Medicaid Meltdown Brings New Slew of Worries for HME

ATLANTA — As if it weren’t enough to be hammered by
competitive bidding and audits that squeeze the life out of
Medicare reimbursements, HME providers across the country are also
trying to fend off what looks to be a new round of debilitating
Medicaid cuts.

Just about every state in the Union is faced with overwhelming
budget deficits — a cumulative $125 billion, according to
estimates — and to close up those shortfalls, lawmakers are
eyeing one of the states’ top expenditures: Medicaid.

“States have implemented an array of Medicaid cost-containment
strategies, including provider rate cuts, benefit restrictions,
provider assessments and administrative cuts,” the Kaiser
Commission on Medicaid and the Uninsured reported in January.

Program enrollment is rising, projected at 6.1 percent in FY
2011, and expiration of the American Recovery and Reinvestment Act
stimulus money on June 30 means the states’ share of Medicaid will
increase by a fourth to a third in FY 2012. State Medicaid
directors said it would be difficult to find options “that do not
represent deep cuts to the program,” according to the Kaiser
report.

In addition to general cuts, providers are also grappling with a
range of other Medicaid issues. Here are only some of the
challenges reported last week by state associations:

Alabama

Faced with a huge shortfall without the government stimulus
money that pumped $270 million into the state’s Medicaid program
last year, Medicaid commissioner R. Bob Mullins Jr. is asking for
$700 million — twice as much as 2011 — to fund the
program for 2012. However, since Alabama is under federal mandate
to beef up the budget for its prisons, the outlook for Mullins’
request isn’t good, said Mike Hamilton, executive director of the
Alabama Durable Medical Equipment Association.

Between that and the fact that the state could move its accounts
payable process back in house to save money, providers are on
tenterhooks, the ADMEA director said.

“It’s bad enough as it is,” Hamilton said. People can’t get
anything paid, and what they do get hardly covers costs.” He said
Alabama Medicaid pays 80 percent or less of Medicare’s fee
schedule, “so we have no place to go. And with the economy that’s
in the condition it’s in, anyone who is dependent on Medicaid is
scared to death.”

That includes providers. Just last week, Hamilton said, he got a
call from a provider asking if he thought it was time to get out of
the Medicaid business. “He was getting paid too late and too
little,” said Hamilton. “I think the next big problem that people
are going to have is that folks aren’t going to be able to find any
kind of provider who will take Medicaid patients.

“It’s just a shame that we are going to have the aftermath
that’s going to follow this thing,” he added. “People won’t get
cared for often enough and soon enough and problems will get worse
and worse.”

California

In an effort to whittle the state’s $25.4 billion deficit, Gov.
Jerry Brown wants to slice $1.7 billion off the Medi-Cal program by
reducing Medicaid
reimbursement by 10 percent, restricting the state’s 7.7
million beneficiaries to six prescriptions a month and limiting
them to 10 visits to clinics and physicians per year.

(Last month the U.S. Supreme Court in January agreed to hear the
state’s appeal of a lower court ruling blocking some pay reductions
for the Medi-Cal program; however, Brown’s budget proposal assumes
the court will find for the state, allowing the cuts to go
through.)

Even more concerning to HME providers, however, is the effort to
push more of the Medicaid burden onto counties by shoving about a
half-million beneficiaries into county-run or managed care plans.
Where a beneficiary ends up depends on which of the state’s 58
counties he or she resides in, said Bob Achermann, executive
director of the California Association of Medical Product
Suppliers.

“It presents all kinds of issues for providers,” Achermann said,
noting that the new system will be implemented throughout the year.
Providers are fearful that reimbursement will drop precipitously
and that managed care or county health plans will restrict the
number of HME companies with which they deal.

“They could say, ‘we don’t need 20 companies; we just want to
deal with two,’” said Achermann. “That could leave a lot of
providers in the cold.” In addition, authorizations might not be
valid as beneficiaries transition from one system to another,
Achermann said. Do providers then go out and reclaim their
equipment?

Under the new plan, access could become an issue just as there
is an influx of new Medi-Cal enrollees from the Affordable Care
Act, he said. “Do we have the capacity to treat all these people
once they are eligible?” Achermann asked. “Some think we
don’t.”

The CAMPS exec finds some irony in the issue. “Here you have the
Medi-Cal program changing its nature in terms of fee-for-service
and getting ready for 2014 where they will expand enrollment [under
ACA] and, at the same time, they’re slashing rates,” Achermann
said. “You might get more patients. But you might not get paid
much.”

Florida

Florida lawmakers are also eying a managed care proposal for the
state’s 2.7 million Medicaid beneficiaries. With the 2011
legislative session only a month away, Executive Director Sean
Schwinghammer of the Florida Alliance of Home Care Services
reported last week that association officials had met with 15 state
senators to voice opposition to a bill that would move all Medicaid
patients into managed care. The group battled the same
legislation in last year’s session.

Among the association’s arguments: Managed care organizations
have no experience with long-term care, which is the largest
expense in Medicaid. The state’s proposal for its 2.7 million
beneficiaries would transfer health care practices from multiple
businesses to monopolies that then become too big to fail and can
claim any cost they wish in the future.

FAHCS is also pushing the point that if some version of managed
care is moved forward, it should be tempered “with rational moves”
such as securing full employment by passing “any willing provider”
legislation.

Medicaid reform is the most pressing item on the state’s
legislative agenda, Schwinghammer noted in a newsletter to members,
adding, “Our efforts are paying off. Senators are surprised by our
facts and thankful for the information we offer.”

Midwest and Arizona

States in the Midwest Association of Medical Equipment Services
are bracing for possible cuts as their legislators craft 2012
budgets, said Rose Schafhauser, executive director of MAMES, which
covers Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota
and South Dakota. Schafhauser is also executive director of the
Arizona Medical Equipment Suppliers Association.

“With the exception of North Dakota, every state has a huge
budget deficit. So obviously in every single state we are in danger
of being cut at the Medicaid level,” the said. She is hopeful,
however, that the years-long effort to build relationships with
Medicaid officials in each state will pay off.

“We have a very good seat at the table with Medicaid with most
of our states,” Schafhauser said. Missouri is a prime
example, she noted, where “there is a little bright news.”

In 2010, providers there were given an ultimatum: Come up with
$10 million in savings or take a 20 percent cut in reimbursement. A
MAMES committee went back to the state with a list of HME products
that were paid at a higher-than-necessary rate and could be
reduced, Schafhauser said, and they were able to sidestep the
cut.

Missouri Medicaid officials just had their first meeting in
2011, “and we’re told that they are on track [for meeting their
goal],” said the MAMES executive director. “So we may not have to
have additional cuts.”

The situation isn’t quite as positive in the Southwest.

“In Arizona,” Schafhauser said, “they did a
straight-across-the-board cut. We really didn’t have an option
because every single entity took those cuts.”

But across-the-board-cuts aren’t always successful. In Kansas
last year, Schafhauser recalled, complex rehab providers were
severely affected by such a cut.

“A lot of providers said, ‘we are not taking Medicaid
patients,’” Schafhauser said. When the story emerged of a
four-year-old who couldn’t get a wheelchair because no complex
rehab provider would take Medicaid, advocacy and parent groups
protested so loudly that the state “came back to the table and
reinstituted the pay they had before,” she said.

New England

Providers in the Northeast have the jitters, too, according to
Karyn Estrella, executive director of the New England Medical
Equipment Dealers association, which includes Connecticut, Maine,
Massachusetts, New Hampshire, Rhode Island and Vermont.

“Right now, we are just bracing for the states to announce their
coming budgets,” Estrella said. “They are facing enormous deficits.
We’re anticipating [Medicaid] will be on the chopping block. It’s
one of the biggest expenditures. There is no way they can avoid
looking at it.”

NEMED is taking a proactive position, however. “If they need
savings, we’re going to help them find savings,” said Estrella,
noting that NEMED has been successful in getting the states to
stick with a fee schedule. “We understand where they are. We’ve
always tried to be proactive and reach out to the states. We tell
them, ‘Work with us before you implement something. It will be a
lot smoother process.’”

Pennsylvania

The state budget for 2012 hasn’t yet been submitted, but HME
providers already have Medicaid headaches, said John Shirvinsky,
executive director of the Pennsylvania Association of Medical
Services. Recently, Medicaid began disallowing prescriptions for
HME if they were written by a physician’s assistant or a certified
nurse practitioner, something it has long covered, he said.

In Pennsylvania, Shirvinsky explained, HME does not have its own
benefit category. “It falls under home health care, which requires
a physician’s prescription [for HME]. So they connected the dots
and said they couldn’t accept prescriptions from physician’s
assistants and certified nurse practitioners.”

CMS said it was the correct interpretation, PAMS’ Shirvinsky
said, “but it is applied to no other state. We’re trying to get it
righted.” Until then, stakeholders are running into difficulty.
“Medicaid beneficiaries tend to rely fairly heavily on the clinics,
and clinics tend to rely heavily on physician’s assistants and
nurse practitioners,” Shirvinsky said, adding that without a
physician’s prescription, they can’t get HME.

Providers who are not aware of the change are also experiencing
problems because their claims have been denied on that basis, he
said.

Another issue: Reimbursement of non-fee schedule items, such as
power wheelchair repairs. Long paid at 85 percent of the MSRP, the
rate has lately bounced all over the place, said Shirvinsky. Most
recently, it has settled at cost plus 15 percent.

“That’s not adequate,” he said, noting that it doesn’t begin to
cover such things as shipping a wheelchair, delivering the repaired
product or any other costs associated with repairs. “For a
bureaucracy to take a long-term reimbursement schedule and turn it
on its head, it just doesn’t work. The number really needs to be in
the 30 to 40 percent range. That’s a big issue,” he said.