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.
