Review of Texas Medicaid Acute Care Therapy Programs

Transcription

1 Review of Texas Medicaid Acute Care Therapy Programs Interim Report Research Questions 1-4 Submitted to: Strategic Decision Support Texas Health and Human Services Commission Revision 1.0 Prepared by: Sean Gregory 1,2, MBA, MS, PhD Robert Ohsfeldt 1,2, PhD Andrea Lorden 1, MPH, PhD Obi Nwaiwu 1, MBBS, MPH 1 Department of Health Policy & Management School of Public Health 2 Department of Pediatrics College of Medicine Health Sciences Center Texas A&M University 1

2 CHAPTER 1. INTRODUCTION AND BACKGROUND Senate Bill 1, 83 rd Legislature, Regular Session, 2013 (Article II, Health and Human Services Commission, Rider 51 1 ) directs the Health and Human Services Commission (HHSC) to reduce Medicaid funding and contain costs. Specifically, there is a mandated "reduction of $200,000,000 in general revenue funds and $284,730,974 in federal funds in fiscal year 2014 and $200,000,000 in general revenue funds and $276,871,722 in federal funds in fiscal year 2015, a biennial total of $400,000,000 in general revenue funds and $561,602,696 in Federal Funds 1 ". Rider 51, parts state: (1) Phase down Medicaid rates which are above Medicare rates, with separate consideration for an accurate and appropriate evaluation of the service delivery model when developing the rate for Medicaid rates for pediatric therapy services that have no equivalent Medicare service. (2) Develop a more appropriate fee schedule for therapy services, requiring providers to submit the National Provider Identification (NPI) on each claim. Rider 51 cost savings associated with Medicaid acute care therapies (fee-for-service [FFS] and managed care [MC]) totaled $36.8 million in general revenue funds and $51.7 million in federal funds for the biennium. Currently, Texas Medicaid FFS reimbursement rates for acute care therapy for children are higher than those of Medicare and Medicaid rates in other states. Medicaid does not typically reimburse at a rate higher than that of Medicare for the same service but it is unclear if Medicare rates are an appropriate point of comparison for therapy services provided to children. HHSC has proposed FFS rate reductions, based on provider type and delivery model (i.e., services provided in an office/clinic setting versus services provided in the client s home). Effective September 1, 2013, the following FFS rate reductions apply: 1.5% reduction for services provided in client's home by a home health agency (HHA) or independent provider 2.5% reduction for services provided in a comprehensive outpatient rehabilitation facility (CORF)/outpatient rehabilitation facility (ORF) 4.0% reduction for services in an office or clinic by an independent provider It is unknown whether the September 1, 2013 FFS payment rates are unreasonable or required due to the payer mix, utilization patterns, or cost of services. Senator Williams and Representative Pitts of the Senate Finance Committee and Committee on Appropriations, respectively, requested that "HHSC review the rates mid-year and make further adjustments or policy changes as needed in order to achieve overall budgeted savings while ensuring quality Medicaid services are provided 2." The legislators also encourage HHSC to explore other cost saving options that would maintain quality of care and increase efficiency of Medicaid acute care therapy services such as standardizing rates, increasing service consistency, encouraging service provision in appropriate settings, improving the quality of care, and achieving efficiencies through managed care therapy utilization. 1 S.B. 1, 83 rd Legislature, Regular Session, 2013 (Article II, Health and Human Services Commission, Rider 51 2 Letter from Tommy Williams, Senate Finance Committee, and Jim Pitts, Committee on Appropriations, to Dr. Kyle Janek, Executive Commissioner Health and Human Services Commission. August 21,

3 The September 1, 2013, rate reductions are estimated to produce savings of $18.1 million in general revenue and $25.4 million in federal funds for the biennium. Legislative intent includes an expectation that additional acute care therapy savings of $18.7 million in general revenue and $26.3 million in federal funds will be achieved during the biennium so that the entire cost savings assumed in Rider 51 for acute care therapies is achieved. A study is needed to understand how Medicaid FFS in Texas compares to other payers regarding pediatric acute care therapy (occupational, physical, speech) in terms of authorization policies, rates, and utilization patterns. Understanding the landscape of pediatric acute care therapy services will inform decision-making regarding authorization policies and rate adjustments. A. PURPOSE OF THE STUDY The proposed study will examine the authorization process, rate structure, and utilization patterns of pediatric acute care therapy (occupational, physical, speech) in Texas. Comparisons will be made according to payer type, and service delivery model (see Table 1). These comparisons should illustrate how Texas Medicaid FFS compares to Texas Medicaid MC, Texas Medicare, private insurers in Texas, and other states' Medicaid in terms of authorization processes, rate structures, and utilization patterns. Additionally, this study will describe the Medicaid clients receiving acute care therapy services and analyze the effectiveness of various service delivery models. Results of this study should identify pros and cons of the current Texas Medicaid pediatric acute care therapy authorization process and rate structure and inform recommendations for policy and/or rate changes to achieve the remaining required cost savings for the biennium. Therapy type Payer types Service delivery models Table 1. Medicaid Rate Comparisons Occupational Physical Speech Medicaid fee-for-service (FFS) in Texas Medicaid managed care (MC) in Texas Medicaid in other states Medicare in Texas Private insurance in Texas (one or two selected large insurance companies, i.e., Blue Cross Blue Shield, United) Comprehensive outpatient rehabilitation facility (CORF)/ Outpatient rehabilitation facility (ORF) Home health agency (HHA) Independent provider - clinic or office setting Independent provider - client's home A. Key Study Questions Study Arm 1: Pediatric Acute Care Therapy Authorization Process, Rate Structure and Utilization Patterns The aim of Study Arm 1 is to illustrate how Texas Medicaid FFS compares to Texas Medicaid MC, Texas Medicare, private insurers in Texas, and other states' Medicaid in terms of authorization processes, rates, and utilization patterns. 1. Authorization Process Research Question 1: How does the authorization process for pediatric acute care therapy compare among payer types? (For Texas, use authorization process as of January 1, 2014.) a. Compare Texas' prior authorization, utilization review, authorization periods, allowed number of therapy hours per day, and evaluation and re-evaluation policies to other payers. Conduct a comparative case study analysis to examine the typical client requiring services for each payer type. Payer types must include 3

4 Medicaid FFS and MC in Texas, private insurance in Texas, and Medicaid in other states (Medicare not necessary). This analysis must include a separate case study for physical therapy, occupational therapy, and speech therapy for each service delivery model. b. Develop a best practice model for authorization and assessment processes to determine the need for and level of services for each patient including when a patient should be eligible for in-home services. This analysis will illustrate how similar or dissimilar authorization processes are among payer types to inform considerations and possible adjustments necessary for one-to-one comparisons of rates among different payers. Additionally, this comparison will inform the development of a best practice model for the pediatric acute care therapy authorization process. 2. Rate Structure Research Question 2: How do payment rates for pediatric acute care therapy compare among payer types? (For Texas, use rates as of September 1, 2013.) a. Compare rates for selected pediatric acute care therapy procedure codes billed per treatment by payer type, and service delivery model. i. Include average travel time to provide services in a client s home, if applicable. b. Compare rates for selected pediatric acute care therapy procedure codes billed per specific amounts of time (i.e., per 15 minutes). i. Include average amount of time spent providing therapy (all settings) and travel time to provide services in a client s home, if applicable. c. Compare costs of pediatric acute care therapeutic services by therapy type, location (STAR service delivery areas in Texas, statewide for comparison states), and service delivery model. (Costs measured in terms of therapist salary or other proxy measure.) d. Compare differences between costs and reimbursement rates of pediatric acute care therapeutic services by therapy type, location, payer type, and service delivery model. (Costs measured in terms of therapist salary or other proxy measure.) These analyses will allow for a "head-to-head" comparison of rates among payer types and to determine any under- or over-payments relative to the cost of providing the service. 3. Utilization Patterns Research Question 3: How do utilization patterns for pediatric acute care therapy compare among payer types? (Compare fiscal year (FY) 2010 through 2012 or 2013, depending on data availability.) a. Compare utilization patterns among therapeutic providers by therapy type, location (STAR service delivery areas in Texas, statewide in comparison states), payer type, and service delivery model. b. Describe payer mix among providers in Texas offering pediatric therapeutic services by STAR service delivery area, payer type, and service delivery model. These analyses will allow for an assessment of the impact of potential rate cuts on providers, based on utilization patterns and payer mix. For example, a provider whose patient base is 5 percent Medicaid clients will be impacted less than a provider whose patient base is 80 percent Medicaid clients. 4. Impact of Future Rate Reductions 4

5 Research Question 4: What would be the impact of additional rate reductions on providers in Texas based on payer mix and utilization patterns? (Reductions based on September 1, 2013 rates.) a. Rate reductions may be from 1 to 5 percent. This analysis will determine if certain providers will be disproportionately affected by additional rate cuts due to the payer mix of their practices and/or utilization patterns. The report is organized into four subsequent chapters, one for each research question. The chapters are inclusive of the methods, results, conclusions and limitations regarding each research question. Some methods are repeated in each of the chapters such that each chapter can serve as a stand-alone response to the research question posited within. 5

6 CHAPTER 2. PEDIATRIC ACUTE CARE THERAPY AUTHORIZATION PROCESS The first research question will examine whether the authorization process for pediatric acute care therapy differs among payer types. Specifically, for physical therapy, occupational therapy, and speech therapy we will: Compare Texas' prior authorization, documentation requirements, utilization review, authorization periods, allowed number of therapy hours per day, prescription of services, and evaluation and reevaluation policies to the Medicaid programs in Florida, California, Minnesota, and Arizona and private insurance in Texas. Conduct a comparative case study analysis to examine the typical client requiring services in Texas Medicaid Managed Care and Fee-for-service, Medicaid programs in Florida, California, Minnesota, and Arizona, and private insurance in Texas. This analysis will illustrate how similar or dissimilar authorization processes are among payer types to inform considerations and possible adjustments necessary for one-to-one comparisons of rates among different payers. Additionally, this comparison will inform the development of a best practice model for the pediatric acute care therapy authorization process. A. POLICY COMPARISON In order to determine whether the Texas Medicaid policies differ from the Medicaid programs of other states or private insurance in Texas we examined program policies related to the prior authorization process, documentation requirements, utilization review, authorization periods, allowed number of therapy hours per day, prescription of services, and evaluation and re-evaluation. 1. Methods To address whether Texas Medicaid policies differ from the Medicaid programs of other states or private insurance in Texas we selected four states that had a Medicaid population that would represent a broad range of Medicaid programs that are shifting beneficiaries from fee-for-service to Medicaid Managed Care: Florida, California, Minnesota, and Arizona. These states represent varying degrees of Medicaid Managed Care concentration, and varying durations since these policy changes have occurred and are presented according to their duration in Medicaid Managed Care, and the sophistication of the Medicaid Managed Care market structure. We believe these large, populous, and demographically diverse states (save for Minnesota), serve as reasonable comparators for HHSC to evaluate contemporary practices in prior authorization, utilization review, authorization periods, allowed number of therapy hours per day, and evaluation and re-evaluation processes. Data for this analysis was gathered from each states Medicaid website with particular emphasis on their prior authorization, utilization reviews, authorization periods, allowed number of therapy hours per day, and evaluation and re-evaluation policies for pediatric acute care therapy (occupational, physical, speech). Tables 2-7 summarize policies from each state and Texas private insurance for the different therapy types. 2. Results In the subsections that follow, state-specific findings will be identified and discussed. In some circumstances there is no state-specific guidelines or policies for the given subsection, therefore not all comparison states are detailed in each subsection. Prior Authorization Policies We compared the prior authorization policies in Texas, Florida, California, Minnesota, Arizona and Texas private insurance. With the exception of Minnesota, most states require prior authorization for occupational 6

7 and speech therapy services. See Table 2 for a summary of services by state that require or do not require a prior authorization. Texas. Prior authorization is required for all occupational therapy, physical therapy, and speech therapy services, in both FFS and MC programs, except for: therapy services provided in an inpatient setting, evaluations or re-evaluations, services provided through the School Health and Related Services (SHARS), or Early Childhood Intervention (ECI) programs. A Request for Initial Outpatient Therapy (Form TP-1) or Request for Extension of Outpatient Therapy (2 Pages) (Form TP-2) must be submitted to the Texas Medicaid & Healthcare Partnership (TMHP) prior to the start of care for the current acute episode of therapy. Florida. Physical, occupational therapy, and speech-language pathology services require prior authorization for reimbursement. Therapy services for recipients who are members of a Medicaid Health Maintenance Organization (HMO) and recipients who are members of a Medicaid Provider Service Network (PSN) are exempt from prior authorization by the Quality Improvement Organization (QIO), also referred to as the External Quality Review Organization (EQRO). Arizona. Prior authorization is required for covered occupational therapy, speech therapy and audiology services, but not required for covered physical therapy services. Covered services include medically necessary therapy services provided to all members who are receiving inpatient care at a hospital (or a nursing facility) when services are ordered by the member's PCP or attending physician for FFS members, and provided by or under the direct supervision of a licensed therapist. Outpatient Occupational and Speech Therapy services are covered only for members receiving Early and Periodic Screening, Diagnosis and Treatment (EPSDT) services, KidsCare members and Arizona Long Term Care System (ALTCS) members. Outpatient Physical Therapy services are covered for EPSDT and KidsCare members, and limited to 15 outpatient visits per contract year for adult members (21 years of age and older) of ALTCS who are not Medicare eligible. California. Treatment Authorization Requests (TARs) for occupational therapy, physical therapy, and speech therapy for Medi-Cal-only recipients is required and must be submitted to the San Francisco Medi- Cal Field Office. Prior authorization approval by the Medi-Cal field office is limited to services that: 1) Are necessary to prevent or substantially reduce an anticipated hospital stay; 2) Continue a plan of treatment initiated in the hospital; 3) Are recognized as a logical component of post hospital care. Minnesota. Unlike Texas, Florida, Arizona and California, the Minnesota Health Care Programs (MHCP) suspended prior authorization requirements effective July 1, 2013 for outpatient rehabilitative and therapeutic services (physical therapy, occupational therapy and speech-language pathology). Rehabilitative and therapy services are subject to post-payment review and may result in a particular provider being required to request authorization for certain services. However, prior authorization is still required for outof-state provider, or if a health service meets one of the following conditions: The health service could be considered, under some circumstances 3, to be of questionable medical necessity 3 No specific example was given. We interpret this comment in the Minnesota guidelines to refer to a situation where there is a debate on the benefit of OT, PT, or ST on the medical condition. In other words, where evidence of effectiveness and/or appropriateness still lacks. 7

8 Use of the health service requires monitoring to control the expenditure of Minnesota Health Care Programs (MHCP) funds A less costly, appropriate alternative health service is available The health service is investigative or experimental The health service is newly developed or modified The health service is of a continuing nature and requires monitoring to prevent its continuation when it ceases to be beneficial The health service is comparable to a service provided in a skilled nursing facility or hospital but is provided in a recipient's home The health service could be considered cosmetic Texas Private Insurance (BlueCross BlueShield of Texas.). Initial evaluation for Therapy Services does not require prior authorization. However, after initial evaluation, therapy visits, continuation of services, and re-evaluations must be authorized prior to services being rendered. An evaluation is needed before implementing any treatment. The evaluation is essential to: 1) determine if acute care therapeutic services are medically necessary 2) gather baseline data 3) establish a treatment plan 4) develop goals based on the data The re-evaluation is a more comprehensive assessment that is indicated when there are new clinical findings, a rapid change in the individual's status, or failure to respond to therapy interventions. 8

9 Table 2. Prior Authorization Requirements by State State Prior Authorization Required Prior Authorization Not Required Texas Occupational therapy Therapy services provided in an inpatient Physical therapy setting, Speech therapy Evaluations or re-evaluations, Services provided through the School Health and Related Services (SHARS), or Early Childhood Intervention (ECI) programs Florida Occupational therapy Physical therapy Speech-language pathology services Arizona Occupational therapy Speech therapy audiology services California Occupational therapy Physical therapy Speech therapy Members of a Medicaid Health Maintenance Organization (HMO) Members of a Medicaid Provider Service Network (PSN) Physical therapy services None Minnesota Texas Private Insurance Services that are: experimental newly developed or modified require monitoring comparable to a service provided in a skilled nursing facility or hospital but is provided in a recipient's home of questionable medical necessity considered cosmetic The following therapy visits after initial evaluation: Occupational therapy Physical therapy Speech therapy Continuation of services Re-evaluations of therapy Occupational therapy Physical therapy Speech therapy Initial evaluation for Therapy Services 9

10 Documentation Requirements Each state s Medicaid program in our sample requires documentation to establish medical necessity of therapy, treatment plan, achievable goal for each therapy, and the scope and duration of therapy. In addition, there are documentation requirements for the therapy providers to establish the basic credentials needed for these providers. Minimum documentation requirements include: Signature of the prescribing practitioner Name, address, telephone and identification number of the prescribing practitioner Date of prescription Medical condition necessitating the service(s) (diagnosis) Specific services (for example, evaluation, treatments, and modalities) prescribed Frequency of services Duration of medical necessity for services Specific dates and length of treatment should be identified if possible. Anticipated medical outcome as a result of the therapy (therapeutic goals) Date of progress review (when applicable) Age of the client at the time of evaluation Functional limitations Mental status and ability to comprehend Related medical conditions Delay in achievement of developmental milestones in a child or impairment of normal achievement in an adult Two states (Texas and Florida) have additional documentation requirements. In addition to the information listed above, Texas requires: For an extension of outpatient therapy, the new request must document all progress made from the beginning of the previous treatment period The number of sessions per week must be supported by documentation supporting the medical necessity for the frequency requested. When requesting prior authorization for group occupational therapy, the provider must submit documentation supporting the group process as being medically necessary and beneficial to the client. A procedural modifier when submitting claims for services. Florida also requires a copy of the documentation demonstrating the recipient has been examined or received medical consultation by the ordering or attending physician before initiating services and every 180 days thereafter. Utilization Review Remarkably, there were no findings in the literature search, or the inspection of state Medicaid program websites regarding specific utilization review (UR) process and procedures for Acute Therapy Services. Through discussion with state Medicaid officials it was noted that typically UR responsibilities have been transferred, albeit not explicitly, to the Medicaid Managed Care Organizations via the fixed capitation for beneficiaries. It is assumed that the Medicaid Managed Care Organizations perform these medical management policies and procedures to manage the risk and utilization in their respective risk pools. All states required Medicaid Managed Care Organizations to cover Acute Therapy Services, and use the same authorization and pre-authorization processes. Texas Private Insurance. In the BlueCross BlueShield of Texas, nurses utilize Clinical Guidelines, Medical Policies, Milliman Guidelines, and plan benefits to determine whether or not coverage of a request can be approved. The nurses 10

11 review for only medical necessity. They do not initiate denial. The request will be authorized if it meets criteria, and referred to a Peer Clinical Reviewer (PCR) if it does not meet criteria. The PCR reviews the cases that are not able to be approved by the nurse and can deny service for lack of medical necessity. In Chapter 4 we will examine whether the expansion of Medicaid Managed Care in Texas impact overall utilization (e.g. spending and number of units.). Authorization Periods In Texas, Florida, California, and Arizona, a request for pediatric acute care therapeutic services may be authorized for varying lengths of time within a patients eligibility period, but no longer than 180 days duration. A new request must be submitted if therapy is required for a longer duration 4. The therapist must review the plan of care every 180 days or prior to the end of the authorization period and make necessary revisions. Texas. When group therapy is authorized, weekly therapy limits cannot be exceeded. If a provider discontinues therapy with a client and a new provider begins therapy during an existing authorization period, submission of a new plan of care and documentation of the last therapy visit with the previous provider is required along with a letter from the client, or responsible adult, stating the date therapy ended with the previous provider. California. Occupational, physical, and speech therapy services rendered in an outpatient setting in California are limited to a maximum of two services per month subject to the availability of Medi-Service reservations. This limitation does not apply to occupational therapy services rendered in a certified rehabilitation center or Nursing Facility (NF) Level A or B. Minnesota. If authorization is required, the date of the order/prescription must not be more than 30 days from the requested start of care. Such conditions requiring authorization are listed in Table 4 below. However, authorization can be submitted for ongoing service by re-evaluating and including summary of statements since therapy started and treatment notes with verification of units provided since last authorization. The plan of care should be documented every 60 days. Minnesota does not require prior authorization except health services meets the some criteria listed above (e.g. if the provider is an out-of-state provider) Texas Private Insurance. For Texas private insurance, authorization periods for services depends on the benefit plans for the individual. Benefits are limited to 75 visits (standard option) or 50 visits (basic option) per person, per calendar year for physical, occupational, or speech therapy, or a combination of all three. When the maximum allowable benefit is exhausted, coverage will no longer be provided even if the medical necessity criteria are met. Allowed Number of Therapy Hours per Day In all 5 states, one unit of service is defined as 15 minutes of therapy service. Texas limits the number of allowed therapy hours, for OT and PT, to two hours (eight units) per day per therapy type. ST treatments are limited to one hour (four units) per day. Florida has a lower limit on the allowed number of therapy hours per day (maximum of four units per day for all therapy types combined) with an additional limit of 14 units of service per week for each therapy type. In California, similar to the private insurance in Texas, no specific limit was set on the allowed number of therapy hours per day. This depends on the individual child s medicals need and the plan of care. 4 Minnesota does not require prior authorization except for health services that meets the criteria listed above e.g if the provider is an out-of-state provider. These are typically the conditions noted in the Prior Authorization discussion for Minnesota. 11

12 Texas. Procedure codes may be billed in multiple quantities (i.e., 15 minutes each) are limited to two hours (eight units) per day for individual, group, or a combination of individual and group therapy, per therapy type (two hrs. of OT and two hrs. of PT). Each 15 minutes equals one unit. All 15-minute increment procedure codes are based on the actual amount of billable time associated with the service. For those services for which the unit of service is 15 minutes (1 unit = 15 minutes), partial units must be rounded up or down to the nearest quarter hour. The documentation retained in the client s file must include the billable start time, billable stop time, total billable minutes, and activity that was performed. For some procedures, related to occupational and physical therapy, there is a limit of one procedure per day while some procedures, related to speech therapy, are limited to two procedures per day. These services are billed on a per service provider basis versus by unit of time. Florida. For all therapy types combined, recipients may receive four units of therapy service per day. In addition, there is a limit of 14 units of service per week for each therapy discipline. California. The number of hours of therapy per day authorized for the individual child will depend upon the child s otherwise level of institutional care and upon the child s medical need, as demonstrated by the plan of care. The cost to the Medi-Cal program for community care cannot exceed the cost to the Medi-Cal program for the equivalent institutional level of care. Authorization of hours for Pediatric Day Health Care (PDHC) may be substituted for hours authorized for in-home nursing care services; but at no time shall the total number of hours for both in-home nursing care services and PDHC services should not exceed the number of hours allowed under CCR, Title 22, Section 51340(m). BlueCross BlueShield of Texas. OT or PT therapy session can vary from fifteen minutes to four hours per day, while speech language pathology treatment session is usually defined as thirty minutes to one hour of speech therapy on any given day, depending on the age and diagnosis and ability to sustain attention for therapy. Treatment sessions lasting more than one hour per day are rare in outpatient settings but may be medically appropriate for inpatient acute settings, day treatment programs, and select outpatient situations. If this is the case, sessions must be supported in the treatment plan and based on an individual's medical condition. Prescription of Services For all states in our sample and the BlueCross Blue Shield of Texas, a prescription requirement is needed before providers are reimbursed. In order to be reimbursed by Medicaid, all therapy services, including evaluations, must be prescribed by the recipient s primary care provider, an advanced registered nurse practitioner, a designated physician assistant, or a designated physician specialist. A prescription is considered current when it is signed and dated on or no later than 60 days before the start of therapy. Evaluation and Re-Evaluation Initial evaluations are used to determine the baseline functional status of an individual and to identify the need for therapeutic services to address the recipient s decreased functional abilities, capabilities, and activity level. Re-evaluations are done at varying intervals depending on the state. Re-evaluations document the progress made since the onset of therapy and modifies or redirects the intervention, if necessary. Most states limit evaluations to once every 180 days, and re-evaluations to once every 30 days. Florida limits reevaluations to once in 150 days. For BlueCross BlueShield of Texas, no calendar day limit is set on reevaluations. A reevaluation is generally indicated when there are new clinical findings, a rapid change in the individual's status, or failure to respond to therapy interventions. Texas. Physical therapy, occupational therapy, and speech therapy do not require prior authorization for evaluations and re-evaluations. Evaluations are limited to once every 180 calendar days by any provider. 12

13 Re-evaluations are limited once per 30 calendar days by any provider. An evaluation or re-evaluation performed on the same day as therapy from a different therapy type must be performed at distinctly separate times to be considered for reimbursement. If a therapy evaluation or re-evaluation procedure code and similar therapy procedure codes are billed for the same date of service by any provider, the similar therapy evaluation or re-evaluation will be denied. Procedural modifiers are not required for evaluations and reevaluations. California. California Medi-Cal does not require prior authorization for initial and six month re-evaluations for occupational therapy (billed under HCPCS code X4108) and speech therapy (billed under HCPCS code 4308). However, California does require that the recipient be eligible for Medi-Cal in the month the service is performed. In contrast, all physical therapy services (including initial and six-month re-evaluations) require prior authorization. Florida. Medicaid reimburses one initial evaluation per recipient, per discipline, per year. A recipient who has received therapy services within the previous 180 days and whose diagnosis has not changed is not eligible for an initial evaluation and must receive a re-evaluation. Medicaid reimburses one re-evaluation per recipient, per discipline, every 150 days, beginning 150 days after the initial evaluation. Re-evaluations rendered within 150 days of a previous evaluation are not reimbursable by Medicaid. Therapy visits performed on the same day as evaluations are not reimbursable. Medicaid reimburses the following Medicaid enrolled providers for evaluations: 1) Licensed physical and occupational therapists; 2) Licensed and provisionally licensed speech-language pathologists; and 3)Home health agencies that employ or contract with licensed physical and occupational therapists and speech-language pathologists. Reimbursement for writing the initial plan of care is included in the reimbursement for the evaluation. Medicaid does not reimburse for evaluations performed by therapy assistants or students. Medicaid does not accept the co-signatures by therapy assistants or students as documentation for authorization of Medicaid services. Texas Private Insurance. Initial evaluation for Therapy Services does not require prior authorization. Therapy visits following the initial evaluation and continuation of services must be authorized prior to services being rendered. Re-evaluations of therapy must be authorized prior to services being rendered. An evaluation is needed before implementing any treatment. The evaluation must include: 1) Prior functional level, if acquired condition; 2) Specific standardized and non-standardized tests, assessments, and tools; 3) Analytic interpretation and synthesis of all data, including a summary of the baseline findings in written report(s); 4) Objective, measurable, and functional descriptions of an individual's deficits using comparable and consistent methods; 4) Summary of clinical reasoning and consideration of contextual factors with recommendations; 5) Plan of care with specific treatment techniques or activities to be used in treatment sessions that should be updated as the individual's condition changes; 6) Frequency and duration of treatment plan; 7) Functional, measurable, and time-framed long-term and short-term goals based on appropriate and relevant evaluation data; 8) Rehabilitation prognosis; and 9) Discharge plan that is initiated at the start of treatment. B. COMPARATIVE CASE STUDY ANALYSIS In order to determine whether the Texas Medicaid policies differ from the Medicaid programs of other states we conducted a comparative case study analysis to examine the typical client requiring services in Texas Medicaid Managed Care and Fee-for-service, Medicaid programs in Florida, California, Minnesota, and Arizona and private insurance in Texas. The details of the case study analysis for each of the five states and Texas private insurance are summarized below in Tables 3-8. Tables are arranged such that the columns represent therapy types, if the state has 13

14 unique policies and/or processes by therapy type. This is the case for Minnesota, Arizona and California. Florida and Texas private insurance has standard processes across all three therapy types, and Texas differs by service modality, CORF/ORF versus other modalities. Starting within a specific column, the use case for each of the therapy types by state can be examined. The process flow begins with pre-authorization, proceeds to authorization, coding, re-authorization billing and documentation processes, indicating patient, provider and payer requirements throughout the Acute Therapy Episode. 14

15 Table 3. Use Case: State of Texas Medicaid Prior authorization Texas OT, PT, & ST (Comprehensive Care Program) A current written order by a physician based on medical necessity A prescription is considered current when it is signed and dated on or no later than 60 days before the start of therapy Texas OT, PT, & ST (CORF or ORF) A current written order by a physician based on medical necessity A prescription is considered current when it is signed and dated on or no later than 60 days before the start of therapy A Request for Initial Outpatient Therapy (Form TP-1) or Request for Extension of Outpatient Therapy (2 Pages) (Form TP-2) must be submitted to TMHP prior to the start of care for the current episode of therapy The most recent evaluation and treatment plan. To establish medical necessity, the written treatment plan must include the following: 1) The age of the client at the time of evaluation 2) Diagnosis 3) Description of specific therapy being prescribed 4) Specific treatment goals related to the client's individual needs. Therapy goals may include improving function, maintenance of function, or slowing of the deterioration of function A Request for Initial Outpatient Therapy (Form TP-1) or Request for Extension of Outpatient Therapy (2 Pages) (Form TP-2) must be submitted to TMHP prior to the start of care for the current episode of therapy The most recent evaluation and treatment plan. To establish medical necessity, the written treatment plan must include the following: 1) The age of the client at the time of evaluation 2) Diagnosis 3) Description of specific therapy being prescribed 4) Specific treatment goals related to the client s individual needs. Therapy goals may include improving function, maintenance of function, or slowing of the deterioration of function For an initial request, anticipated measurable progress toward goals, the prognosis, and the client's gross motor skills in years or months For a new request for additional therapy, documentation of all progress made from the beginning of the previous treatment period Duration and frequency of therapy Requested date of service For an initial request, anticipated measurable progress toward goals, the prognosis, and the client s gross motor skills in years or months For a new request for additional therapy, documentation of all progress made from the beginning of the previous treatment period Duration and frequency of therapy Requested date of service The number of sessions per week must be supported by documentation supporting the medical necessity for the frequency requested When requesting prior authorization for group occupational therapy, the provider must submit documentation supporting the group process as being medically necessary and beneficial to the client. When group therapy is authorized, weekly therapy limits will not be exceeded 15 The number of sessions per week must be supported by documentation supporting the medical necessity for the frequency requested When requesting prior authorization for group occupational therapy, the provider must submit documentation supporting the group process as being medically necessary and beneficial to the client. When group therapy is authorized, weekly therapy limits will not be exceeded

16 Authorization periods Texas OT, PT, & ST (Comprehensive Care Program) An advanced practice registered nurse (APRN) or a physician assistant may sign all documentation related to the provision therapy services on behalf of the client's physician when the physician delegates this authority to the APRN or physician assistant A request for services may be prior authorized for no longer than 180 days duration. A new request must be submitted if therapy is required for a longer duration. A procedural modifier is required when submitting claims for services. Providers must use modifier GO for OT services, GP for PT services, and GN for ST services. Procedural modifiers are not required for evaluations and reevaluations. Texas OT, PT, & ST (CORF or ORF) An advanced practice registered nurse (APRN) or a physician assistant may sign all documentation related to the provision therapy services on behalf of the client s physician when the physician delegates this authority to the APRN or physician assistant A request for services may be prior authorized for no longer than 180 days duration. A new request must be submitted if therapy is required for a longer duration A procedural modifier is required when submitting claims for services. Providers must use modifier GO for OT services, GP for PT services, and GN for ST services. Procedural modifiers are not required for evaluations and reevaluations. If a provider discontinues therapy with a client and a new provider begins therapy during an existing authorization period, submission of a new plan of care and documentation of the last therapy visit with the previous provider is required along with a letter from the client, or responsible adult, stating the date therapy ended with the previous provider If a provider discontinues therapy with a client and a new provider begins therapy during an existing authorization period, submission of a new plan of care and documentation of the last therapy visit with the previous provider is required along with a letter from the client, or responsible adult, stating the date therapy ended with the previous provider Evaluation and re-evaluation Prior authorization is not required for evaluations and reevaluations. Evaluations are limited to once every 180 calendar days any provider. Reevaluations are limited once per 30 calendar days, any provider Prior authorization is not required for evaluations and reevaluations. Evaluations are limited to once every 180 calendar days, any provider. Reevaluations are limited once per 30 calendar days, any provider An evaluation or reevaluation performed on the same day as therapy from a different therapy type must be performed at distinctly separate times to be considered for reimbursement. If a therapy evaluation or reevaluation procedure code and like therapy procedure codes are billed for the same date of service by any provider, the like therapy evaluation or reevaluation will be denied An evaluation or reevaluation performed on the same day as therapy from a different therapy type must be performed at distinctly separate times to be considered for reimbursement If a therapy evaluation or reevaluation procedure code and like therapy procedure codes are billed for the same date of service by any provider, the like therapy evaluation or reevaluation will be denied 16

17 Texas OT, PT, & ST (Comprehensive Care Program) Texas OT, PT, & ST (CORF or ORF) Allowed number of therapy hours per day Occupational and Physical therapy evaluation or reevaluation will be denied as part of the following therapy procedure codes billed with Modifiers GO and GP respectively: S8990. Speech therapy evaluation and reevaluations will be denied when billed on the same date of service by any provider, as procedure codes and with modifier GN Procedure codes that may be billed in multiple quantities (i.e., 15 minutes each) are limited to two hours (eight units) per day individual, group, or a combination of individual and group therapy, per therapy type (two hrs. of OT and two hrs. of PT). Each 15 minutes equals one unit. Speech therapy treatment codes 92507, 92508, and are payable in 15-minute increments at a maximum of four units (one hour) per day. Occupational therapy evaluation or reevaluation and Physical therapy evaluation or reevaluation will be denied as part of the following therapy procedure codes billed with Modifier GO or GP respectively. Speech therapy evaluation and reevaluations will be denied when billed on the same date of service by any provider as procedure code and with modifier GN. Procedure codes that may be billed in multiple quantities (i.e., 15 minutes each) are limited to two hours (eight units) per day of individual, group, or a combination of individual and group therapy, per therapy type (two hrs. of OT and two hrs. of PT). Each 15 minutes equals one unit. Speech therapy treatment codes 92507, 92508, and are payable in 15-minute increments at a maximum of eight units (two hours) per day. The following procedure codes are billed in 15-minute increments: S8990 The following procedure codes are billed in 15-minute increments: S8990 All 15-minute increment procedure codes are based on the actual amount of billable time associated with the service. For those services for which the unit of service is 15 minutes (1 unit = 15 minutes), partial units must be rounded up or down to the nearest quarter hour All 15-minute increment procedure codes are based on the actual amount of billable time associated with the service. For those services for which the unit of service is 15 minutes (1 unit = 15 minutes), partial units must be rounded up or down to the nearest quarter hour The documentation retained in the client s file must include the billable start time, billable stop time, total billable minutes, and activity that was performed The documentation retained in the client s file must include the billable start time, billable stop time, total billable minutes, and activity that was performed To calculate billing units, count the total number of billable minutes for the calendar day for the client, and divide by 15 to convert to billable units of service. If the total billable minutes are not evenly divisible by 15, minutes greater than 7 are converted to 1 unit and 7 or fewer minutes are converted to 0 unit To calculate billing units, count the total number of billable minutes for the calendar day for the client, and divide by 15 to convert to billable units of service. If the total billable minutes are not evenly divisible by 15, minutes greater than 7 are converted to 1 unit and 7 or fewer minutes are converted to 0 unit 17

18 Texas OT, PT, & ST (Comprehensive Care Program) Texas OT, PT, & ST (CORF or ORF) The following procedure codes (97012, 97014, 97016, 97018, 97022, 97024, 97026, 97028, 97150) are limited to once per day, for each therapy type (OT and PT). Speech procedure codes and are limited to two procedures per day, for different procedures, billed by the same provider or provider group. If procedure code is billed with an office visit on the same date of service by the same provider, the office visit will be denied. Procedure code will be denied if billed on the same date of service by the same provider as procedure code Electrical stimulation therapy (procedure code 97032) may be considered with documentation of medical necessity. Procedure code will be denied if billed on the same date of service by the same provider as procedure code Electrical stimulation therapy may be considered with documentation of medical necessity 18

19 Table 4. Use Case: State of Florida Medicaid Prior authorization Authorization periods Approval process Approved Request Florida Physical, occupational therapy, and speech-language pathology services require prior authorization for reimbursement. The request must be submitted to the Medicaid Quality Improvement Organization (QIO) via its Web-based Internet system. All required documentation to support the request must be submitted directly to the QIO at the time of the request For initial service requests, it is recommended that the therapy services provider submit the request to the QIO at least ten business days prior to the start of care. For subsequent authorization requests (continued stay requests), the therapy services provider must submit the request to the QIO at least ten business days prior to the new certification period The earliest effective date of the authorization is the date the request is received by the Medicaid QIO When requesting prior authorization, each therapy provider is responsible for informing the QIO of other therapy providers also providing services to the recipient To be reimbursed by Medicaid, all therapy services, including evaluations, must be prescribed by the recipient s primary care provider, an advanced registered nurse practitioner (ARNP), a designated physician assistant (PA), or a designated physician specialist Minimum requirements for each prescription request: 1) Recipient s name, address, date of birth, and Medicaid ID number 2) Recipient s diagnosis or diagnoses contributing to the need for therapy 3) Therapy provider s Medicaid provider number, name and address 4) Procedure code(s), with modifier(s) if applicable, matching the services reflected in the plan of care 5) Units of service requested 6) Duration and frequency of the therapy treatment period 7) Summary of the recipient s current health status, including diagnosis(es) 8) Planned dates and times of service 9) Ordering provider s Medicaid provider number, National Provider Identifier, or Florida medical license number, name, and address 10) Signature of the prescribing provider 11) Date of prescription 12) Specific type of evaluation or service requested 13) The complete evaluation and plan of care, reviewed, signed and dated by the primary care provider, ARNP or PA designee, or designated physician specialist 14) Patient condition summaries that substantiate medical necessity and the need for requested services, such as a hospital discharge summary (if services are being requested as a result of a hospitalization), physician or nurse progress notes, or history and physical 15) A copy of the documentation demonstrating the recipient has been examined or received medical consultation by the ordering or attending physician before initiating services and every 180 days thereafter The QIO will authorize service up to a 180 day period If the prescription has not been received before the service is rendered, Medicaid will not reimburse for the service Prescriptions to evaluate recipients are valid for up to 60 days The QIO will review each prior authorization request and approve, deny or request additional information to support the request Prior authorization requests for therapy services that appear to deviate from treatment norms, established standards of care, or utilization norms may be subject to a more intensified review by the QIO prior to rendering a determination When the request is approved, the approval will contain a prior authorization number for billing and reference An approved request is not a guarantee that Medicaid will reimburse the services The provider and recipient must be eligible on the date of service, and the service must not have exceeded any applicable service limits 19

20 Recipients Exempt from Prior Authorization Evaluations and Reevaluations Plan of Care Requirements Plan of Care Approval Recipients who are members of a Medicaid Health Maintenance Organization (HMO); and,recipients who are members of a Medicaid Provider Service Network (PSN). Medicaid reimburses one initial evaluation per recipient, per discipline, per year A recipient who has received therapy services within the previous 180 days and whose diagnosis has not changed is not eligible for an initial evaluation and must receive a re-evaluation Medicaid reimburses one re-evaluation per recipient, per discipline, every 150 days, beginning 150 days after the initial evaluation Re-evaluations rendered within 150 days of a previous evaluation are not reimbursable by Medicaid Therapy visits performed on the same day as evaluations are not reimbursable Medicaid reimburses the following Medicaid enrolled providers for evaluations: 1) Licensed physical and occupational therapists 2) Licensed and provisionally licensed speech-language pathologists Home health agencies that employ or contract with licensed physical and occupational therapists and speechlanguage pathologists Reimbursement for writing the initial plan of care is included in the reimbursement for the evaluation Medicaid does not reimburse for evaluations performed by therapy assistants or students. Medicaid does not accept the co-signatures by therapy assistants or students as documentation for authorization of Medicaid services After the therapist or speech-language pathologist performs the initial evaluation of a recipient, and before providing services, the therapist or speech language pathologist must write an initial plan of care for the recipient based on the results of the initial evaluation If any amendments to the plan of care are necessary, those amendments must be made by the therapist and must be reviewed, approved and signed by the primary care provider before service is provided The therapist must review the plan of care every 180 days or prior to the end of the authorization period and make necessary revisions The therapist and the primary care provider, ARNP or PA designee, or designated physician specialist who prescribed the therapy must retain a copy of the plan of care in his or her records for the recipient The plan of care may suffice as a prescription if the signed plan of care indicates that the plan of care is to serve as a prescription and all prescription requirements are met The plan of care must be reviewed, signed and dated by the therapist and by the primary care provider, ARNP or PA designee, or designated physician specialist who prescribed the therapy The prescriber s signature indicates approval of the plan of care The prescriber must review, certify, and sign the renewed plan of care, based on the recipient s re-evaluation, before the end of the authorization period If the plan of care has not been signed and approved before the service is rendered, Medicaid will not reimburse for the service 20

21 Table 5. Use Case: State of Minnesota Prior authorization Authorizations for recipients with third party liability Initial authorization Occupational and Physical Therapy Services Effective July 1, 2013, medical authorization is no longer required for outpatient rehabilitative and therapeutic services; physical therapy, occupational therapy and speech-language pathology. MHCP suspended authorization requirements from July 1, 2011 to July 1, Rehabilitative and therapy services are subject to post-payment review and may result in a particular provider being required to request authorization for certain services Authorization is not a guarantee of payment. An authorization request may be done prospectively or retroactively and requests may also include authorization of both prospective units of anticipated services and retroactive authorization of services already provided There is no requirement to submit authorization prior to delivering service unless the provider is an out-of-state provider Providers must meet any third party payer criteria, including accreditation requirements for the third party insurance or Medicare, in order to assist recipients for whom MCHP is not the primary payer. Providers who do not meet the third party payer s or Medicare s requirements must refer the recipient to a provider who does. MHCP will not reimburse providers who do not meet provider criteria for the primary payer, whether a third party insurer or Medicare Documentation needed for initial authorization include: Physician s (or practitioner of the healing arts) current order/prescription; the date of the order/prescription must not be more than 30 days from the requested start of care Initial evaluation with: o o o o Identified problems Treatment diagnosis and date of onset, including any contraindications to treatment Summary of previous episodes of therapy Current and prior functional status, including baseline evaluation and brief past and current medical history All tests performed and interpretation of results Plan of Care: All POC from the origin of services Speech-language Pathology and Audiology Services Effective July 1, 2013, medical authorization is no longer required for outpatient rehabilitative and therapeutic services; physical therapy, occupational therapy and speech-language pathology. MHCP suspended authorization requirements from July 1, 2011 to July 1, Rehabilitative and therapy services are subject to post-payment review and may result in a particular provider being required to request authorization for certain services Authorization is not a guarantee of payment. An authorization request may be done prospectively or retroactively and requests may also include authorization of both prospective units of anticipated services and retroactive authorization of services already provided There is no requirement to submit authorization prior to delivering service unless the provider is an out-of-state provider Providers must meet any third party payer criteria, including accreditation requirements for the third party insurance or Medicare, in order to assist recipients for whom MCHP is not the primary payer. Providers who do not meet the third party payer s or Medicare s requirements must refer the recipient to a provider who does. MHCP will not reimburse providers who do not meet provider criteria for the primary payer, whether a third party insurer or Medicare Documentation needed for initial authorization include: Physician s (or practitioner of the healing arts) current order/prescription; the date of the order/prescription must not be more than 30 days from the requested start of care Initial evaluation with: o Identified problems o Treatment diagnosis and date of onset, including any contraindications to treatment o Summary of previous episodes of therapy o Current and prior functional status, including baseline evaluation and brief past and current medical history All tests performed and interpretation of results Plan of Care: All POC from the origin of services 21

22 Authorizations for Ongoing Services General Authorization Criteria Occupational and Physical Therapy Services Re-eval, if applicable, including summary of progress POC, every 60 days; send all signed POCs since previous authorization Treatment notes with verification of units provided since last authorization MHCP requires authorization as a condition of MHCP payment if a health service, including a drug, meets one of the following: The health service could be considered, under some circumstances, to be of questionable medical necessity Use of the health service requires monitoring to control the expenditure of MHCP funds A less costly, appropriate alternative health service is available The health service is investigative or experimental The health service is newly developed or modified The health service is of a continuing nature and requires monitoring to prevent its continuation when it ceases to be beneficial The health service is comparable to a service provided in a skilled nursing facility or hospital but is provided in a recipient's home The health service could be considered cosmetic To be covered as a rehabilitative and therapeutic service, occupational therapy and physical therapy must be prescribed by a physician or other licensed practitioner of the healing arts and must require the skills of at least one of the following: A physical therapist An occupational therapist A physical therapist assistant who is working under the supervision of a physical therapist An occupational therapy assistant working under the supervision of an occupational therapist Speech-language Pathology and Audiology Services Re-eval, if applicable, including summary of progress POC, every 60 days; send all signed POCs since previous authorization Treatment notes with verification of units provided since last authorization MHCP requires authorization as a condition of MHCP payment if a health service, including a drug, meets one of the following: The health service could be considered, under some circumstances, to be of questionable medical necessity Use of the health service requires monitoring to control the expenditure of MHCP funds A less costly, appropriate alternative health service is available The health service is investigative or experimental The health service is newly developed or modified The health service is of a continuing nature and requires monitoring to prevent its continuation when it ceases to be beneficial The health service is comparable to a service provided in a skilled nursing facility or hospital but is provided in a recipient's home The health service could be considered cosmetic To be covered as a rehabilitative and therapeutic service, speech-language pathology and audiology services require written referral by a physician or other licensed practitioner of the healing arts, or in the case of a long-term care facility resident on the written order of a physician; and must require the skills of at least one of the following: A speech-language pathologist An audiologist An individual completing the clinical fellowship year required for certification as a speech-language pathologist An individual completing the clinical fellowship year required for certification as an audiologist and working under the supervision of an audiologist Treatment must be specified in a Plan of Care that is reviewed and revised as medically necessary by the recipient's attending physician, or other licensed practitioner of the healing arts, at least once every 90 days The recipient's functional status must be expected by the physician or other licensed practitioner of the healing arts as defined in this section, to progress toward or achieve the objectives in the recipient's plan of care within a 90-day period 22

23 Specialized Maintenance Therapy Documentation Requirements Occupational and Physical Therapy Services Specialized maintenance therapy must be specified in a Plan of Care that meets the requirements of this section, and provided to recipients whose condition cannot be maintained or treated only through Rehabilitative nursing services and Services of other care providers Specialized maintenance therapy must have expected outcomes that are: Functional Realistic Relevant Transferable to the recipient's current or anticipated environment, such as home, school, community, work Consistent with community standards Specialized maintenance therapy must meet at least one of the following characteristics: Prevent deterioration and sustain function Provide interventions, in the case of a chronic or progressive disability, that enable the recipient to live at the recipient's highest level of independence Provide treatment interventions for recipients who are progressing but not at a rate comparable to the expectations of restorative care Providers must document all evaluations and re-evaluations, services provided, recipient s progress, attendance records, and discharge plans. Documentation must be kept in the recipient's records. Documentation must demonstrate that rehabilitative and therapeutic services are: Medically necessary as determined by prevailing community standards or customary practice and usage Appropriate and effective for the recipient s medical needs Timely, considering the nature and present medical condition of the recipient Provided by a provider with appropriate credential The least expensive, appropriate alternative available An effective and appropriate use of MHCP funds Speech-language Pathology and Audiology Services Specialized maintenance therapy must be specified in a Plan of Care that meets the requirements of this section, and provided to recipients whose condition cannot be maintained or treated only through Rehabilitative nursing services and Services of other care providers Specialized maintenance therapy must have expected outcomes that are: Functional Realistic Relevant Transferable to the recipient's current or anticipated environment, such as home, school, community, work Consistent with community standards Specialized maintenance therapy must meet at least one of the following characteristics: Prevent deterioration and sustain function Provide interventions, in the case of a chronic or progressive disability, that enable the recipient to live at the recipient's highest level of independence Provide treatment interventions for recipients who are progressing but not at a rate comparable to the expectations of restorative care Providers must document all evaluations and re-evaluations, services provided, recipient s progress, attendance records, and discharge plans. Documentation must be kept in the recipient's records. Documentation must demonstrate that rehabilitative and therapeutic services are: Medically necessary as determined by prevailing community standards or customary practice and usage Appropriate and effective for the recipient s medical needs Timely, considering the nature and present medical condition of the recipient Provided by a provider with appropriate credential The least expensive, appropriate alternative available An effective and appropriate use of MHCP funds 23

24 Plan of Care Occupational and Physical Therapy Services The Plan of Care must specifically state: The recipient s medical and treatment diagnosis and any contraindications to treatment A description of the recipient s functional status/limitations The objectives of the rehabilitative and therapeutic service A description of the recipient s progress toward the objectives The treatment plan including interventions to be provided Outcomes of the rehabilitative and therapeutic service, which include treatment goals that are: 1. Functional 2. Measurable 3. Time-specific Speech-language Pathology and Audiology Services The Plan of Care must specifically state: The recipient s medical and treatment diagnosis and any contraindications to treatment A description of the recipient s functional status/limitations The objectives of the rehabilitative and therapeutic service A description of the recipient s progress toward the objectives The treatment plan including interventions to be provided Outcomes of the rehabilitative and therapeutic service, which include treatment goals that are: 1. Functional 2. Measurable 3. Time-specific Record of Service Projected frequency and duration of treatment Plans for discharge from treatment A description of the recipient's progress toward the outcomes for subsequent POC: 1. Home program teaching 2. Collaboration with other professionals and services 3. Progress toward goals with updating as indicated 4. Modifications to the initial plan of care 5. Plans for continuing care The Plan of Care must be signed by the prescribing or ordering physician, or licensed practitioner of the healing arts. The recipient s record of service must show the: 1. Date, type, length, and scope of each service 2. Name(s) and title(s) of the person(s) providing each service 3. Name(s) and title(s) of the person(s) supervising or directing the care 4. Documented evidence of progress at least every 30 days, by the therapist providing or supervising the services that the therapy's nature, scope, duration and intensity are appropriate to the medical condition of the recipient Projected frequency and duration of treatment Plans for discharge from treatment A description of the recipient's progress toward the outcomes for subsequent POC: 1.Home program teaching 2.Collaboration with other professionals and services 3.Progress toward goals with updating as indicated 4.Modifications to the initial plan of care 5. Plans for continuing care The Plan of Care must be signed by the prescribing or ordering physician, or licensed practitioner of the healing arts. The recipient s record of service must show the: 1. Date, type, length, and scope of each service 2. Name(s) and title(s) of the person(s) providing each service 3. Name(s) and title(s) of the person(s) supervising or directing the care 4. Documented evidence of progress at least every 30 days, by the therapist providing or supervising the services that the therapy's nature, scope, duration and intensity are appropriate to the medical condition of the recipient 24

25 Authorization Termination Occupational and Physical Therapy Services MHCP will terminate reimbursement when services are discontinued by the referral source or when the recipient has: Met the goals of the POC Developed behavioral or vocational problems that are not being addressed and that interfere with return to work or the ability to participate in therapy (particularly pediatric cases) Failed to comply with the requirements of participation Developed medical contraindications Reached a plateau prior to meeting goals Speech-language Pathology and Audiology Services MHCP will terminate reimbursement when services are discontinued by the referral source or when the recipient has: Met the goals of the POC Developed behavioral or vocational problems that are not being addressed and that interfere with return to work or the ability to participate in therapy (particularly pediatric cases) Failed to comply with the requirements of participation Developed medical contraindications Reached a plateau prior to meeting goals 25

26 Table 6 Use Case: State of Arizona Prior authorization Arizona (OT, ST) Prior Authorization (PA) is required for covered occupational therapy, speech therapy and audiology services. AHCCCS covers occupational, physical and speech therapy services that are ordered by a Primary Care Provider (PCP), or attending physician for FFS members, approved by AHCCCS Division of Fee-for-Service Management (DFSM) or the Contractor, and provided by or under the direct supervision of a licensed therapist The scope, duration and frequency of each therapeutic modality must be ordered by the PCP/attending physician as part of the rehabilitation plan. In order for the occupational, physical, and speech therapy services to be covered, the member must have the potential for improvement due to rehabilitation AHCCCS covers medically necessary speech therapy services provided to all members who are receiving inpatient care at a hospital (or a nursing facility) when services are ordered by the member's PCP or attending physician for FFS members. Inpatient occupational therapy consists of evaluation and therapy. Outpatient OT and ST services are covered only for members receiving Early and Periodic Screening, Diagnosis and Treatment (EPSDT) services, KidsCare members andaltcs members. OT services must be provided by a qualified occupational therapist licensed by the Arizona Board of Occupational Therapy Examiners or a certified OT assistant (under the supervision of the occupational therapist according to 4 A.A.C. 43, Article 4) licensed by the Arizona Board of Occupational Therapy Examiners. ST may be provided by the following professionals: A qualified Speech-Language Pathologist (SLP) A speech-language pathologist who has a temporary license from ADHS A qualified SPL assistant (under the supervision of the speechlanguage pathologist and according to A.R.S and R et seq) licensed by the Arizona Department of Health Services Arizona (PT) No Prior Authorization (PA) is required for covered physical therapy services AHCCCS covers occupational, physical and speech therapy services that are ordered by a Primary Care Provider (PCP), or attending physician for FFS members, approved by AHCCCS Division of Feefor-Service Management (DFSM) or the Contractor, and provided by or under the direct supervision of a licensed therapist The scope, duration and frequency of each therapeutic modality must be ordered by the PCP/attending physician as part of the rehabilitation plan. In order for the occupational, physical, and speech therapy services to be covered, the member must have the potential for improvement due to rehabilitation Inpatient PT services are covered for all members who are receiving inpatient care at a hospital (or a nursing facility). Outpatient PT services are covered for EPSDT and KidsCare memberswhen medically necessary PT services must be rendered by a qualified physical therapist licensed by the Arizona Physical Therapy Board of Examiners or a Physical Therapy Assistant. (under the supervision of the PT, according to 4 A.A.C. 24, Article 3) certified by the Arizona Physical Therapy Board of Examiners. Physical therapists who provide services to AHCCCS members outside the State of Arizona must meet the applicable State and/or Federal requirements. 26

27 Table 7 Use Case: State of California California (OT) California (PT) California (ST) Prior authorization A current written order by a physician, dentist or podiatrist based on medical necessity A current written order by a physician, dentist or podiatrist based on medical necessity A current written order by a physician or dentist based on medical necessity Physical therapy services include physical therapy evaluation, treatment planning, treatment, instruction, consultations and application of topical medication Service Authorization Requests (SARs) will be accepted only from California Children s Services (CCS)-approved therapists. Providers should verify the recipient s Medi-Cal eligibility for the month of service Service Authorization Requests (SARs) will be accepted only from California Children s Services (CCS)-approved therapists. Providers should verify the recipient s Medi- Cal eligibility for the month of service The requested therapy must be for treatment of the client s California Children s Services Prior authorization approval by the Medi-Cal field office is limited to services that: (CCS)-eligible medical condition 1) Are necessary to prevent or substantially reduce an anticipated hospital stay 2) Continue a plan of treatment initiated in the hospital 3) Are recognized as a logical component of post hospital care Services billed by a certified rehabilitation center or rendered in a Nursing Facility (NF) Level A or B also require prior authorization 27

28 The following must be present on the prescription form: 1) Signature of the prescribing practitioner 2) Name, address and telephone number of the prescribing practitioner 3) Date of prescription 4) Medical condition necessitating the service(s) (diagnosis) 5) Specific services (for example, evaluation, treatments, modalities) prescribed 6) Frequency of services 7) Duration of medical necessity for services Specific dates and length of treatment should be identified if possible. Duration of therapy should be set by the prescriber; however, prescriptions are limited to six months 8) Anticipated medical outcome as a result of the therapy (therapeutic goals) 9) Date of progress review (when applicable) 10) Age 11) Functional limitations 12) Mental status and ability to comprehend 13) Related medical conditions 14) Delay in achievement of developmental milestones in a child or impairment of normal achievement in an adult The following must be present on the prescription form: 1) Signature of the prescribing practitioner 2) Name, address and telephone number of the prescribing practitioner 3) Date of prescription 4) Medical condition necessitating the service(s) (diagnosis) 5) Specific services (for example, evaluation, treatments, modalities) prescribed 6) Frequency of services 7) Duration of medical necessity for services Specific dates and length of treatment should be identified if possible. Duration of therapy should be set by the prescriber; however, prescriptions are limited to six months 8) Anticipated medical outcome as a result of the therapy (therapeutic goals) 9) Date of progress review (when applicable) 10) Age 11) Functional limitations 12) Mental status and ability to comprehend 13) Related medical conditions 14) Delay in achievement of developmental milestones in a child or impairment of normal achievement in an adult The following information must be included on the written referral: 1) Signature of the referring practitioner 2) Name, address and telephone number of the referring practitioner 3) Date of the referral 4) Medical condition necessitating the service(s) (diagnosis) 5) Supplemental summary of the medical condition or functional limitations must be attached or included in the referral 6) Specific services (for example, evaluation, treatments, modalities) requested 7) Frequency of services 8) Duration of medical necessity for services specific dates and length of treatment should be identified if possible. Duration of therapy should be set by the referring practitioner; however, referrals are limited to six months. 9) Anticipated medical outcome as a result of the therapy (therapeutic goals) 10) Date of progress review (when applicable) 11) Age 12) Developmental status and rate of achievement of developmental milestones 13) Mental status and ability to comprehend 14) Related medical conditions 28

29 Home Health Agencies SAR Requirements Authorization periods When appropriate, CCS-approved physical and occupational therapists may use Service Code Grouping (SCG) 11 to facilitate authorization of multiple and/or unique therapy services Each SAR submitted to CCS is reviewed for medical necessity. If the SAR is approved, a copy of the authorization letter will be sent to the provider and the family via fax or mail The authorized physician treating the CCS client as an inpatient may proactively request authorization for anticipated post-discharge HHA services at the same time as the inpatient request. The physician may request HHA services using a discharge planning SAR. The CCS program may authorize an initial home assessment and up to three additional visits if requested by an attending physician responsible for care during an inpatient hospitalization at the time of the CCS client s discharge from the inpatient stay. For additional medically necessary HHA visits, a SAR and the unsigned plan of treatment must be submitted for authorization HHA services not requested on a Discharge Planning SAR, nor requested prior to hospitalization, must be submitted within three working days of the date the services began. Any services provided during this three-day grace period must be included on the SAR. CCS authorization is contingent on a client s CCS program eligibility and the services must be medically necessary Services may be authorized for varying lengths of time during the CCS client s eligibility period, however, prescriptions are limited to six months A specified duration and frequency of therapy must be indicated in weeks or months. (The purpose of therapy should be the return of adequate function, not necessarily restoration of full capacity.) Speech therapy services rendered in an outpatient setting are limited to a maximum of two services per month subject to the availability of Medi-Service reservations. Initial and six-month evaluations do not require prior authorization. 29

30 Treatment Authorization Requests (TARs) for occupational therapy for Medi-Cal-only recipients must be submitted to the San Francisco Medi-Cal Field Office Treatment Authorization Requests (TARs) for physical therapy for Medi-Cal-only recipients must be submitted to the San Francisco Medi-Cal Field Office Treatment Authorization Requests (TARs) for speech therapy for Medi-Cal-only recipients must be submitted to the San Francisco Medi-Cal Field Office. Evaluation and reevaluation Initial and six-month evaluations billed under HCPCS code X4108 (occupational therapy) do not require prior authorization, but do require that the recipient be eligible for Medi-Cal the month the service is performed, on the written order of the attending physician, in a certified rehabilitation center, Nursing Facility (NF) Level A, B or a subacute pediatric facility All physical therapy services (including initial and six-month evaluations) require prior authorization The statement Initial evaluation visit or Six-month re-evaluation visit must be entered in the Remarks area/reserved For Local Use field (Box 19) of the claim when physical therapy services are billed Initial and six-month evaluations billed with HCPCS code X4308 (speech) require only that the recipient be eligible for the Medi-Cal month during which the service is performed in a certified rehabilitation center, NF-A or NF-B, or pediatric subacute care facility on the written order of the attending physician 30

31 Table 8 Use case: Texas Private Insurance Texas Private Insurance (BlueCross BlueShield) OT, PT, & ST Clinical indications Continuation of Services Criteria Prior authorization The indication for authorization for acute care therapy services include: The therapy is aimed at improving, adapting or restoring functions which have been impaired or permanently lost as a result of illness, injury, loss of a body part, or congenital abnormality; and The therapy is for conditions that require the unique knowledge, skills, and judgment of a rehabilitative therapist for education and training that is part of an active skilled plan of treatment; and There is an expectation that the therapy will result in a practical improvement in the level of functioning within a reasonable and predictable period of time; and An individual's function could not reasonably be expected to improve as the individual gradually resumes normal activities; and An individual's expected restoration potential would be significant in relation to the extent and duration of the rehabilitative therapy service required to achieve such potential; and The therapy documentation objectively verifies progressive functional improvement over specific time frames; and The services are delivered by a qualified provider of rehabilitative therapy services; and The services require the judgment, knowledge, and skills of a qualified provider of rehabilitative therapy services due to the complexity and sophistication of the therapy and the medical condition of the individual. In order to reflect that continued services are medically necessary, intermittent progress reports must be submitted and they should demonstrate that the individual is making functional progress. Progress reports for Speech-Language Pathology SLP should meet the American Speech-Language-Hearing Association (ASHA) standards. All progress reports should include at a minimum: Start of care date; Time period covered by the report; Medical and therapy treatment diagnoses; Statement of the individual's functional level at the beginning of the progress report period; Statement of the individual's current status as compared to evaluation baseline data and the prior progress report, including objective measures of the individual's function that relate to the treatment goals; Changes in prognosis and why; Changes in plan of care and why; Changes in goals and why; Consultations with other professionals or coordination of services, if applicable; Signature and title of qualified professional responsible for the therapy services. Initial evaluation for Therapy Services does not require prior authorization. Therapy visits following the initial evaluation and continuation of services must be authorized prior to services being rendered. Re-evaluations of therapy must be authorized prior to services being rendered. 31

32 Texas Private Insurance (BlueCross BlueShield) OT, PT, & ST Evaluation Re-evaluation A comprehensive evaluation is essential to: 1) determine if acute care therapeutic services are medically necessary; 2) gather baseline data; 3) establish a treatment plan; and 4) develop goals based on the data. An evaluation is needed before implementing any treatment. The evaluation must include: Prior functional level, if acquired condition; Specific standardized and non-standardized tests, assessments, and tools; Analytic interpretation and synthesis of all data, including a summary of the baseline findings in written report(s); Objective, measurable, and functional descriptions of an individual's deficits using comparable and consistent methods; Summary of clinical reasoning and consideration of contextual factors with recommendations; Plan of care with specific treatment techniques or activities to be used in treatment sessions that should be updated as the individual's condition changes; Frequency and duration of treatment plan; Functional, measurable, and time-framed long-term and short-term goals based on appropriate and relevant evaluation data; Rehabilitation prognosis; Discharge plan that is initiated at the start of treatment. A reevaluation is indicated when there are new clinical findings, a rapid change in the individual's status, or failure to respond to therapy interventions. There are several routine reassessments that are not considered reevaluations. These include ongoing reassessments that are part of each skilled treatment session, progress reports, and discharge summaries. Reevaluation is a more comprehensive assessment that includes all the components of the initial evaluation, such as: Documentation Data collection with objective measurements taken based on appropriate and relevant assessment tests and tools using comparable and consistent methods; Making a judgment as to whether skilled care is still warranted; Organizing the composite of current problem areas and deciding a priority/focus of treatment; Identifying the appropriate intervention(s) for new or ongoing goal achievement; Modification of intervention(s); Revision in plan of care if needed; Correlation to meaningful change in function; and Deciphering effectiveness of intervention(s). Documentation of treatment sessions must include: Date of treatment; Specific treatment(s) provided that match the procedure codes billed; Total treatment time; The individual's response to treatment; Skilled ongoing reassessment of the individual's progress toward the goals; Any progress toward the goals in objective, measurable terms using consistent and comparable methods; Any problems or changes to the plan of care; Name and credentials of the treating clinician. 32

33 Texas Private Insurance (BlueCross BlueShield) OT, PT, & ST Therapist qualification Allowed number of therapy hours per day Duration and frequency of therapy When individuals receive physical, occupational, or speech therapy, the therapists should provide different treatments that reflect each therapy discipline's unique perspective on the individual's impairments and functional deficits and not duplicate the same treatment. They must also have separate evaluations, treatment plans, and goals. The services are delivered by a qualified provider of rehabilitative therapy services who is certified, licensed, or otherwise regulated by the State or Federal governments. Rehabilitative therapy assistants may provide services under the direction and supervision of an occupational therapist. Benefits for services provided by these practitioners are dependent upon the member's contract language OT or PT therapy session can vary from fifteen minutes to four hours per day; however, treatment sessions lasting more than one hour per day are rare in outpatient settings. A speech language pathology treatment session is usually defined as thirty minutes to one hour of speech therapy on any given day, depending on the age and diagnosis and ability to sustain attention for therapy. Treatment sessions for more than one hour per day may be medically appropriate for inpatient acute settings, day treatment programs, and select outpatient situations, but must be supported in the treatment plan and based on an individual's medical condition. Benefits are limited to 75 visits (standard option) or 50 visits (basic option) per person, per calendar year for physical, occupational, or speech therapy, or a combination of all three 33

34 C. SUMMARY AND RECOMMENDATIONS In summary, prior authorization process for occupational, physical, and speech therapy in the State of Texas is similar to BlueCross BlueShield of Texas and the other states in our sample with the exception of the State of Minnesota where prior authorizations for therapy has been discontinued and the State of Arizona where physical therapy does not require prior authorization. The utilization review, prescription of services requirements, and documentation requirements for all the states and the private insurance appear to have the same fundamental requirements. However, there were slight differences in the authorization periods and the allowed number of therapy hours per day between Texas and other states. While Texas allows a maximum of two hours (eight units) per day per therapy type for OT and PT and one hours (four units) per day for ST, Florida allows four units of combined therapy service per day with an additional limit of 14 units of service per week for each therapy type. BlueCross and BlueShield of Texas and the State of California do not set daily limits on the number of allowable hours of therapy as this would depend on the medical need of the individual patient and the plan of care. Upon inspection of both (1) the comparison of state processes and (2) the estimation of a significant (p<0.05) Medicaid Managed Care effect, to be discussed in more detail in research question #3, we recommend the further development of utilization review processes within Texas Medicaid and the Medicaid managed care organizations. The managed care organizations should be able to leverage expertise and processes from adjacent components of their businesses to adopt and co-develop utilization review approaches to ensure appropriate, clinically-substantial and patient-focused designs. This is especially true when determining the most appropriate service modality to apply for individual beneficiaries. Medicaid managed care organizations have both the expertise and aligned incentives with the state to provide these services. The findings from Texas commercial insurance suggest that Managed Care programs incorporate a more flexible authorization process for services that is based on the individual case, diagnoses, severity, response to therapy and other individual factors, when making authorization and utilization review decisions. We believe this is a more pragmatic approach within clinical guidelines for both the diagnosis and the chosen therapy alternative. D. LIMITATIONS The evidence and analysis presented herein regarding Authorization and Utilization Review processes is based on the policies and procedures of State Medicaid programs. It is unclear how these policies are operationalized within Managed Care Medicaid programs. There were no explicit discussions of how fee for service policies regarding authorization and utilization were adopted or incorporated into Managed Care practices. There are explicit covered services and volume allowances (e.g. number of units of service authorized) for acute therapy programs. This is a limitation of the evidence and conclusions presented in this chapter. The findings are best interpreted as baseline for fee for service Medicaid services in the respective states, and it is likely that these policies are operationalized differently when incorporated into Medicaid Managed Care programs. 34

35 CHAPTER 3: RESEARCH QUESTION #2 A. RATE COMPARISON Research Question 2: How do payment rates for pediatric acute care therapy compare among payer types? (For Texas, use rates as of September 1, 2013.) Compare rates for selected pediatric acute care therapy procedure codes billed per treatment by payer type, and service delivery model. Compare rates for selected pediatric acute care therapy procedure codes billed per specific amounts of time (i.e., per 15 minutes). Compare costs of pediatric acute care therapeutic services by therapy type, location (STAR service delivery areas in Texas, statewide for comparison states), and service delivery model. (Costs measured in terms of therapist salary or other proxy measure.) Compare differences between costs and reimbursement rates of pediatric acute care therapeutic services by therapy type, location, payer type, and service delivery model. (Costs measured in terms of therapist salary or other proxy measure.) These analyses will allow for a "head-to-head" comparison of rates among payer types and to determine any under- or over-payments relative to the cost of providing the service. 1.0 Methods Data There are three sources of Medicaid data, (1) state programs, which is the source of the Texas Medicaid data used in this analysis, Centers for Medicare and Medicaid via the ResDAC data dissemination service, and the 11 state Medicaid sample, used in this study, licensed from Truven. Given the timeline for this study, ResDAC was not a viable alternative. The ResDAC approval process requires 6-9 months of proposal development and approvals, before data will be released, and there is no accelerated process. Truven offers a sample of Medicaid claims from 11 state programs. This data is directly collected from participating state program. Texas is not a participating program. In addition, licensing stipulates that Truven not disclose state-level specifics in the Medicaid sample. This sample has been used as credible resource for National Medicaid analyses and comparisons between state-specific programs and Medicaid overall. Commercial Claims for Texas and nationally, identified by state, is available through Truven and was licensed. Texas Commercial claims are coded for county within Texas, and thus were able to be assigned to the HHSC region. This enabled a detailed comparison of Texas Medicaid and Commercial Claims data at the region level, and help to inform the rate and utilization analyses within Texas. This is a substantial advantage, as other sources of commercial claims restrict geographic identification to the state or metropolitan area, which would not have made HHSC region assignment possible. These data afford the comparison of Texas Medicaid, National Medicaid, Texas Commercial, and National Commercial claims for Acute Therapy programs, as defined by the three therapy types and procedure codes, defined for this study Rate structure and utilization patterns (research questions 2-4) require the analysis of Texas Medicaid claims data (Texas Medicaid data), and the comparison of these analyses with those of equivalent claims for other state Medicaid programs, and commercial claims, both in Texas, and from comparison states. HHSC furnished Texas Medicaid claims for the requisite state fiscal years and services noted above in the introduction. To provide the comparison data, for both Medicaid and commercial claims, corresponding Truven data sets were licensed for this analysis. 35

36 Data transformations were required to generate key study variables in the Truven data set to match those provided in the Texas Medicaid data. These transformations included conversion of calendar to state fiscal year, grouping of point of service into four main categories, and identification of service type (e.g. PT, OT and ST). Texas Medicaid data was provided at the claim line detail level of analysis. Truven data is provided at the claim level, simply the summary of all detail claim lines for a given claim. Texas Medicaid data was summarized first to the claim level to align with the Truven comparison data. No data was lost in the aggregation of claim lines to claims, as a claim is simply the sum of all claim lines for a given set of services delivered and billed. Further, since these claim lines were for outpatient acute therapy services, there we no other service categories included on the Texas Medicaid claim lines. Now at the claim level across both, an analytic file was created for the Texas Medicaid data, and each of three Truven comparison data sets. These analytic files summarized utilization (payments and units of service) at the per-beneficiary, per year, per therapy type, per point of service. This afforded accurate comparison of utilization patterns at the sample unit of analysis across all files. Three comparison data sets were constructed from the Truven licensed claims data; (1) Truven Medicaid, a sample of Medicaid claims from 11 states other than Texas which contribute annually, (2) Truven Texas commercial claims, a sample of large employer-sponsored commercial claims in Texas, and (3) Truven Commercial, containing a national sample, not including Texas, of commercial claims from larger employersponsored plans. These comparisons are arranged in descending order of similarity, insofar as we expect to see increasing differences in payments, and units of utilization and rate structure as we move from Medicaid to Medicaid, to Medicaid to Commercial claims comparisons. Analysis Plan To identify differences between the existing rate structure and payment rates by payer, we created weighted mean payment rates for each procedure code to use as a reference for comparison. To accomplish this, we ordered the analytic table of Medicaid payment rates by procedure code, and reviewed each procedure code for type of service and service provider to identify the place of service as corresponds to our service delivery models: clinic/office (of independent therapists), CORF/ORF, home health agency, or other provider. Other providers only existed in the Texas Medicaid claims data, and are likely services performed in physicians offices by therapists, billed through the physician provider identifier. If more than one rate existed for a place of service, a mean rate for the place of service was calculated. To create weighted mean rates for the procedure codes, we used the distribution of claims by place of service for each type of service as a weighting factor. For example, to calculate the weighted mean rate for any procedure code for speech therapy, we multiplied the rate times the percentage of the Texas Medicaid population that received speech therapy services in the corresponding place of service. We then added the four weighted rates together for the speech therapy weighted rate. There were two exceptions where a procedure code only identified one or two of the places of service. In the case of two places of service identified, the weighting calculation was normalized to the two settings. The second exception occurred where procedure codes identified one place of service. Since most procedure codes did not include the other place of service, we used one minus the other percentage to be consistent with other weighted estimates of payment rates. To identify payment rates by each payer for comparison, we aggregated payment per unit of service in two ways. In the first method, we calculated the cost per unit of service at the claim line level that represents one encounter for a procedure. Where units of service were zero, and paid amount was not zero, we assigned one unit of utilization. To calculate the mean payment rate for each of the identified procedure codes, we used 36

37 generalized linear regression models for each payer and for each type of service. We adjusted for place of service and payment structure (FFS or MCO). In the second method for estimating payment rate, we aggregated payments and units of service to create up to 24 levels for each procedure code accounting for therapy type, service delivery model, and payment structure. We then calculated payment per unit of service and used generalized linear regression models to estimate the mean adjusted rate per procedure code adjusting for place of service and payment structure. When initially examining the data, we found claim lines with payments and procedure code, but zero units of service. Since all these claim lines were associated with managed care, we assigned a value of one unit of service in the first method to avoid division by zero, and left the number of units of service as zero in the second method. When compared to FFS claims for the same procedure codes, we confirmed values of one unit were appropriate. We elected to treat units of service in this manner to demonstrate the anomalies caused by current billing practices. These analyses will allow for a "head-to-head" comparison of rates among payer types and to determine any under- or over-payments relative to the cost of providing the service. 2.0 Results Rate Comparison per treatment Research Question #2, part a Compare rates for selected pediatric acute care therapy procedure codes billed per treatment by payer type, and service delivery model. When we compared encounter (per unit per treatment) level rates to the weighted mean rate for each procedure code, we found most payer rates to be significantly (p<0.05) different from the weighted mean payment rate including rates calculated from the Texas Medicaid claims data. We found the majority of actual payment rates to be less than the weighted mean rate regardless of payer. For claims identified as physical therapy related, Texas Medicaid claims rates approximately $ greater than the corresponding weighted Medicaid rate included PT re-evaluation (97002), OT re-evaluation (97004), ultraviolet therapy (97028), and speech therapy re-evaluation (S9152) (Table 9). Aquatic therapy (97113) exhibited a notably higher rate for all payer types compared to the weighted mean rate, while self-care management training (97535) and physical medicine procedure (97799) rates were much higher for commercial payers. For occupational therapy, only Texas Medicaid demonstrated rates above the weighted mean rate with occupational therapy re-evaluation (97004) and speech therapy re-evaluation (S9152) demonstrating rates greater than $50 more per unit of service (Table 10). For claims identified as speech therapy related, none of the increases in rates were greater than $50, regardless of payer (Table 11). 5 $50 was selected, because for most of the CPT s this represented more than 2 SDs from the associated mean value. 37

38 CPT Table 9. Rate comparisons for physical therapy services by procedure code, per unit per treatment Description Weighted for Physical Therapy Medicaid Rate Actual Medicaid Rate Truven Medicaid Rate TX Commercial Rate Commercial Rate N = 4,709,168 N = 4,114,131 N = 2,653,411 N = 31,034,272 mean se mean se mean se mean se SPEECH/HEARING EVALUATION SPEECH/HEARING THERAPY SPEECH/HEARING THERAPY EVALUATE SWALLOWING FUNCTION PT EVALUATION PT RE-EVALUATION OT RE-EVALUATION MECHANICAL TRACTION THERAPY ELECTRIC STIMULATION THERAPY VASOPNEUMATIC DEVICE THERAPY PARAFFIN BATH THERAPY WHIRLPOOL THERAPY DIATHERMY EG, MICROWAVE INFRARED THERAPY ULTRAVIOLET THERAPY ELECTRICAL STIMULATION ELECTRIC CURRENT THERAPY CONTRAST BATH THERAPY ULTRASOUND THERAPY HYDROTHERAPY PHYSICAL THERAPY TREATMENT THERAPEUTIC EXERCISES NEUROMUSCULAR REEDUCATION AQUATIC THERAPY/EXERCISES GAIT TRAINING THERAPY MASSAGE THERAPY PHYSICAL MEDICINE PROCEDURE MANUAL THERAPY GROUP THERAPEUTIC PROCEDURES THERAPEUTIC ACTIVITIES SELF CARE MNGMENT TRAINING COMMUNITY/WORK REINTEGRATION WHEELCHAIR MNGMENT TRAINING PHYSICAL PERFORMANCE TEST ORTHOTIC MGMT AND TRAINING PROSTHETIC TRAINING C/O FOR ORTHOTIC/PROSTH USE PHYSICAL MEDICINE PROCEDURE EVALUATION OF AUDITORY REHABILITATION STATUS AUDITORY REHABILITATION PRE- LINGUAL HEARING LOSS S9152 SPEECH THERAPY, RE-EVALUATION Means in bold are significant at a p<.05 level. Sample sizes in bold reflect model significance at a p<.0001 level. Sources: Texas Medicaid Claims data, ; Truven licensed multi-state Medicaid and Commercial claims data, Medicaid rates provided by HHSC as of July,

39 CPT Table 10. Rate comparisons for occupational therapy services by procedure code, per unit per treatment Description Weighted for Occupational Therapy Medicaid Rate Truven Medicaid Rate TX Commercial Rate Actual Medicaid Rate Commercial Rate n=5,148,312 n=70,513 n=28,302 n=200,090 Mean SE Mean SE Mean SE Mean SE SPEECH/HEARING EVALUATION SPEECH/HEARING THERAPY EVALUATE SWALLOWING FUNCTION OT EVALUATION OT RE-EVALUATION ELECTRIC STIMULATION THERAPY VASOPNEUMATIC DEVICE THERAPY PARAFFIN BATH THERAPY WHIRLPOOL THERAPY INFRARED THERAPY ELECTRICAL STIMULATION ELECTRIC CURRENT THERAPY ULTRASOUND THERAPY HYDROTHERAPY PHYSICAL THERAPY TREATMENT THERAPEUTIC EXERCISES NEUROMUSCULAR REEDUCATION AQUATIC THERAPY/EXERCISES GAIT TRAINING THERAPY MASSAGE THERAPY PHYSICAL MEDICINE PROCEDURE MANUAL THERAPY GROUP THERAPEUTIC PROCEDURES THERAPEUTIC ACTIVITIES SELF CARE MNGMENT TRAINING COMMUNITY/WORK REINTEGRATION WHEELCHAIR MNGMENT TRAINING PHYSICAL PERFORMANCE TEST ORTHOTIC MGMT AND TRAINING PROSTHETIC TRAINING C/O FOR ORTHOTIC/PROSTH USE PHYSICAL MEDICINE PROCEDURE PHYSICAL OR MANIPULATIVE THERAPY PERFORMED FOR MAINTENANCE RATHER THAN S8990 RESTORATION S9152 SPEECH THERAPY, RE-EVALUATION Means in bold are significant at a p<.05 level. Sample sizes in bold reflect model significance at a p<.0001 level. Sources: Texas Medicaid Claims data, ; Truven licensed multi-state Medicaid and Commercial claims data, Medicaid rates provided by HHSC as of July,

40 CPT Table 11. Rate comparisons for speech therapy services by procedure code, per unit per treatment Description Weighted for Speech Therapy Medicaid Rate Actual Medicaid Rate 40 Truven Medicaid Rate TX Commercial Rate Commercial Rate n=10,941,103 n=4,389,332 n=696,718 n=4,654,132 Mean SE Mean SE Mean SE Mean SE SPEECH/HEARING EVALUATION SPEECH/HEARING THERAPY SPEECH/HEARING THERAPY EVALUATE SWALLOWING FUNCTION ELECTRIC STIMULATION THERAPY PARAFFIN BATH THERAPY ELECTRICAL STIMULATION THERAPEUTIC EXERCISES NEUROMUSCULAR REEDUCATION GAIT TRAINING THERAPY GROUP THERAPEUTIC PROCEDURES THERAPEUTIC ACTIVITIES SELF CARE MNGMENT TRAINING EVALUATION OF AUDITORY REHABILITATION STATUS EVALUATION OF AUDITORY REHABILITATION STATUS SPEECH/HEARING THERAPY SPEECH/HEARING THERAPY S9152 SPEECH THERAPY, RE-EVALUATION Means in bold are significant at a p<.05 level. Sample sizes in bold reflect model significance at a p<.0001 level. Sources: Texas Medicaid Claims data, ; Truven licensed multi-state Medicaid and Commercial claims data, Medicaid rates provided by HHSC as of July, There were also payer rates at least $50 less than the weighted Medicaid rate. For physical therapy, all other payer groups demonstrated rates, between $60 to $85, less, per unit of service for PT re-evaluation (97002). Texas Medicaid payment rates for physical therapy treatment (97039) and physical medicine procedure (97799) paid $50 less per unit of service than the corresponding weighted mean rate (Table 8). Medicaid in other states demonstrated payment rates more than $50 less than the weighted mean rate for PT evaluation (97001), mechanical traction therapy (97012), vasopneumatic device therapy (97016), paraffin bath therapy (97018), diathermy e.g., microwave (97024), infrared therapy (97026), contrast bath therapy (97034), and physical medicine procedure (97799) (Table 9). Commercial payers in Texas also demonstrated payments rates of more than $50 less than the weighted mean rate for paraffin bath therapy (97018), physical therapy treatment (97039), and prosthetic training (97761). For occupational therapy claims, we found an extremely limited number of procedure codes reported in the multi-state sample of Medicaid and commercial payer claims (Table 10). For the procedure codes included, OT evaluation (97003) and OT re-evaluation (97004) demonstrated lower payment rates for other states Medicaid and commercial payers in Texas and nationally. The largest difference between weighted mean payment rate and actual payment rate was for evaluate swallowing function (92610), where Texas Medicaid paid approximately $145 less than the weighted mean rate for a unit of service. When encounter rates were examined for speech therapy claims, only speech/hearing evaluation (92506) and speech therapy, re-evaluation (S9152) demonstrated reduced rates by $50 or more for other Medicaid payers and national commercial payers respectively (Table 11). For the most part aggregated (per unit per procedure) rate comparisons generated similar differences. However, we did observe one very notable anomaly we believe to be caused by managed care payments with zero units of service included in the claim line data. For physical therapy claims involving prosthetic training (97761), from Texas commercial claims we estimated a claim rate equivalent to $1,390 per unit of service (Tables A1-A3, available in the appendix). This is drastically different than the encounter level rate of $12 per unit of service (Table 9). While most of the encounter and aggregated rate comparisons are similar in direction and magnitude,

41 the evaluation is limited by the reporting and billing practices with most of the differences appearing in the commercial claims data. Rate comparison per Procedure Research Question #2, part b Compare rates for selected pediatric acute care therapy procedure codes billed per specific amounts of time Table12. Cost per beneficiary per year for physical therapy services by Health Services Region and service delivery model HHSC Clinic CORF/ORF HHA Independent HH Other Region Mean SE Mean SE Mean SE Mean SE Mean SE 1 $2,254 $84 -$147 $63 $1,910 $341 $1,018 $56 $853 $200 2 $1,114 $132 $33 $65 $1,818 $563 $835 $87 $555 $233 3 $2,054 $56 $352 $35 $2,940 $63 $2,455 $23 $2,296 $76 4 $1,363 $96 $265 $54 $3,369 $240 $2,139 $53 $2,732 $127 5 $1,440 $86 -$387 $88 $1,847 $445 $1,095 $87 $1,624 $263 6 $2,363 $38 $538 $33 $2,897 $84 $2,765 $25 $2,578 $99 7 $1,693 $39 -$199 $48 $2,477 $173 $1,979 $32 $2,438 $101 8 $1,712 $46 $341 $48 $2,874 $99 $2,677 $29 $3,094 $85 9 $991 $99 $16 $62 $4,857 $591 $763 $80 $1,165 $ $2,219 $50 $1,083 $81 $3,001 $141 $1,827 $52 $1,600 $ $1,972 $23 $2,644 $22 $2,301 $172 $2,315 $38 $2,558 $83 n = 220,930 NOTE: All costs are adjusted for age, payment structure, and fiscal year. Table 13. Cost per beneficiary per year for speech therapy services by Health Services Region and service delivery model Clinic CORF/ORF HHA Independent HH Other HHSC Mean SE Mean SE Mean SE Mean SE Mean SE Region 1 $2,644 $73 $1,050 $98 $2,564 $511 $1,283 $54 $1,654 $135 2 $1,437 $125 $863 $76 $2,074 $515 $1,156 $87 $1,256 $172 3 $2,752 $43 $1,874 $42 $4,358 $53 $3,998 $18 $2,809 $36 4 $1,576 $86 $1,526 $64 $3,802 $236 $2,799 $52 $3,243 $95 5 $2,246 $78 $2,564 $93 $2,448 $562 $1,464 $80 $1,791 $203 6 $4,018 $26 $3,022 $41 $3,801 $90 $3,540 $24 $3,472 $54 7 $2,447 $34 $785 $70 $3,152 $154 $2,874 $31 $3,473 $63 8 $2,581 $47 $2,234 $71 $4,506 $87 $4,028 $23 $4,429 $50 9 $1,453 $110 $682 $68 $3,921 $742 $1,044 $85 $1,547 $ $3,144 $49 $3,143 $77 $4,430 $168 $1,990 $44 $1,894 $ $3,931 $19 $4,173 $18 $3,752 $142 $2,882 $25 $2,946 $53 n = 418,060 NOTE: All costs are adjusted for age, payment structure, and fiscal year. 41

42 Table 14. Cost per beneficiary per year for occupational therapy services by Health Services Region and service delivery model HHSC Region Clinic CORF/ORF HHA Independent HH Other Mean SE Mean SE Mean SE Mean SE Mean SE 1 $3,604 $99 $1,245 $111 $2,383 $700 $1,449 $87 $1,577 $202 2 $1,669 $255 $1,138 $118 $1,750 $1,423 $1,628 $159 $1,134 $314 3 $3,286 $80 $2,121 $55 $4,120 $92 $4,028 $33 $3,397 $98 4 $2,193 $136 $1,744 $90 $3,609 $296 $3,412 $76 $3,630 $149 5 $2,027 $153 $937 $200 $3,940 $712 $1,918 $138 $2,225 $358 6 $3,841 $51 $2,859 $50 $4,846 $123 $4,220 $36 $4,318 $137 7 $2,620 $54 $1,003 $97 $3,451 $324 $2,870 $49 $3,818 $124 8 $3,279 $77 $2,724 $89 $4,192 $158 $4,344 $40 $3,672 $124 9 $1,788 $190 $731 $97 $3,304 $1,191 $1,493 $142 $1,195 $ $2,689 $108 $3,583 $102 $3,686 $258 $2,268 $100 $1,642 $ $3,435 $28 $4,264 $24 $3,754 $243 $3,089 $39 $3,026 $85 n=161,925 NOTE: All costs are adjusted for age, payment structure, and fiscal year. 42

43 Table 15. Medicaid payment rates for select procedures in Texas, Arizona, Minnesota and California Texas Arizona Minnesota California Non- Mean Facility Facility Rate Rate Rate Medicine Podiatrist Local Education Agency Procedure Code Description SPEECH/HEARING EVALUATION $ $ SPEECH/HEARING THERAPY $75.70 $35.32 $35.32 $55.55 $29.72 $ SPEECH/HEARING THERAPY $37.78 $10.28 $10.28 $16.41 $20.64 $ ORAL FUNCTION THERAPY $75.86 $65.98 $65.98 $60.85 $ EVALUATE SWALLOWING FUNCTION $ $66.53 $57.36 $59.59 $ PT EVALUATION $ $63.86 $63.86 $52.77 $ PT RE-EVALUATION $ $35.95 $35.95 $29.54 $ OT EVALUATION $ $72.17 $72.17 $59.33 $ OT RE-EVALUATION $ $45.40 $45.40 $37.37 $ MECHANICAL TRACTION THERAPY $69.09 $13.64 $13.64 $11.11 $11.14 $ ELECTRIC STIMULATION THERAPY $69.09 $13.59 $13.59 $11.11 $11.14 $ VASOPNEUMATIC DEVICE THERAPY $69.09 $16.75 $16.75 $13.38 $11.14 $ PARAFFIN BATH THERAPY $69.09 $9.50 $9.50 $7.57 $9.84 $ WHIRLPOOL THERAPY $69.09 $20.18 $20.18 $16.66 $11.14 $ DIATHERMY EG, MICROWAVE $69.09 $5.49 $5.49 $4.29 $9.84 $ INFRARED THERAPY $69.09 $5.21 $5.21 $4.04 $9.84 $ ULTRAVIOLET THERAPY $69.09 $6.37 $6.37 $5.05 $9.84 $ ELECTRICAL STIMULATION $69.09 $16.22 $16.22 $13.38 $8.66 $ ELECTRIC CURRENT THERAPY $69.09 $27.97 $27.97 $22.97 $9.18 $ CONTRAST BATH THERAPY $75.86 $15.33 $15.33 $12.62 $7.83 $ ULTRASOUND THERAPY $69.09 $10.75 $10.75 $8.83 $7.43 $ HYDROTHERAPY $75.86 $28.27 $28.27 $23.23 $11.14 $ PHYSICAL THERAPY TREATMENT $71.14 $9.54 $9.54 $21.88 $14.27 $ THERAPEUTIC EXERCISES $69.09 $27.23 $27.23 $22.47 $10.96 $10.96 $ NEUROMUSCULAR REEDUCATION $69.09 $28.38 $28.38 $23.48 $12.22 $ AQUATIC THERAPY/EXERCISES $21.42 $36.97 $36.97 $30.55 $13.93 $ GAIT TRAINING THERAPY $69.09 $24.05 $24.05 $19.94 $11.28 $ MASSAGE THERAPY $69.09 $22.30 $22.30 $18.43 $10.29 $ PHYSICAL MEDICINE PROCEDURE $69.09 $12.90 $12.90 $7.65 $ MANUAL THERAPY $69.09 $25.50 $25.50 $20.95 $22.21 $ GROUP THERAPEUTIC PROCEDURES $56.03 $14.81 $14.81 $ THERAPEUTIC ACTIVITIES $69.09 $29.81 $29.81 $24.49 $ SELF CARE MNGMENT TRAINING $69.09 $29.53 $29.53 $ COMMUNITY/WORK REINTEGRATION $69.09 $25.51 $25.51 $ WHEELCHAIR MNGMENT TRAINING $69.09 $25.80 $25.80 $ PHYSICAL PERFORMANCE TEST $75.86 $28.40 $28.40 $23.23 $ ORTHOTIC MGMT AND TRAINING $76.24 $32.70 $32.70 $ PROSTHETIC TRAINING $75.86 $28.40 $28.40 $ C/O FOR ORTHOTIC/PROSTH USE $78.17 $41.43 $41.43 $ PHYSICAL MEDICINE PROCEDURE $ BR BR $ EVALUATION OF AUDITORY REHABILITATION STATUS $70.87 $76.33 $64.59 $63.12 $ EVALUATION OF AUDITORY REHABILITATION STATUS $16.97 $18.27 $14.84 $15.15 $ AUDITORY REHABILITATION PRE-LINGUAL HEARING LOSS $70.87 $37.29 $37.29 $ SPEECH THERAPY, RE-EVALUATION $70.87 $37.29 $37.29 $0.00 PHYSICAL OR MANIPULATIVE THERAPY PERFORMED FOR S8990 MAINTENANCE RATHER THAN RESTORATION $47.48 S9152 SPEECH THERAPY, RE-EVALUATION $ Sources: Texas Medicaid rates provided by HHSC as of July, Arizona rates can be found at Minnesota rates can be found at California rates can be found at B. COSTS AND GROSS MARGIN ANALYSIS Research Question 2, part c and d call for the estimation of direct costs associated with the provisioning of acute therapy services, and a comparison of costs and reimbursement rates for pediatric acute therapy services. This analysis will establish estimates for the gross margin associated with the provisioning of acute therapy services for Medicaid recipients, and can be used, in conjunction with the results from Research Question #4, to evaluate the impacts of further rate reductions. 43

44 1.0 Methods Data Part B, of Chapter 3 employs the same data sources described in Part A., Section 1.0 of this chapter. Analysis Plan Gross margin is the generally accepted accounting term for the value of the difference between Net Patient Revenues and Direct Costs, and is the portion of revenues available to cover indirect, or fixed costs, after subtracting the direct or variable costs or providing services. For health care services, direct costs often exceed 75% of total costs, and generally contain a disproportionate share of labor, fringe and benefit costs for service providers delivering the health care services. Further, these direct costs (e.g. wages, fringe and benefits for therapists) are less variable across service providers, as there is generally a shortage of therapists available in any given geographic market, and therapists are able to move freely between provider organizations in search of better wages and fringe. Provider organizations often vary in their indirect or fixed costs structure, ranging from capital intensive hospitals, to relatively low fixed costs home health providers that do not have large facilities resulting in high fixed costs. Gross margin analysis is common in the analysis of health care services when the research question involves the economic value of providing services from the provider perspective 6. For the purposes of this research question, first costs must be estimated from relevant wage and fringe data, and then Gross Margin can be calculated using Net Revenues from claims data and estimated costs. Estimation of Costs As previously noted, a disproportionate share of total costs, and direct or variable costs for provisioning acute therapy services are the labor costs associated with the therapist s wages and fringe. Estimation of costs for these services is primarily focused on tabulating the relevant geographic total wages and fringe for the therapists performing the services, and applying the wage rate (per hour, or fraction thereof) to time involved in provisioning those services. This results in an estimation of the direct costs for the service and is a direct input to the Gross Margin calculation. Wages and fringe are surveyed, tabulated and reported by the Bureau of Labor Statistics (BLS) 7. These data report the mean and median for wage rates (per hour) and fringe benefits for three therapist types (Physical, Occupational, and Speech) at the county and metropolitan statistical area (MSA) level. Using the geographic identifiers present on the claims data analytic files, the corresponding wage rate is attached to each claims record. Next, each claim is analyzed for the number of units of service, and the corresponding duration of services performed. These units are then converted into hours, and fractions of thereof. Wage rates (including fringe, per hour) are multiplied by the hours (or fractions of an hour) to estimate the direct costs associated with performing the acute therapy services contained within that specific claim. This process is repeated for each claim. With a cost scored claims data set completed, cost analysis for each therapy type can be performed. Calculation of Gross Margin for Services The calculation of gross margin for acute therapy services requires the subtraction of costs from net payments for services performed on each claim. Gross margin can be expressed as the dollar value of the difference, and also as a percentage of the net payments for each service. For the purposes of this analysis we will examine the difference in dollar denominated terms. This is an attempt to normalize the comparison across therapy types and procedures, and focus attention on the actual dollar values or costs and gross margin, rather than the percentage of net payments, which often obscures the results, and does not provide the capability to assess the among of gross margin (in dollars) that is available to cover indirect or fixed costs, and thus estimate net income from acute therapy services provided to Medicaid enrollees. 6 For more detail on Gross Margin analysis please see: Gapinski (2013). Healthcare Finance 5 th edition 7 from -- May

45 Cost and Gross Margin Comparison Costs and gross margin will be analyzed by the following policy variables, similar to the utilization analysis of net payments, which is conducted in Research Question #3. Type of Therapy Region Service Modality In order to perform these analyses, we construct an econometric model for estimated direct costs and gross margin. This analysis is analogous to the econometric model employed in Research Question #3 to analyze both units of utilization and net payments for utilization. The inclusion criteria were all pediatric (<21 years of age) claims for 40 acute therapy CPT codes, (see Table A4 for complete listing of CPTs included) billed to Texas Medicaid for the three therapy types during state fiscal years We replicated the inclusion criteria in selection of the three Truven comparison data sets, using the same CPT codes, modifiers, and age to select comparison samples. In all analyses, we examined, (1) estimated direct costs and (2) net payments, payments less applied contractual discounts. These two variables were the main dependent variables inspected in the analysis. Independent policy variables of interest included: (1) state fiscal year (2) managed care vs. fee for service (FFS) (3) HHSC Region (for Texas claims only) (4) service modality Texas Medicaid and Texas Commercial claims data afforded the inclusion of the Region variable as a main effect and interaction. Region was not used in the modeling of Truven Medicaid or Truven Commercial claims data since neither included Texas Medicaid claims/encounters. State Fiscal Year allows for the assessment of temporal trends in utilization, and was included as a vector of dummy coded variables indicating the year in which the claim occurred. Calendar year was converted to state fiscal year for the purposes of this analysis. Program type, referring to fee for service vs. managed care Medicaid, was included to test for an effect of Medicaid program type on utilization. This is a critical policy variable to assess, given the changes to the Texas Medicaid program, shifting more beneficiaries into Managed Care Medicaid plans, especially in specific geographies of Texas, as authorized in the Texas Healthcare Transformation and Quality Improvement Program (1115(a) waiver). Region refers to the eleven HHSC regions in Texas, and represents contiguous geography of interest to HHSC and reflects the general management regions for HHSC programs. Service delivery model refers to the modality in which the therapy was delivered, and is included due to the variance in rates and charges experienced by HHSC. The continuous variable for age was categorized and included in the model. Three interactions terms were included in the model as well, (1) program and state fiscal year, (2) program and region, and (3) program and service delivery model. These interactions directly address the components of the utilization research question(s) posed for the study. To test for an effect of the implementation of Medicaid Managed Care in 2012, as result of the 1115(a) waiver, we interact the Program and State Fiscal Year variables and inspect the coefficient for significance and sign to determine if movement from fee for service to managed 45

46 care programs impacted utilization. This is a contemporaneous policy intervention that can easily bias results of the analysis. Program by region, is a refinement of the inspection of the effect of this programmatic shift, due to the differential introduction of Medicaid managed care across the various regions of Texas. Service delivery model and region, addresses the concerns in the research questions regarding the modalities of service used in different HHSC regions as a result of access, rurality, beneficiary preference, socio-demographic status and provider capabilities. The data contains repeated measures of an individual over time, multiple claims for an individual over the study period. This is a violation of the independence of errors assumption for ordinary least squares (OLS), and requires the employment of longitudinal, or repeated measures analyses, which partition and identify the proportion of variance, error, due to the lack of independence of repeated measures of the same individual over time. This effect is reported as rho, the proportion of variance due to the individual, and thus produces unbiased estimators for the effects being examined 1. Statistical analyses were implemented in STATA 13 (STATA College Station, TX). Data preparation and transformation were implemented using SAS 9.4 (SAS Institute, Cary, NC). 2.0 Results Costs and Gross Margin Estimation and Analysis Research Question 2, part c. Compare costs of pediatric acute care therapeutic services by therapy type, location (STAR service delivery areas in Texas, statewide for comparison states), and service delivery model. (Costs measured in terms of therapist salary or other proxy measure.) The primary policy question being posed in parts c and d of research question 2 is an assessment of the profitability of providing acute therapy services for Medicaid enrollees in Texas, to ultimately inform the debate regarding the impacts of future rate reductions, and to a lesser extent, understand what incentives may be influencing provider behavior. Since costs and gross margin are arithmetically related concepts, and patterns in findings will be similar for both, we discuss gross margin in greater detail below. Physical and Occupational Therapy Physical and Occupational therapy services have quite similar estimated cost and gross margin results, and as such, are discussed together in this section. The costed claims data for Texas Medicaid was used to determine the median cost of providing acute therapy services. This calculation represents an estimate of the median direct costs of all claims over the study period for each of the three therapy types, Physical, Occupational and Speech. Estimated Direct Costs for providing providing Physical and Occupational Therapy services were quite similar at $38.06 and $36.72 per claim, respectively. For each therapy type, separate regression analysis was conducted to determine differences in costs among key policy variables, and concluded that differences were statistically significant (p<0.05), for all levels of the policy variables of interest. Tables summarize the differences in predicted means for both direct costs and gross margin at specific levels of key policy variables of interest for Physical, Occupational and Speech Therapy, respectively. 46

47 Speech Therapy Speech therapy services were estimated to have $ in direct costs per claim, based on the Texas Medicaid claims data over the study period. Table 16: Predicted Means for Costs and Gross Margin for Physical Therapy services Gross Margin Median Cost Unadjusted Mean $63.33 $34.16 Standard Error $0.04 $0.03 Adjusted Mean $47.57 $38.61 Standard Error $0.84 $0.79 State Fiscal Year 2010 $66.41 $ $65.17 $ $61.07 $ $62.92 $33.34 Program FFS $65.00 $34.52 MC $58.62 $33.76 HHSC Region Region 1 $69.14 $32.99 Region 2 $55.28 $33.73 Region 3 $66.65 $31.62 Region 4 $64.66 $32.30 Region 5 $56.12 $38.62 Region 6 $64.27 $35.05 Region 7 $61.36 $29.67 Region 8 $62.72 $32.53 Region 9 $66.11 $32.32 Region 10 $60.82 $40.60 Region 11 $58.55 $37.49 Service Modality Office/Clinic $49.15 $37.50 CORF/ORF $53.64 $34.65 HHA $77.86 $32.84 Independent HH $85.35 $29.36 Other $0.00 $

48 Table 17: Predicted Means for Costs and Gross Margin for Occupational Therapy services Gross Margin Median Cost Unadjusted Mean $85.53 $33.42 Standard Error $0.02 $0.01 Adjusted Mean $68.46 $36.72 Standard Error $0.35 $0.27 State Fiscal Year 2010 $89.76 $ $86.65 $ $82.57 $ $85.52 $33.87 Program FFS $87.09 $33.14 MC $80.95 $34.92 HHSC Region Region 1 $91.47 $30.81 Region 2 $82.25 $32.98 Region 3 $83.97 $35.26 Region 4 $84.16 $34.16 Region 5 $74.47 $33.65 Region 6 $86.14 $30.94 Region 7 $82.22 $33.19 Region 8 $85.58 $33.29 Region 9 $87.26 $32.47 Region 10 $89.22 $28.33 Region 11 $81.71 $36.41 Service Modality Office/Clinic $70.95 $36.68 CORF/ORF $79.85 $37.45 HHA $95.21 $29.80 Independent HH $97.48 $30.05 Other $0.00 $

49 Table 18: Predicted Means for Costs and Gross Margin for Speech Therapy services Gross Margin Median Cost Unadjusted Mean -$0.11 $ Standard Error $0.05 $0.05 Adjusted Mean -$16.97 $ Standard Error $1.45 State Fiscal Year 2010 $10.79 $ $2.80 $ $3.70 $ $3.01 $ Program FFS -$0.99 $ MC $0.20 $ HHSC Region Region 1 -$4.97 $ Region 2 -$ $ Region 3 $6.69 $ Region 4 -$0.89 $ Region 5 -$16.35 $ Region 6 $13.86 $ Region 7 -$4.15 $ Region 8 $2.17 $ Region 9 -$20.64 $ Region 10 -$8.38 $ Region 11 -$15.21 $ Service Modality Office/Clinic -$24.19 $ CORF/ORF -$16.28 $ HHA $16.74 $ Independent HH $20.87 $ Other $0.00 $0.00 Research Question 2, part d. Compare differences between costs and reimbursement rates of pediatric acute care therapeutic services by therapy type, location, payer type, and service delivery model. (Costs measured in terms of therapist salary or other proxy measure.) Physical and Occupational Therapy Gross margin is a function of reimbursement rates and estimated costs, and as such, follows a similar pattern to estimated costs. Gross margin for Physical and Occupational therapy are positive and similar, estimated at $63.33 and $68.46, respectively. Tables above detail the predicted mean for different levels of key policy variables, and describe the differences in gross margin across the three therapy types. The general pattern of results is similar for Physical and Occupational therapy. Over state fiscal years included in this study, gross margin declines across both therapy types. There is an approximately $20 range in gross margin across regions of Texas. This difference is primarily due to differences in median wages for Physical and Occupational therapists across Texas, and is most notable among urban and rural contrasts, where urban wages tend to be higher, based on Bureau of Labor Statistics measures, detailed in the methods discussion. There is less variance across regions in terms of net payments estimated from the data. Fixed reimbursement for services, and varying direct costs, produce these observed differences in gross margin across regions in Texas. 49

50 There is a significant (p<0.05) effect for program type, FFS vs. MC, wherein claims billed under MC contracts have an estimated -$5.54 and -$5.18 lower gross margin for Physical and Occupational therapy services, respectively. This indicates that on average, managed care services are less profitable on a gross margin basis. This is likely due to the nature of services provided under managed care, specifically there is more provisioning of lower priced services in managed care then fee for service, or that fee for service Medicaid allows higher priced services than managed care. This is evident in findings in research question 1, where authorization and reauthorization policies in Texas Medicaid, seem to indicate this case. The service modality in which the therapy was delivered, office-based services compared to CORF/ORF, Home Health Agencies and Independent Home Health, provides for significant (p<0.05) variance in gross margin for both Physical and Occupational therapy. The general trend is higher gross margin for providing services outside of the Office/Clinic modality, with the highest gross margin estimated for Independent Home Health providers, $31.06 and $38.28 higher than Office/Clinic, the referent comparison group. This variance is due entirely to the higher reimbursement rates for providing services in these modalities, as the direct costs for these claims were estimated entirely based on the prevailing median wage rate for therapists in the corresponding region. The analysis did not vary wage rates by service modality, as there was no evidence to support any differences. Speech Therapy When compared with reimbursement rates, costs for providing Speech therapy services are greater, producing an estimated gross margin loss of $ While this estimate of gross margin is negative, on average, based on the Texas Medicaid claims data analyzed for the study period, there is considerable variance (p<0.05) among differing levels of key policy variables. Over the study period, estimated gross margin declines, with a notable change in state fiscal year 2012, where there is an -$11 decrease in gross margin. Large variances of >$100 exists across regions, again attributable to differences in wages among regions in Texas. Gross margin from claims attributable to managed care programs versus fee for service is slightly lower in absolute terms, -$0.52 per claim. The most notable variance in gross margin for speech therapy services is the contrast between Clinic/Office based services and those delivered elsewhere, Home Health Agency and Independent Home Health, in particular. For these service modalities, providing speech therapy services produces positive gross margin of $28 and $32 per claim, respectively. Again these differences are a result of higher reimbursement rates for Home Health Agencies and Independent Home Health providers, since there is no change to estimates of direct costs for providers across service modalities. Reflecting on the findings in Research Question 1, regarding the authorization and evaluation processes for Speech therapy services in Texas Medicaid, there do not appear to be strict guidelines regarding the service modality in which these acute therapies are being delivered. While there are certainly differences in total costs between Home-based and facility-based services (e.g. additional variable costs including transportation for home-based services, and higher fixed costs for facility-based services), the differences in reimbursement rates likely overcomes these differences in favor of home-based service modalities generating more gross margin. 3.0 Summary Based on the cost estimation and the calculation of gross margin, providing acute Physical and Occupational therapy services generates positive gross margin, with variances in the amount by the key policy variables described in Tables In contrast, Speech therapy services do not, on an average basis among the Texas Medicaid claims examined in this analysis. Further inspection by service modality indicates a bifurcation wherein Home Health Agencies and Independent Home Health providers enjoy positive gross margins, while Clinic/Office-based service have negative gross margins. This source from differences in reimbursement rates, 50

51 between service modality. One note is that these services are acute in nature, essentially meaning not chronic, and require a physician s order deeming the therapy medically necessary, described in Research Question 1. The effect of key policy variables is consistent across costs and gross margin, and durable across therapy types. Specifically, there following effects are noted for key policy variables. A decrease in gross margin over the study period (p<0.05) Higher gross margins in Home Health Agency and Independent Home Health modalities (p<0.05) Significant variation in gross margin across regions in Texas, attributable to differences in geographic wages for the three therapy types, favoring urban geographies (p<0.05) A significant managed care effect (p<0.05) where claims billed under managed care have lower gross margins 4.0 Limitations For both the analysis of costs and gross margin, we use estimates of wage rates as the key direct cost proxy, as discussed in the above methods section. This allows for the application of local wage rates to estimate costs of providing therapy services. While a reasonable proxy for costs, this represents a geographic estimate, and does not account for the cost variances resulting from facility-based providers with higher fixed/indirect costs than independent providers and home health providers. This is observable when comparing gross margins of service modality, where home health providers are estimated to have higher gross margins than facility-based service modalities. Further, the geographic wage rate was applied to all claims in the region. There were no other adjustments made to wage rates to account for any differences in wages that may occur by service modality, as there was no evidence to support such variance, nor data available to estimates any differences. While this methods lacks precision in the estimation of indirect costs, the relative rankings of costs and gross margin among policy variables is informative to assessing the differences in costs and gross margin among the key levels of policy variables. 51

52 CHAPTER 4: RESEARCH QUESTION #3 A. UTILIZATION PATTERNS Research Question 3: How do utilization patterns for pediatric acute care therapy compare among payer types? (Compare fiscal year (FY) 2010 through 2012 or 2013, depending on data availability.) a. Compare utilization patterns among therapeutic providers by therapy type, location (STAR service delivery areas in Texas, statewide in comparison states), payer type, and service delivery model. b. Describe payer mix among providers in Texas offering pediatric therapeutic services by STAR service delivery area, payer type, and service delivery model. These analyses will allow for an assessment of the impact of potential rate cuts on providers, based on utilization patterns and payer mix. For example, a provider whose patient base is 5 percent Medicaid clients will be impacted less than a provider whose patient base is 80 percent Medicaid clients. 1. Methods Data Three sources of Medicaid data, (1) state programs, which is the source of the Texas Medicaid data used in this analysis, Centers for Medicare and Medicaid via the ResDAC data dissemination service, and the 11 state Medicaid sample, used in this study, licensed from Truven. Given the timeline for this study, ResDAC was not a viable alternative. The ResDAC approval process requires 6-9 months of proposal development and approvals, before data will be released, and there is no accelerated process. Truven offers a sample of Medicaid claims from 11 state programs. This data is directly collected from participating state program. Texas is not a participating program. In addition, licensing stipulates that Truven not disclose state-level specifics in the Medicaid sample. This sample has been used as credible resource for National Medicaid analyses and comparisons between state-specific programs and Medicaid overall. Commercial Claims for Texas and nationally, identified by state, is available through Truven and was licensed. Texas Commercial claims are coded for county within Texas, and thus were able to be assigned to the HHSC region. This enabled a detailed comparison of Texas Medicaid and Commercial Claims data at the region level, and help to inform the rate and utilization analyses within Texas. This is a considerable advantage, as other sources of commercial claims restrict geographic identification to the state or metropolitan area, which would not have made HHSC region assignment possible. These data afford the comparison of Texas Medicaid, National Medicaid, Texas Commercial, and National Commercial claims for Acute Therapy programs, as defined by the three therapy types and procedure codes, defined for this study Rate structure and utilization patterns (research questions 2-4) require the analysis of Texas Medicaid claims and encounters data (Texas Medicaid data), and the comparison of these analyses with those of equivalent claims for other state Medicaid programs, and commercial claims, both in Texas, and from comparison states. HHSC furnished Texas Medicaid claims for the requisite state fiscal years and services noted above in the introduction. To provide the comparison data, for both Medicaid and commercial claims, corresponding Truven data sets were licensed for this analysis. Data transformations were required to generate key study variables in the Truven data set to match those provided in the Texas Medicaid data. These transformations included conversion of calendar to state fiscal year, grouping of point of service into four main categories, and identification of service type (e.g. PT, OT and ST). 52

53 Texas Medicaid data was provided at the claim line detail level of analysis. Truven data is provided at the claim level, simply the summary of all detail claim lines for a given claim. Texas Medicaid data was summarized first to the claim level to align with the Truven comparison data. Now at the claim level across both, an analytic file was created for the Texas Medicaid data, and each of three Truven comparison data sets. These analytic files summarized utilization (payments and units of service) at the per-beneficiary, per year, per therapy type, per point of service. This afforded accurate comparison of utilization patterns at the sample unit of analysis across all files. Three comparison data sets were constructed from the Truven licensed claims data; (1) Truven Medicaid, a sample of Medicaid claims from 11 states other than Texas which contribute annually, (2) Truven Texas commercial claims, a sample of large employer-sponsored commercial claims in Texas, and (3) Truven Commercial, containing a national sample, not including Texas, of commercial claims from larger employersponsored plans. These comparisons are arranged in descending order of similarity, insofar as we expect to see increasing differences in payments, and units of utilization and rate structure as we move from Medicaid to Medicaid, to Medicaid to Commercial claims comparisons. Analysis Plan Research question #3 seeks to profile the utilization patterns among providers, within the three therapy types, by modality of service and region. Lacking an all payer claims database or sample, and the ability to link unique providers across the Texas Medicaid and Truven data sets, we examined utilization at the per beneficiary per year level of analysis, and modeled the effect of service modality and region within each of the three therapy types for each of four payers: Texas Medicaid, 11 state Medicaid Comparison data, Texas Commercial Claims Data, and National Commercial Claims. Utilization pattern analysis was conducted for each therapy type: physical, occupational and speech. The inclusion criteria was all pediatric (<21 years of age) claims for 40 acute therapy CPT codes, billed to Texas Medicaid for the three therapy types during state fiscal years We replicated the inclusion criteria in selection of the three Truven comparison data sets, using the same CPT codes, modifiers, and age to select comparison samples. In all analyses, we examined three related utilization parameters, (1) net payments, payments less applied contractual discounts, (2) units of service, billed per service or in 15 minute increments for therapy, depending upon the CPT code and (3) a computed variable, dollars per unit, simply net payments divided by units. These three variables were the three main dependent variables inspected in the analysis. Independent policy variables of interest included: (1) state fiscal year (2) managed care vs. fee for service (FFS) (3) HHSC Region (for Texas claims only) (4) service delivery model (5) age Texas Medicaid and Texas Commercial claims data afforded the inclusion of the Region variable as a main effect and interaction. Region was not used in the modeling of Truven Medicaid or Truven Commercial claims data since neither included Texas Medicaid claims/encounters. State Fiscal Year allows for the assessment of temporal trends in utilization, and was included as a vector of dummy coded variables indicating the year in which the claim occurred. Calendar year was converted to state fiscal year for the purposes of this analysis. 53

54 Program type, fee for service vs. managed care, was included to test for an effect of Medicaid program type on utilization. This is a critical policy variable to assess, given the changes to the Texas Medicaid program, shifting more beneficiaries into Managed Care Medicaid plans, especially in specific geographies of Texas, as authorized in the Texas Healthcare Transformation and Quality Improvement Program (1115(a) waiver). Region refers to the eleven HHSC regions in Texas, and represents contiguous geography of interest to HHSC and reflects the general management regions for HHSC programs. Service delivery model refers to the modality in which the therapy was delivered (i.e...), and is included due to the variance in rates and charges experienced by HHSC. The continuous variable for age was categorized and included in the model. Three interactions terms were included in the model as well, (1) program and state fiscal year, (2) program and region, and (3) program and service delivery model. These interactions directly address the components of the utilization research question(s) posed for the study. To test for an effect of the implementation of Medicaid Managed Care in 2012, as result of the 1115(a) waiver, we interact the Program and State Fiscal Year variables and inspect the coefficient for significance and sign to determine if movement from fee for service to managed care programs impacted utilization. This is a contemporaneous policy intervention that can easily bias results of the analysis. Program by region, is a refinement of the inspection of the effect of this programmatic shift, due to the differential introduction of Medicaid managed care across the various regions of Texas. Service delivery model and region, addresses the concerns in the research questions regarding the modalities of service used in different HHSC regions as a result of access, rurality, beneficiary preference, socio-demographic status and provider capabilities. The data contains repeated measures of an individual over time, multiple claims for an individual over the study period. This is a violation of the independence of errors assumption for ordinary least squares (OLS), and requires the employment of longitudinal, or repeated measures analyses, which partition and identify the proportion of variance, error, due to the lack of independence of repeated measures of the same individual over time. This effect is reported as rho, the proportion of variance due to the individual, and thus produces unbiased estimators for the effects being examined 1. Statistical analyses were implemented in STATA 13 (STATA College Station, TX). Data preparation and transformation were implemented using SAS 9.4 (SAS Institute, Cary, NC). 2. Results Research Question #3, part a. Compare utilization patterns among therapeutic providers by therapy type, location (STAR service delivery areas in Texas, statewide in comparison states), payer type, and service delivery model. Utilization Analyses Utilization analysis was conducted for each therapy type individually, and patterns of findings across therapy types are discussed in the summary section for Research Question #3. As noted in the earlier methods section, utilization analysis was conducted at the per beneficiary per year level, for each therapy type, adjusting for temporal trends, program (FFS vs. Managed Care), HHSC region of Texas and Service Modality, and their interactions, the key policy variables of interest. In addition, we adjusted analyses for age of the individual beneficiary. We did not adjust for specific diagnosis or procedure code 8. This was not possible given the 8 This Diagnosis by Procedure by Therapy type analysis will serve as the cornerstone of Study Arm 2, in which we will estimate the effectiveness of Acute Therapy Services. This analysis will further inform the macro-level utilization analysis (Research Question #3) in this Study Arm 1 report. Effectiveness of Acute Therapy Services completes the analysis of these services and will include Diagnosis and Individual level characteristics that seek to inform the anomalies in utilization noted in this section. 54

55 underlying over-identification of the modeling approach (e.g. 100 s of diagnoses by up to 40 procedures). Additional targeted analyses by groups of Diagnoses 9 (e.g. all musculoskeletal injuries) may serve to inform targeted Utilization Review efforts, noted in the discussion of Research Question #1. The results for each therapy type below follows the same pattern. The analysis begins with an introduction of descriptive statistics for Texas Medicaid and the three comparison data sets. Comparisons are arranged in decreasing order of similarity to the Texas Medicaid program, Truven 11 State Medicaid Data, Texas Commercial Sample and National Commercial. This is done intentionally to orient the reader and user of the analysis and aid in the interpretation of the comparisons. Next the analysis describes the results of the adjustment model for utilization, spending, units of therapy and per unit. Again, this analysis is fundamentally beneficiary per year in order to best estimate the effects of the policy variables of interest, and underlying differences in service modality delivery by providers. Specific utilization (spending and units) summaries, including Diagnosis by procedure (CPT) are included as electronic appendices to this report. These Microsoft Excel-based pivot Tables summarize each therapy type in terms of specific diagnoses and procedures, for each of the policy variables. The interactive nature of the pivot Table reports allows flexibility to examine utilization easily, with respect to the large number of diagnoses for each of the 40 procedure types. Separate pivot Tables are included for each therapy type, by policy variables, and the Texas Medicaid and three comparison data sets. This grants the reader more detail on specific diagnoses or procedures as requested by HHSC. The results of the utilization analysis discussed herein are derived from the adjustment model, and afford the ability to make conclusions regarding the effect of the policy variables of interest. Lastly, detailed results of the regression models, including all modeled coefficients and goodness of fit measures are provided in the therapy type-specific electronic appendices to this report. To ease the interpretation of the analysis, we have computed the predicted means for key policy variables and categories resulting from the regression models, and discuss the model results in this fashion. This aids the interpretation of wither spending or unit level utilization analyses. Physical Therapy. Our analysis of utilization for Acute Physical Therapy services begins with an inspection of proportions of claims based on key policy variables of interest. These are summarized below in Table 19. Save for Texas Medicaid, there is an overall decline in the proportion of claims in each of the 4 state fiscal years we examined. This was confirmed as a statistically significant (p<0.05) temporal trend in the data, increasing for Texas Medicaid over the period (p<0.000) and most notably decreasing (p<0.000) for both Truven Medicaid and Texas Commercial, the two most reasonable comparators. Truven commercial claims, both national and Texas, are almost exclusively fee-for-service, as they are collections from large self-funded employer pools. Texas Medicaid represents a lower proportion of managed care claims than Truven Medicaid, commensurate with the recent shift towards Medicaid Managed Care resultant from the 1115(a) waiver activities in Texas. The advantage in Texas and Truven Medicaid data is the availability of Managed Care claims/encounters, wherein the Truven Commercial data sets lack purely HMObased utilization, and include only fee-for-services claims resulting paid by self-funded employers, utilizing 9 Each Therapy Type has a corresponding excel pivot Table for both spending and units of service, summarized by Diagnosis (ICD-9) and Procedure (CPT code). These Tables were constructed for all four comparison data sets, Texas Medicaid, Truven Medicaid, TX Commercial, and National Commercial, to facilitate further diagnosis-related reporting and assessment. The composition of Diagnoses, varies, most notably between Texas Medicaid, and the comparison data sets. This may occur due to differences allowed diagnose, procedures or covered combinations of the two. This finding is most notable between Texas Medicaid and Texas Commercial, which offer the fairest comparison, incorporating the same geography and practice patterns, but yield different results. 55

56 administrative services and networks of large national health insurers. This allows the testing for a Medicaid Managed Care effect in Texas and National Medicaid, reported herein. Texas Commercial allows comparison of HHSC region-based utilization within Texas, an important comparison in order to determine the significance of regional variation in Texas Medicaid claims. Of greatest note, is the proportion of Texas Medicaid Claims attributable to Region 11, compared to those in the Texas Commercial data. This finding is important, as it suggests differential patterns of utilization by payer type. In the case of Region 11, there is less employer-sponsored health insurance provision, and a higher proportion of children covered through the Texas Medicaid program. Medicaid claims are comprised of generally younger children than commercial payers, and this trend is durable across therapy types. Texas Medicaid is also different in the composition of claims by service modality, specifically the shift from Office/Clinic-delivered services versus those delivered in home health and independent home health settings. This is understandable compared to commercial given the inclusion of severely disabled children and others with generally higher clinical severity than commercial populations. Restricting the comparison to Texas Medicaid and Truven Medicaid this trend remains, shifts from Clinic/Office settings to Home Health. Certainly this could be due to geographic and transportation limitations unique to certain regions and geographies in Texas, and the pre-authorization and authorization procedures unique to Texas noted in the discussion of research question #1. 56

57 Table 19: Proportions for Key Policy Variables Physical Therapy % of TX Medicaid % of Truven Medicaid % of Truven TX Commercial % of Truven Commercial State Fiscal Year Program FFS MC HHSC Region Region Region Region Region Region Region Region Region Region Region Region Region Missing Age Group 0-4 Years Years Years Years Years Years Modality Office/Clinic CORF/ORF HHA Independent HH Other Inspection of adjusted means for the three utilization variables, net amount paid, units, and per unit levels of utilization offer base level comparisons across data sets. The nature of the data, repeated measures of acute utilization per beneficiary per year, demonstrates consistency across all four data sets, at approximately 1.4 observations per unique individual. This is consistent with expectations for services prescribed for acute diagnoses, short duration of services, accumulated in few claims for individuals. Also of note is the consistency in the pattern of variance attributable to individual characteristics. This suggests the same unobserved variables are influencing utilization in the Texas Medicaid and Truven comparison data sets, and individual proportion of variance peaks in the per unit modeling, which is the most sensitive to diagnosis and severity-related adjustments. These results are summarized in Table 20: number of unique observations per beneficiary and rho, the portion of variance attributable to the individual, and the fixed effect in our model specification. The overall pattern exhibited by the adjusted means is that of increased utilization (per unit) in Texas Medicaid, Truven Medicaid and then commercial comparisons, with an inverse price effect, wherein commercial payers reimburse at higher rates than Medicaid. This was discussed earlier in the review of research question 2. Texas Medicaid has the highest per unit level of utilization, likely to be attributable to the higher severity and nature of eligibility in Texas and Medicaid programs in general, evidenced by the Truven Medicaid comparison data. 57

58 Unadjusted means are non-informative, but do demonstrate the significance of the key policy variables in terms of their individual and interactive effect on the intercepts. Table 20: Unadjusted and Adjusted Means for Physical Therapy (Paid, Units, Per Unit) PAID Texas Medicaid Truven Medicaid Truven TX Commercial Truven Commercial Unadjusted Mean $2, $ $ $ Standard Error ρ-statistic Number of Beneficiaries 222, , ,976 2,067,250 Mean claims per beneficiary Adjusted Mean $1, $1, $2, $1, Standard Error ρ-statistic UNITS OF SERVICE Unadjusted Mean Standard Error ρ-statistic Adjusted Mean Standard Error ρ-statistic PAID PER UNIT Unadjusted Mean $79.20 $46.30 $37.20 $39.20 Standard Error ρ-statistic Adjusted Mean $67.80 $47.50 $34.40 $23.66 Standard Error ρ-statistic The purpose of the predicted means (Table 20), adjusted means predicted using the adjustment equation, are to demonstrate the effect of the particular policy variable of interest and be more informative than the inspection of regression coefficients 10. The prediction of means sets the entire data set equal to a particular category for a policy variable of interest. For example, the predicted mean for Paid in State Fiscal Year 2010, sets the entire data set to state fiscal year 2010, and then computes the model, main effects and interactions, for the remaining variables as they exist in the data. The result is the ability to compare the 2010 predicted mean to the overall adjusted mean for the data set, and versus the other fiscal years (within policy variable) and make determinations regarding the policy significance of a given statistically significant (p<0.05) coefficient. Further, with large data sets, such as those employed in this study, there exists considerable power to detect statistical significance, that may in fact lack policy significance, when considering the actual differences in predicted means. To that end, there are both statistically (p<0.05) and policy relevant findings from the utilization analysis on acute physical therapy services. There is a significant (p<0.05) effect of both program (fee for service versus 10 Regression coefficient and model results are included in the electronic appendices accompanying this report, by therapy type. 58

59 Medicaid Managed Care) and the interaction with time, indicating that shifts to Medicaid Managed Care over the study period demonstrates policy and statistically significant (p<,0.05) reductions in spend, units and per unit spending. This effect is found in both the Texas Medicaid data and the Truven Medicaid comparison and is commensurate with the shifts within Texas and nationally from state run fee for service Medicaid to capitated programs administrated through Medicaid Managed Care programs. Next in order of significance is the predicted effect of Service Modality, in which there is a significant (p<0.05) increase in spending and unit utilization occurring in Home Health Agencies and Independent Home Health versus the referent modality of Office/Clinic and CORF/ORF. This effect is unique to Texas Medicaid, but has some similarity with Truven Medicaid, as shifts away from Office/Clinic result in higher predicted utilization. The region effect, HHSC Region within Texas, is assessed by comparing the Texas Medicaid data to the Texas Commercial data. The limitation of this approach is that endogenous to the region of Texas is an underlying difference in the payer mix, between Medicaid and Commercial (employer-sponsored) health insurance provisioning. This is an excellent example of the utility of predicted means. The regression results demonstrate a significant (p<0.05) effect for Region 11, in excess of that of all other regions, while prediction of the mean for Region 11, post-estimation, results in a statistically significant (p<0.05) difference from Texas overall, but not as large of a difference as that of Regions 3 or 5, when all adjustments are taken into account. This conclusion, that the proportion of total spending in Region 11, is due in part to the individual-level characteristics of individuals covered by Texas Medicaid residing in Region 11. There are other scenarios and hypotheses which can be developed for this proportionate difference from Region 11, but none that can be tested from the data supplied. 59

60 TX Medicaid Truven Medicaid Table 20: Predicted Means for Key Policy Variables PAID UNITS OF SERVICE PAID PER UNIT Truven TX Truven TX Truven Truven TX Truven TX Truven Truven TX Truven Commercial Commercial Medicaid Medicaid Commercial Commercial Medicaid Medicaid Commercial Commercial State Fiscal Year 2010 $1,456 $759 $612 $ $90.33 $48.31 $36.04 $ $1,963 $921 $663 $ $87.55 $46.92 $36.22 $ $2,024 $909 $752 $ $73.30 $45.25 $36.41 $ $2,664 $240 $367 $ $73.12 $44.54 $41.75 $42.90 Program FFS $2,668 $827 $637 $ $78.89 $53.82 $37.19 $39.52 MC $1,155 $694 n.s. $ $81.69 $37.17 $2.88 $18.62 HHSC Region Region 1 $1,731 $1, $82.81 $46.20 Region 2 $838 $1, $75.94 $36.01 Region 3 $2,237 $ $81.12 $37.99 Region 4 $2,059 $ $79.40 $43.47 Region 5 $2,725 n.s $69.00 n.s. Region 6 $2,236 $ $77.35 $37.70 Region 7 $1,941 $ $77.68 $37.37 Region 8 $1,872 $1, $78.08 $27.69 Region 9 $1,438 $1, $86.02 $49.57 Region 10 $1,740 $ $79.61 $17.94 Region 11 $1,458 $1, $76.65 $45.49 Service Modality Office/Clinic $1,968 $845 $530 $ $69.18 $40.93 $24.78 $27.85 CORF/ORF $1,036 $514 $1,218 $ $72.25 $49.00 $99.42 $91.97 HHA $2,346 $568 $1,203 $ $88.23 $57.14 $40.96 $70.69 Independent HH $2,499 $1,155 $87 $ $88.16 $51.91 $17.75 $35.70 Other $2,278 $0 $0 $ $89.02 $0.00 $0.00 $

61 Occupational Therapy. Occupational therapy takes a quite similar pattern of utilization to that of Physical Therapy. Consultation with Truven suggests that much of occupational health (OT) claims are often coded as physical therapy in nature, due to diagnoses covered by commercial payers. Specifically, commercial claims comparisons includes Occupational Therapy evaluation and re-evaluation services only, and for a limited set of diagnoses compared to Texas Medicaid 11. Table 21 provides proportions for key policy variables related to occupational therapy utilization. Identical to the findings for Physical Therapy, there is an underlying temporal trend of increasing utilization in Texas Medicaid (p<0.000) and a decreasing temporal trend in the commercial comparison data (p<0.000). The effect of fee for service versus Medicaid managed care is durable in occupational therapy, as was the finding for physical therapy (p<0.000), wherein Medicaid managed care predicts lower utilization over spending and units. Noted severity, and eligibility differences between commercial and Medicaid programs are evident in the utilization analysis as well. Age of the individual at the time of therapy skews even more towards younger children receiving Occupational Therapy services, especially in Medicaid versus commercial insurance. Again, this is likely reflective of the eligibility and severity issues in Medicaid populations, and could be better explained with more robust individual level severity adjustment and enrollment details. The use of independent home health therapists versus both Clinic/Office and Independent Home Health settings is the most notable departure in spending and units of utilization for Texas Medicaid compared with the three comparison data sets. This is of note and requires further review, and again may be due in part to the differences in authorization, eligibility and geographic/transportation issues of the Texas Medicaid program. Region 11 achieves its highest outlier share of all utilization in Occupational Therapy, exceeding 1/3 of all utilization in the Texas Medicaid program. While Texas Commercial may understate as a comparison, it certainly indicates a considerably higher utilization and/or eligibility-related issues occurring therein. 11 This is further evidenced through the inspection of the electronic appendices included with this report. Specifically, the OT and PT per comparison file summaries of Diagnoses and Procedures. 61

62 Table 21: Proportions for Key Policy Variables Occupational Therapy % of TX Medicaid % of Truven Medicaid % of Truven TX Commercial % of Truven Commercial State Fiscal Year Program FFS MC HHSC Region Region Region Region Region Region Region Region Region Region Region Region Region Missing Age Group 0-4 Years Years Years Years Years Years Modality Office/Clinic CORF/ORF HHA Independent HH Other Adjusted means, summarized in Table 22, reveal an interesting utilization difference not evident in the other two therapy types, a mean number of acute observations (claims) per individual of 2, versus the Truven comparisons of This is indicative of higher per individual utilization, and is also supported with measurements of rho, the proportion of variation due to the individual over time, versus non-individual covariates. Adjusted means for Texas Medicaid are significant departures from comparison data, but the pattern is durable (at a scale level) to that found in Texas Commercial versus National Commercial, wherein any Texas utilization for Occupational Therapy is significantly (p<0.05) greater. Per unit analysis, suggest this effect is not due to pricing, in fact Texas and Comparison Truven Medicaid show lower per unit values (proxy for prices), so the increased utilization is due to units of service delivered to Medicaid beneficiaries. Again, there is a significant (p<0.05) eligibility and severity effect of Medicaid populations versus commercially insured. 62

63 Table 22: Unadjusted and Adjusted Means for Occupational Therapy (Paid, Units, Per Unit) PAID Texas Medicaid Truven Medicaid Truven TX Commercial Truven Commercial Unadjusted Mean $3,739 $122 $259 $216 Standard Error ρ-statistic Number of Beneficiaries 162,868 69,649 21, ,403 Mean claims per beneficiary Adjusted Mean $4, $ $1, $ Standard Error ρ-statistic UNITS OF SERVICE Unadjusted Mean Standard Error ρ-statistic Adjusted Mean Standard Error ρ-statistic PAID PER UNIT Unadjusted Mean $60.86 $47.07 $73.76 $88.83 Standard Error ρ-statistic Adjusted Mean $53.54 $55.46 $11.12 $42.51 Standard Error ρ-statistic Predicted Means for Occupational Therapy (Table 23) are most informative in terms of describing the effects of Region 11, and Service Modality, where the predicted means are larger than both the adjusted mean of the data (intercept) and the other categories of both variables. Predicted means are calculated for each level of the policy variables, by setting the entire data set equal to the specific level, and calculating the predicted value from the entire regression equation. This allows for the comparison of the dependent variable across different levels of the policy variable (e.g. State Fiscal Year), thus evaluating the effect of one level versus the referent level. This represents the largest (absolute) and percentage deviation for our policy variables of interest with respect to therapy type. Taken with little outside interpretation, this supports a conclusion that there is some combination of eligibility, enrollment, and covered services effect, interacting with some HHSC region and service modality selection; evidenced in the authorization procedures and manifest in the utilization findings. This is a notable and finding. The per unit analysis for Occupational Therapy finds Texas Medicaid at highest levels of the comparison, indicating some price related (or covered therapy) impact on utilization. 63

64 TX Medicaid Truven Medicaid Table 23: Predicted Means for Key Policy Variables Occupational Therapy PAID UNITS OF SERVICE PAID PER UNIT Truven TX Truven TX Truven Truven TX Truven TX Truven Truven TX Commercial Commercial Medicaid Medicaid Commercial Commercial Medicaid Medicaid Commercial Truven Commercial State Fiscal Year 2010 $3,198 $135 $181 $ $61.72 $49.88 $74.74 $ $3,613 $153 $274 $ $62.73 $46.79 $75.53 $ $3,404 $114 $380 $ $58.50 $45.78 $72.25 $ $4,490 $38 $24 ($10) $63.05 $46.27 $71.77 $86.37 Program FFS $4,176 $126 $253 $ $63.82 $53.71 $74.56 $90.12 MC $2,591 $115 n.s. $ $56.01 $37.07 $10.88 HHSC Region Region 1 $3,348 $ $58.97 $34.43 Region 2 $2,909 n.s n.s. $53.79 $ Region 3 $3,744 n.s $59.72 $8.99 Region 4 $3,288 $1, $61.48 $55.85 Region 5 $3,162 $ $54.06 $4.37 Region 6 $3,354 $ $56.95 $11.95 Region 7 $3,032 n.s n.s. $62.34 $ Region 8 $3,725 $1, $61.08 n.s. Region 9 $3,434 $ $59.83 $32.77 Region 10 $2,968 $ $57.87 $57.28 Region 11 $3,531 $ $57.56 $18.56 Service Modality Office/Clinic $3,445 $66 $59 $ $50.44 $46.96 $34.95 $51.41 CORF/ORF $3,310 $129 $392 $ $45.88 $44.19 $ $ HHA $4,118 $718 $1,662 $1, $76.80 $61.67 $40.33 $53.52 Independent HH $3,795 $156 $164 $ $72.58 $52.61 $24.46 $30.98 Other $3, $

65 Speech Therapy. Descriptive Statistics When we examined Speech Therapy costs and utilization patterns, we found unadjusted mean costs for the Texas Medicaid population of $3,342 (Table 24). The unadjusted estimate was approximately four times that of the multi-state sample of Medicaid costs, commercial Texas costs, and the multi-state commercial costs. When adjusted for age, region, type of program (FFS or MCO), place of service, fiscal year and interactions between variables, we found Texas mean Medicaid costs were similar to Texas commercial cost at $3,764 and $3,426 respectively (Table 23). The multi-state Medicaid and multi-state commercial mean costs were substantially less at $1,071 and $784, respectively. Table 24: Unadjusted and Adjusted Means for Physical Therapy (Paid, Units, Per Unit) PAID Texas Medicaid Truven Medicaid Truven TX Commercial Truven Commercial Unadjusted Mean $3, $ $ $ Standard Error ρ-statistic Number of Beneficiaries 419, ,632 49, ,469 Mean claims per beneficiary Adjusted Mean $3, $1, $3, $ Standard Error ρ-statistic UNITS OF SERVICE Unadjusted Mean Standard Error ρ-statistic Adjusted Mean Standard Error ρ-statistic PAID PER UNIT Unadjusted Mean $ $52.27 $56.52 $81.04 Standard Error ρ-statistic Adjusted Mean $ $52.62 $53.20 $50.45 Standard Error ρ-statistic To understand underlying reasons for differences in speech therapy cost between payers, we examined claims across fiscal year, age group, payment structure, Texas Public Health Region, and place of service. We found 2012 consistently had the most claims for all payer groups, ranging between 30.2% to 32.0% of claims for Texas Medicaid and multi-state Commercial respectively (Table 25). Although proportions of claims varied for remaining years for all payers, the lowest proportion of claims was found in 2013 for the multi-state commercial dataset at 16.8% of claims to a high of 30.4% of claims in 2011 for the Texas commercial dataset. 65

66 Table 25. Proportions for Key Policy Variables Speech Therapy % of TX Medicaid % of Truven Medicaid % of Truven TX Commercial % of Truven Commercial State Fiscal Year Program FFS MC HHSC Region Region Region Region Region Region Region Region Region Region Region Region Region Missing Age Group 0-4 Years Years Years Years Years Years Modality Office/Clinic CORF/ORF HHA Independent HH Other When examined by payment structure, Texas Medicaid claims were approximately 48% FFS and 52% managed care (Table 25). The proportion of FFS was greater in the multi-state Medicaid claims data at 61.2% FFS, and even greater in the Texas Commercial and multi-state commercial datasets at 99% and 98% respectively. When we examined claims for each payer by the age of beneficiaries, we found similar proportions between Texas Medicaid and Texas Commercial payers, and similar proportions by beneficiary age for Truven Medicaid and Truven Commercial (Table 25). All payers had the highest proportion of claims for children between ages 1 and 4 years, and the age group accounted for more than half of all claims ranging from a low of 52.8% of Truven Commercial claims to a high of 62.2% of Texas Medicaid claims. For place of service, we found Texas Medicaid claims to differ substantially from all other payer types. For Texas Medicaid, 40.1% of claims identified an independent home health provider in the home as the place of service (Table 25). Other payers identified independent home health provider in the home from 13.7% for Truven Commercial claims to 27.7% for Truven Medicaid claims. Over half of claims in both 66

67 commercial datasets, identified place of service as a clinic or office, while Truven Medicaid identified nearly 50% of claims with clinic or office as the place of service (Table 25). Finally, since we had Texas Medicaid and Texas Commercial data, we examined claims by Texas Health Service Region (region). We observed approximately 30% of Texas Medicaid claims were generated from region 11 compared 5.9% for Texas commercial claims (Table 25). The majority of commercial claims were generated in region 3 (30.1%) and region 6 (24.5%) (Table 25). While proportions of Texas Medicaid claims were not as large, region 3 and region 6 accounted for 19.3% and 15.6% of Medicaid claims, respectively. A large proportion of claims for region 3 and region 6 seems appropriate as both contain large metropolitan areas, Dallas/Fort Worth and Houston respectively. However, we are uncertain why there is such a large proportion of Texas Medicaid claims from region 11. Payment per beneficiary for speech therapy Relative to 2010, we observed an increase in mean payments for speech therapy services across all payer groups in 2011 and However in 2013, we observed decreases in the amount paid per beneficiary in all payers except Texas Medicaid where we observed the amount of increased mean payment more than doubled from $970 more than 2010 payments to $2,120 more than 2010 payments for 2012 and 2013 respectively (Table 23). All other payer groups mean payment fell below 2010 rates. This trend of increased mean payments in the Texas Medicaid population coincides with the transition of beneficiaries to managed care in Texas Medicaid and is consistent with the proportional differences of beneficiary distributions for payment structure. With this in mind, we examined the effect of payment structure on mean payments per beneficiary. We found mean payments for managed care beneficiaries for speech therapy services were approximately $3,500 less than FFS beneficiaries in Texas Medicaid. While all other payer groups demonstrated reduced payments for managed care beneficiaries, the differences were not as sizeable. Differences ranged from $129 for Truven Medicaid to $1,215 for Texas commercial. However, across time we observed an increase in mean payment per beneficiary when we considered both time and payment structure together except for Texas commercial payers who experienced a slight decrease. When we consider the effects of time and payment structure including the interaction between the two variables, we observed an overall decrease in mean payments per beneficiary in all payer groups. When we examined differences in mean payment for speech therapy services attributable to region we set region 11 as our referent population. We found within the Texas Medicaid data all other regions to have significantly lower mean payments per beneficiary for speech therapy services. The differences range from $1,117 less per beneficiary in region 4 to $2,345 less per beneficiary region 10. For commercial payers in Texas, all regression coefficients indicated lower mean payments for speech therapy services in all region relative to region 11. However, not all differences were significant (p>0.05) and estimated differences demonstrated greater variation ranging from $850 to $4,470 less per beneficiary for region 4 and region 10 respectively (Table 21). When we accounted for the interaction between region and payment structure, we observed that the overall effect of payment structure and region is reduced payments per beneficiary for speech therapy services compared to individuals in region 11 using Texas Medicaid FFS. When we examined the effect of place of service on the mean payment per beneficiary for speech therapy services, we found mixed results by payer. For Texas Medicaid beneficiaries, independent home health providers cost approximately $450 more per beneficiary than the clinic/office setting, $480 less for use of home health agency services, and insignificant (p>0.05) differences for use of CORF/ORF settings. When we examine differences in mean cost per beneficiary for speech therapy, we observed no discernable pattern in the effects of place of service on mean payment. When accounting for region, mean payments for speech therapy services is consistently and significantly (p>0.05) different from the referent group 67

68 (clinic/office in region 11) across all place of service categories for region 3 and region 8. We observed mean payments for services provided in CORF/ORF settings to be significantly (p<0.05) less, while mean payments for services provided in the home (independent HH and HHA) were more than the clinic/office setting. Since region 3 and region 8 include major metropolitan areas, economies of scale and availability of providers likely play a role in these differences. Finally, when we examined mean payment of speech therapy services by age, we found increases in mean payment for the 1 to 4 years of age group when compared to the under 1 year of age group. With the referent group as under 1 year of age, all other age groups demonstrated a progressive trend of lower mean payments as age increased. This was consistent across all payer types. Units of Service for speech therapy Texas Medicaid beneficiaries adjusted mean units of service was approximately 91. All other payers demonstrated a mean number of units of service as under 20. Similar to observations of mean payments, Relative to 2010, we observed an increase in mean units of service for speech therapy services across all payer groups in 2011 and 2012 with decreases in the mean number of units of service in all payers except Texas Medicaid. For Texas Medicaid, we observed increased mean number of units of service from 25 units more than 2010 to 40 units more than 2010 for 2012 and 2013 respectively. Additionally, utilization in the Texas Medicaid population was an order of magnitude greater than other payers for all years. All other payer groups mean utilization fell below 2010 rates in Again, this trend of increased utilization in the Texas Medicaid population coincides with the transition of beneficiaries to managed care. When examined, the effect of payment structure demonstrated managed care beneficiaries using fewer units of speech therapy services for all payers. Significant (p<0.05) differences were found between FFS and managed care for the Texas Medicaid and Truven commercial populations. Some of the differences may be attributable to billing and coding practices where units of service are not always included in managed care claims. Consistent with the move of the Texas Medicaid population and required reporting associated with managed care in the Texas Medicaid population, we observed increases in the units of service across time for the Texas Medicaid and Truven commercial population. In examining differences in mean utilization for speech therapy services attributable to region, we set region 11 as our referent population. We found within the Texas Medicaid data all other regions have significantly (p<0.05) lower utilization for speech therapy services. Conversely, all regions demonstrated higher utilization of speech therapy services in the Texas commercial data relative to region 11, however only differences in region 4 were significant (p<0.05). While differences between region 11 and other regions was consistently greater than 25 mean units of service for the Texas Medicaid population, the Texas commercial population differences ranged from less than 1 unit to 71 units. When we accounted for the interaction between region and payment structure, we observed that the interaction mostly offsets the regional effect, attributing most differences in utilization to payment structure for speech therapy. When we examined the effect of place of service on utilization of speech therapy services, we found utilization in settings other than the clinic/office to be significantly (p<0.05) less for the Texas Medicaid population (Table 18). For other payer groups, Independent HH providers demonstrated more mean units of service compared to the office/clinic setting for speech therapy services. When accounting for the interaction of region and place of service, we observed that the interaction effects almost offset the effects of place of service indicating that regional effect may have a stronger effect on utilization than place of service regarding units of service. 68

69 Finally, when we examined mean units of speech therapy services by age, we found increased utilization for the 1 to 4 years of age group when compared to the under 1 year of age group. With the referent group as under 1 year of age, all other age groups demonstrated a progressive trend of lower utiliz ation as age increased. This was consistent across all payer types. Payment per unit of service for speech therapy Unlike trends in payment and utilization, we found payment per unit of service to exhibit decreases in all fiscal years relative to 2010, with the exception of Texas Commercial data. Mean payments per unit of service for speech therapy in the Texas Medicaid population decreased from $112 by approximately $25 from 2010 to All other payer groups mean payment per unit of service were less than half of Texas Medicaid. To determine whether the temporal trend reflects the transition of Texas Medicaid beneficiaries from FFS to managed care, we examined effects of payment structure. Interestingly, we found mean payments per unit of service increased for managed care beneficiaries in the Texas Medicaid and Texas commercial data and decreased for Truven Medicaid and Truven Commercial beneficiaries. When time and payment structure were examined holistically, we observed an overall decrease in mean payments per benefici ary in all payer groups. When we examined differences in mean payment per unit of speech therapy services attributable to region, we found mean payments for unit of service that were less and mostly significant (p<0.05) in all regions except region 6 relative to region 11 for the Texas Medicaid population. For the Texas commercial population, differences between regions demonstrated increased payment per unit of service relative to region 11. When we accounted for the interaction between region and payment structure, we observed that the overall effect of payment structure and region is increased payments per unit of speech therapy service compared to individuals in region 11 using Texas Medicaid FFS. When we examined the effect of place of service on the mean payment per unit of speech therapy services, we found mixed results by payer. For Texas Medicaid beneficiaries, all places of services were significantly (p<0.05) more expensive per unit of service than the clinic/office setting. In the Truven Medicaid population all places of service were significantly (p<0.05) different than the clinic/office setting with HHA demonstrated increased payments per unit of speech therapy service, while CORF/ORF and Independent HH demonstrated decreased payments per unit of service when compared to clinic/office. When place of service and region were examined together, we were unable to identify any consistent trend between the two variables. However, decreased payments per unit of speech therapy service identified in the interaction did not outweigh increases attributable to place of service or region alone. Finally, unlike the trends for payment per beneficiary and utilization, payment per unit of service continually increases by age group when compared to the under one year of age group for all payers. Additionally, all differences between age groups and the referent group are significant (p<0.05) for Texas Medicaid and Truven Medicaid. 3. Summary An overall pattern emerged from the utilization analysis of all three therapy types, with respect to the impact of the policy variables of interest, and the situation outlined in the introduction of this report that motivates the rationale and need for this study. First, we found an underlying temporal trend in utilization during the study period. This trend is durable across therapy types and comparison data sets (Texas Medicaid vs. all Truven Comparisons), and is increasing for spending and units per beneficiary per year, controlling for the other policy variables and individual 69

70 characteristics. Generally, approximately 40% of the variation in the data can be explained by the individual beneficiary. This varies across model to some degree, but the apportioned variation to the individual captures the amount of variance due to differences in diagnosis, severity, success with therapy, and other factors known, but not present in the data as discrete data points. The remaining proportion of the variance, approximately 60% on average, is explained by the policy variables and quantified in both the corresponding statistically significant (p<0.05) coefficients and the predicted means, point-estimation, from the adjustment models. Second, there is an enduring program effect, fee for service versus managed care, in both the Texas Medicaid and Comparison data sets. The state fiscal year and program interaction term in the model, describes this effect over time. Notable in the Texas Medicaid data is the relatively enduring effect of the program overtime, which is commensurate with the expansion of Medicaid managed care via the 1115a waiver to new HHSC regions, occurring during this time period. Regional variation in the Texas Medicaid data, most notable in Region 11, is a unique finding. This pattern of utilization, in aggregate or per beneficiary is not found when inspecting the commercial claims sample for Texas. We also identify service modality impact on utilization. Using the Office/Clinic mode as the referent category, we see significant differences across therapy types for service modality, generally higher total spending for Home Health Agencies and Independent Home Health, than for Office and CORF/ORF. 4.Limitations All payer data for Acute Therapy Services is not available in Texas. This is a limitation in that it restricts the ability to precisely calculate payer mix for unique providers. This becomes problematic in addressing research question 4, but the question is addressed using simulation analysis grounded on parameters harvested from both the Texas Medicaid data and Truven comparison data sets. This method is discussed in research question 4. B. ESTIMATION OF PAYER MIX Part D of Research Question #3, requires the estimation of Medicaid payer mix for providers in Texas. This is an essential input in order to assess Research Question #4, the impact of proposed rate reductions on providers of acute therapy services to Medicaid enrollees. The impact of a rate reduction is differentially experienced by providers based on the proportion of their net revenues from Medicaid services versus other payers, who often contract at higher rates. This analysis is focused on estimating the payer mix for acute therapy providers in Texas. 1. Method Estimation of Payer Mix The lack of an all payer database for acute therapy services in Texas requires the estimation of payer mix. An all payer database would allow the direct calculation of payer mix for each provider in Texas, by summing the net patient revenues from each individual payer sources and dividing that value by total net payments from all payers. Repeating this calculation for all payer sources would result in the determination of the payer mix, or proportion of net payments from each payer source for each provider. In order to estimate the proportion of Medicaid net payments as a percentage of total net payments without such an all payer database, we must construct a model. Market statistics regarding the number of enrolled Medicaid beneficiaries and the total population parameters are available at the county level from the Area Resource File (ARF) The ARF is a widely used, national data resource for health services research that contains the most comprehensive data on local market characteristics. Medicaid eligibility and enrollment varies substantially from county to county in Texas and nationally, and the ARF allows us to utilize the proportion of 70

71 total Medicaid enrollment to estimate the local market payer mix. This proxy is appropriate at the local county level, but does not accurately estimate the individual provider-level payer mix. One explanation for the difference between estimating the geographic payer mix versus the individual provider payer mix is the dual markets hypothesis, wherein providers choose to either concentrate efforts to serve Medicaid enrollees, or essentially exclusively serve Medicare and commercially insured individuals 12. The result of this dual markets provider behavior is essentially two situations, providers with extensive Medicaid proportions (e.g % of net payments) and providers with comparatively low proportions (e.g. 5-15%). To estimate the payer mix for a typical provider, we will inspect and report the proportion of Medicaid enrollees to total population for each HHSC region in Texas, and for Texas overall. Within each HHSC region, we will report the region proportion and the Texas proportion, then assess the payer mix for these dual markets, and adjust accordingly within each region, based on the region-specific proportion. This will essentially adjust upward to proportion for providers that serve relatively low proportions of Medicaid enrollees. Payer mix will be estimated and reported for both of the dual Medicaid markets within each HHSC region. This will be then used as an input for Research Question #4 (Chapter 5) which will examine the differential impact of potential rate reductions for providers in each of these dual markets serving Medicaid enrollees, in each of the HHSC regions. 2. Results Provider Payer Mix Research Question #3, part d Describe payer mix among providers in Texas offering pediatric therapeutic services by STAR service delivery area, payer type, and service delivery model. Estimates for Medicaid Payer Mix for Acute Therapy Services in each of the STAR regions are summarized below in Table 26. Market-level payer mix is represented in the cells where both STAR region parameters, the proportion of population under 21 and the proportion enrolled in Medicaid, intersect. This is the expected value of the Medicaid proportion of net patient revenues for Acute Therapy Services at the STAR region level. The expected value is not an informative parameter to estimate the provider-level Medicaid payer mix. As discussed in the methods section above, the Dual Markets Hypothesis for provider behavior in Medicaid programs demonstrates that providers supply either high or low concentrations of Medicaid services. A more informative estimate of market-level payer mix for STAR regions can be found in the rows representing 80% and 20% proportion Medicaid respectively for each of the STAR regions indicated in columns. These estimates range 29.13%-40.88% and 5.83% % respectively. 12 For more explanation of the dual markets hypothesis in Medicaid, see: Sloan, F., J. B. Mitchell, and J. Cromwell. Physician participation in state Medicaid programs, Journal of Human Resources XVIII:Supplement, , 1978 & Bronsein, JM et al (2004). The impact of S-CHIP enrollment on physician participation in Medicaid in Alabama and Georgia. Health Services Research Vol 39 Iss 2. 71

72 Proportion <21 years of age enrolled in Medicaid Table 26: Estimated Medicaid Payer mix for Pediatric Acute Therapy Services Proportion of Population <21 years of age in STAR Region Bexar Dallas El Paso Harris Hidalgo Jefferson Lubbock Nueces Tarrant Travis Not Assigned Star Region 33.16% 31.72% 37.80% 33.32% 40.88% 29.13% 32.73% 30.75% 32.76% 31.09% 30.85% 80.00% 26.53% 25.38% 30.24% 26.66% 32.70% 23.30% 26.18% 24.60% 26.21% 24.87% 24.68% 70.00% 23.21% 17.76% 21.17% 18.66% 22.89% 16.31% 18.33% 17.22% 18.35% 17.41% 17.28% Hildago 61.70% 25.22% 60.00% El Paso 51.50% 19.47% 50.00% 16.58% 15.86% 18.90% 16.66% 20.44% 14.56% 16.36% 15.37% 16.38% 15.54% 15.43% Nueces 47.20% 14.51% 40.00% 13.26% 12.69% 15.12% 13.33% 16.35% 11.65% 13.09% 12.30% 13.10% 12.43% 12.34% Jefferson 39.90% 11.62% Bexar 38.00% 12.60% Not Assigned 37.80% 11.66% Lubbock 36.80% 12.04% Dallas 35.00% 11.10% Harris 34.60% 11.53% Travis 28.40% 8.83% Tarrant 25.50% 8.35% 20.00% 6.63% 6.34% 7.56% 6.66% 8.18% 5.83% 6.55% 6.15% 6.55% 6.22% 6.17% 10.00% 3.32% 3.17% 3.78% 3.33% 4.09% 2.91% 3.27% 3.07% 3.28% 3.11% 3.09% 72

73 3. Summary Medicaid payer mix, the proportion of net patient revenues sourcing from serving Medicaid enrollees varies at the STAR region and individual provider levels. Ideally an all payer database would allow for precise providerspecific calculation of payer mix, including the Medicaid proportion. In the absence of such a data source, we estimated STAR region-level parameters and, relying on the Dual Markets Hypothesis for provider Medicaid behavior, estimated the mix for both high and low suppliers of Medicaid services. These estimates incorporate population characteristics, proportions under 21 and enrolled in Medicaid, for each STAR region, to account for the variation across STAR regions. For providers who choose to supply high levels of Medicaid services, the effective payer mix is estimated to be 30-40%. In contrast, those who choose to supply low levels of Medicaid services are estimated to have a 6-8% Medicaid payer mix. The variance across STAR regions is demonstrated by inspecting the 80% and 20% rows respectively. 4. Limitations All payer data for Acute Therapy Services is not available in Texas. This is a limitation in that it restricts the ability to precisely calculate payer mix for unique providers. This becomes problematic in addressing research question 4, but the question is addressed using simulation analysis grounded on parameters harvested from both the Texas Medicaid data and Truven comparison data sets. This method is discussed in research question 4 73

74 CHAPTER 5. RESEARCH QUESTION #4 A. IMPACTS OF POTENTIAL RATE REDUCTIONS Research question 4 requires the estimation of the impacts from potential future rate changes to be enacted on providers delivering acute therapy services for Texas Medicaid beneficiaries. The study stipulated the consideration of a further 1% and 5% reduction in rates for all 40 procedures within the three therapy types. The purpose of this analysis is to simulate the effects of the rate reductions to identify disproportionate impacts on providers as a result of these universally applied rate reductions. The starting point for this analysis was the September 1, 2013 rates which were determined after an adjustment to rates was performed. This rate adjustment, as discussed in the introduction, differentially adjusted rates for acute therapy services based on service modality. The focus on modality is unique to Texas, and was not found to be a focus of rate or authorization processes in the four comparison states inspected to address research question 1. This analysis will determine if certain providers will be disproportionately affected by additional rate cuts due to the payer mix of their practices and/or utilization patterns. 1. Method Conceptually, universal changes to reimbursement rates would affect all providers proportionately. In practice, providers have materially different payer mixes with respect to programs serving children (Medicaid, commercial and private pay) and between adults and children (commercial, Medicare and private pay). Precise calculation of payer mix, a key parameter to assess the differential impact of universal reimbursement rate changes, requires an all payer database, or at least an all payer sample, from which to derive these estimates. No all payer data resource is available for acute therapy, or outpatient services for the state of Texas. To overcome this lack of data, and address research question 4, we developed a simulation of payer mix, incorporating the utilization patterns from Texas Medicaid and Texas commercial claims data. The effect of a rate reduction for Medicaid acute therapy services, on a given provider, is a function of two parameters, (1) the proportion of net revenues from pediatric Medicaid patients, (2) and the corresponding rate reduction. For providers with higher proportions of net revenue associated with pediatric Medicaid services, the impact experienced as a result of the rate reduction will approach the aggregate value of the reduction. For those providers with proportionally less net revenues from pediatric Medicaid services, the impact will be less than the actual value of the rate reductions. For the purposes of this analysis, we estimate the impact as the percentage change in net patient revenues for therapy services resulting from the 1% and 5% potential rate reduction. The 5% reduction is calculated from the 1% simulation, simply by multiplying the 1% results by 5. The proportion of net revenues for pediatric services can be estimated by examining the proportion of population in each region under 21 years of age in each region. These population characteristics source from the Area Resource File (201x), a common data source for geo-demographics used widely in Health Services Research. There is no evidence in the literature suggesting therapists bifurcate the market by pediatrics versus adult populations, and therapists are not licensed to perform services, or limited in performing services by age of patient. The Medicaid payer mix, estimated in Research Question #3 part d, is incorporated in this calculation to identify the region-level and state-level proportion of net revenues from Medicaid. As mentioned previously in Research Question #3, there is a dual markets logic for providers with respect to the amount participation in Medicaid. For this reason, we present the region and state-level payer mix, as well as a range of potential mix parameters from 10% to 80%. This allows a region-level assessment of the expected value of impact, as well as the estimation of impact for a specific provider, participating in a one of the dual markets (e.g. either a low or high supplier of Medicaid services) 74

75 As the Medicaid payer mix, and the pediatric patient mix increases for a given provider, their experience of the rate reduction approaches the actual rate reduction. 2. Results Research Question 4 Describe the impact of additional rate reductions on providers in Texas based on payer mix and utilization pattern. The impact of a 1% potential rate reduction is summarized below in Table 27. The proportion of the population in each STAR region, under 21, is shown in the columns. The rows represent the proportion of the under 21 population enrolled in Medicaid, ranging from 20% to 80%. The specific Medicaid payer mix for each STAR region, is also included as rows in Table 26. The potential rate reduction, either 1% or 5%, is multiplied by the product of each row and column combination. The result is the estimated reduction to net patient revenue for therapy services. Based on the STAR region and the Medicaid payer mix, the impact of a 1% potential rate reduction ranges from 0.33% to 0.03%. As mentioned previously, the Dual Markets hypothesis for Medicaid provider markets suggests that providers choose to either supply high levels or low levels of Medicaid services. For this reason, using the STAR region Medicaid enrollment proportion for this calculation, is less informative. For providers with high Medicaid payer mix, 70% for this illustration, the range of impact from the potential 1% rate reduction ranges from 0.23% to 0.33%. Providers with a relatively low Medicaid proportion, 20% for this illustration, have an estimated impact of 0.06 to 0.08% of net patient revenues from therapy services. The row indicating the STAR region proportion of Medicaid enrolled can be used to assess the overall marketlevel impact from the potential reduction. These market-level impacts range from 0.06% to 0.25% of net patient services revenue for therapy services. 75

76 Table 27: 1% Rate Calculation Proportion of Population <21 years of age in STAR Region Proportion <21 Not years of age Bexar Dallas El Paso Harris Hidalgo Jefferson Lubbock Nueces Tarrant Travis Assigned enrolled in Star Region Medicaid 33.16% 31.72% 37.80% 33.32% 40.88% 29.13% 32.73% 30.75% 32.76% 31.09% 30.85% 80.00% 0.27% 0.25% 0.30% 0.27% 0.33% 0.23% 0.26% 0.25% 0.26% 0.25% 0.25% 70.00% 0.23% 0.22% 0.26% 0.23% 0.29% 0.20% 0.23% 0.22% 0.23% 0.22% 0.22% Hildago 61.70% 0.25% 60.00% 0.20% 0.19% 0.23% 0.20% 0.25% 0.17% 0.20% 0.18% 0.20% 0.19% 0.19% El Paso 51.50% 0.19% 50.00% 0.17% 0.16% 0.19% 0.17% 0.20% 0.15% 0.16% 0.15% 0.16% 0.16% 0.15% Nueces 47.20% 0.15% 40.00% 0.13% 0.13% 0.15% 0.13% 0.16% 0.12% 0.13% 0.12% 0.13% 0.12% 0.12% Jefferson 39.90% 0.12% Bexar 38.00% 0.13% Not Assigned 37.80% Lubbock 36.80% 0.12% Dallas 35.00% 0.11% Harris 34.60% 0.12% Travis 28.40% 0.09% Tarrant 25.50% 0.08% 20.00% 0.07% 0.06% 0.08% 0.07% 0.08% 0.06% 0.07% 0.06% 0.07% 0.06% 0.06% 10.00% 0.03% 0.03% 0.04% 0.03% 0.04% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 76

77 Simulation of 5% Rate Reduction The 5% scenario, is arithmetically 5 times higher, than the estimates for a 1% reduction, summarized above in Table 27. For providers with high Medicaid payer mix, 70% for this illustration, the range of impact from the potential 5% rate reduction ranges from 1.15% to 1.65%. Providers with a relatively low Medicaid proportion, 20% for this illustration, have an estimated impact of 0.30 to 0.40% of net patient revenues from therapy services. The row indicating the STAR region proportion of Medicaid enrolled can be used to assess the overall marketlevel impact from the potential reduction. These market-level impacts range from 0.30% to 1.25% of net patient services revenue for therapy services. 3. Summary The estimated provider-level impacts to both 1% and 5% potential rate reductions, 0.06% to 0.33% and 0.30% % respectively. These net patient revenue impacts are best evaluated by considering the Gross Margin analysis in Research Question 2 part d. Results of the Gross Margin analysis suggest that providing Acute Therapy Service for Medicaid enrollees generates positive gross margin for all Physical and Occupational therapy services, regardless of modality, and Speech therapy services delivered in Home Health service modalities. As such, 1% and 5% rate reductions will marginally reduce estimated gross margin for these services, but, in all but Office/Clinic based Speech therapy services, providers are estimated to maintain positive gross margin for these services. Additional analysis may be required to determine the Office/Clinic Speech therapy services, and potentially exclude them from further rate reductions. 4. Limitations There are two primary limitations to the approach implemented in this chapter, and thus the interpretation of results. First is the lack of an all payer database for acute therapy services in Texas. While this is mentioned throughout this study in various research questions, its primary limitation regarding this research question is the lack of precision regarding the variance in pediatric Medicaid payer mix among providers in Texas. In order to overcome this data limitation, we have employed an approach that results in ranges of expected impact based on the level of supply a providers offers to Medicaid, as indicated by the dual markets logic for provider s Medicaid behavior. This analysis is still useful in answering the question regarding impact of rate reductions, but the answers are in ranges. To address the issues facing specific parameter, users of this report need to inquire regarding the providers proportion of net revenues from pediatric Medicaid, then refer to the table and interpolate an impact value. The second limitation to this approach is the use of region and state-level payer mixes as reference points. The temptation is to assume that the region payer mix, the average mix of all providers in the region, is a reasonable conclusion, and estimate impacts from that value. While convenient, such usage results in the fallacy of expected values. This is simply the fact that although it is the mean of all providers in the region, no actual provider has the mean payer mix, due to the dual markets logic, wherein providers have either extremely high and low values of Medicaid payer mix. For this reason, conclusions regarding impact are most accurate when considering high, 80%, and low, 10%, relative Medicaid payer mix 77

78 CHAPTER 6. APPENDICIES AND TABLES A. APPENDIX Tables Table A1: Rate comparisons for physical therapy services by procedure code, aggregated level CPT Description Weighted for Physical Therapy Medicaid Rate Actual Truven Tx Commercial Commercial Medicaid Rate Medicaid Rate Rate Rate n= 288 n=198 n=136 n=190 mean se mean se mean se mean se SPEECH/HEARING EVALUATION SPEECH/HEARING THERAPY SPEECH/HEARING THERAPY EVALUATE SWALLOWING FUNCTION PT EVALUATION PT RE-EVALUATION OT EVALUATION OT RE-EVALUATION MECHANICAL TRACTION THERAPY ELECTRIC STIMULATION THERAPY VASOPNEUMATIC DEVICE THERAPY PARAFFIN BATH THERAPY WHIRLPOOL THERAPY DIATHERMY EG, MICROWAVE INFRARED THERAPY ULTRAVIOLET THERAPY ELECTRICAL STIMULATION ELECTRIC CURRENT THERAPY CONTRAST BATH THERAPY ULTRASOUND THERAPY HYDROTHERAPY PHYSICAL THERAPY TREATMENT THERAPEUTIC EXERCISES NEUROMUSCULAR REEDUCATION AQUATIC THERAPY/EXERCISES GAIT TRAINING THERAPY MASSAGE THERAPY PHYSICAL MEDICINE PROCEDURE MANUAL THERAPY GROUP THERAPEUTIC PROCEDURES THERAPEUTIC ACTIVITIES SELF CARE MNGMENT TRAINING COMMUNITY/WORK REINTEGRATION WHEELCHAIR MNGMENT TRAINING PHYSICAL PERFORMANCE TEST ORTHOTIC MGMT AND TRAINING PROSTHETIC TRAINING , C/O FOR ORTHOTIC/PROSTH USE PHYSICAL MEDICINE PROCEDURE EVALUATION OF AUDITORY REHABILITATION STATUS AUDITORY REHABILITATION PRE- LINGUAL HEARING LOSS S9152 SPEECH THERAPY, RE-EVALUATION Means in bold are significant at a p<.05 level. Sample sizes in bold reflect model significance at a p<.0001 level. Sources: Texas Medicaid Claims data, ; Truven licensed multi-state Medicaid and Commercial claims data, Medicaid rates provided by HHSC as of July,

79 Table A2: Rate comparisons for occupational therapy services by procedure code, aggregated level CPT Description Weighted for Occupational Therapy Medicaid Rate Truven Medicaid Rate TX Commercial Rate Actual Medicaid Rate Commercial Rate n= 212 n=17 n=13 Mean SE Mean SE Mean SE Mean SE SPEECH/HEARING EVALUATION SPEECH/HEARING THERAPY SPEECH/HEARING THERAPY EVALUATE SWALLOWING FUNCTION OT EVALUATION OT RE-EVALUATION ELECTRIC STIMULATION THERAPY VASOPNEUMATIC DEVICE THERAPY PARAFFIN BATH THERAPY WHIRLPOOL THERAPY INFRARED THERAPY ELECTRICAL STIMULATION ELECTRIC CURRENT THERAPY ULTRASOUND THERAPY HYDROTHERAPY PHYSICAL THERAPY TREATMENT THERAPEUTIC EXERCISES NEUROMUSCULAR REEDUCATION AQUATIC THERAPY/EXERCISES GAIT TRAINING THERAPY MASSAGE THERAPY PHYSICAL MEDICINE PROCEDURE MANUAL THERAPY GROUP THERAPEUTIC PROCEDURES THERAPEUTIC ACTIVITIES SELF CARE MNGMENT TRAINING COMMUNITY/WORK REINTEGRATION WHEELCHAIR MNGMENT TRAINING PHYSICAL PERFORMANCE TEST ORTHOTIC MGMT AND TRAINING PROSTHETIC TRAINING C/O FOR ORTHOTIC/PROSTH USE PHYSICAL MEDICINE PROCEDURE PHYSICAL OR MANIPULATIVE THERAPY PERFORMED FOR MAINTENANCE RATHER THAN S8990 RESTORATION S9152 SPEECH THERAPY, RE-EVALUATION Means in bold are significant at a p<.05 level. Sample sizes in bold reflect model significance at a p<.0001 level. Sources: Texas Medicaid Claims data, ; Truven licensed multi-state Medicaid and Commercial claims data, Medicaid rates provided by HHSC as of July,

80 Table A3: Rate comparisons for speech therapy services by procedure code, aggregated level CPT Description Weighted for Speech Therapy Medicaid Rate Actual Medicaid Rate Truven Medicaid Rate TX Commercial Rate Commercial Rate n= 92 n=25 n=22 n=25 Mean SE Mean SE Mean SE Mean SE SPEECH/HEARING EVALUATION SPEECH/HEARING THERAPY SPEECH/HEARING THERAPY EVALUATE SWALLOWING FUNCTION ELECTRIC STIMULATION THERAPY PARAFFIN BATH THERAPY ELECTRICAL STIMULATION THERAPEUTIC EXERCISES NEUROMUSCULAR REEDUCATION GAIT TRAINING THERAPY GROUP THERAPEUTIC PROCEDURES THERAPEUTIC ACTIVITIES SELF CARE MNGMENT TRAINING EVALUATION OF AUDITORY REHABILITATION STATUS EVALUATION OF AUDITORY REHABILITATION STATUS AUDITORY REHABILITATION PRE- LINGUAL HEARING LOSS AUDITORY REHABILITATION; POSTLINGUAL HEARING LOSS S9152 SPEECH THERAPY, RE-EVALUATION Means in bold are significant at a p<.05 level. Sample sizes in bold reflect model significance at a p<.0001 level. Sources: Texas Medicaid Claims data, ; Truven licensed multi-state Medicaid and Commercial claims data, Medicaid rates provided by HHSC as of July,

81 Table A4: CPT Descriptions CPT Description SPEECH/HEARING EVALUATION SPEECH/HEARING THERAPY SPEECH/HEARING THERAPY ORAL FUNCTION THERAPY EVALUATE SWALLOWING FUNCTION PT EVALUATION PT RE-EVALUATION OT EVALUATION OT RE-EVALUATION MECHANICAL TRACTION THERAPY ELECTRIC STIMULATION THERAPY VASOPNEUMATIC DEVICE THERAPY PARAFFIN BATH THERAPY WHIRLPOOL THERAPY DIATHERMY EG, MICROWAVE INFRARED THERAPY ULTRAVIOLET THERAPY ELECTRICAL STIMULATION ELECTRIC CURRENT THERAPY CONTRAST BATH THERAPY ULTRASOUND THERAPY HYDROTHERAPY PHYSICAL THERAPY TREATMENT THERAPEUTIC EXERCISES NEUROMUSCULAR REEDUCATION AQUATIC THERAPY/EXERCISES GAIT TRAINING THERAPY MASSAGE THERAPY PHYSICAL MEDICINE PROCEDURE MANUAL THERAPY GROUP THERAPEUTIC PROCEDURES THERAPEUTIC ACTIVITIES SELF CARE MNGMENT TRAINING COMMUNITY/WORK REINTEGRATION WHEELCHAIR MNGMENT TRAINING PHYSICAL PERFORMANCE TEST ORTHOTIC MGMT AND TRAINING PROSTHETIC TRAINING C/O FOR ORTHOTIC/PROSTH USE PHYSICAL MEDICINE PROCEDURE EVALUATION OF AUDITORY REHABILITATION STATUS EVALUATION OF AUDITORY REHABILITATION STATUS AUDITORY REHABILITATION PRE-LINGUAL HEARING LOSS SPEECH THERAPY, RE-EVALUATION S8990 PHYSICAL OR MANIPULATIVE THERAPY PERFORMED FOR MAINTENANCE RATHER THAN RESTORATION S9152 SPEECH THERAPY, RE-EVALUATION 81

82 B. ELECTRONIC APPENDICIES 1. Replicated Tables and Model Results The first set of appendices contain the replicated Tables and Model Results (Regression Detail), for each therapy type, by each of the four comparison data sets. In the excel appendices, each Therapy Type has a unique Excel with the Tables included in the body of the report, and an additional Table of Model Results. The files included are named: PT Tables.xlsx OT Tables.xlsx ST Tables.xlsx Each of these files (by therapy type) include the following Tables as individual tabs within the therapy type Excel file: A. Means (Unadjusted and Adjusted) B. Proportions C. Predicted Means D. PT Model Results Paid E. PT Model Results Units F. Model Results Per unit 2. Diagnosis by CPT Summary Specific utilization (spending and units) summaries, including Diagnosis by procedure (CPT) are included as electronic appendices to this report. These Microsoft Excel-based pivot Tables summarize each therapy type in terms of specific diagnoses and procedures, for each of the policy variables. The interactive nature of the pivot Table reports allows flexibility to examine utilization easily, with respect to the large number of diagnoses for each of the 40 procedure types. Separate pivot Tables are included for each therapy type, by policy variables, and the Texas Medicaid and three comparison data sets. This grants the reader more detail on specific diagnoses or procedures as requested by HHSC. The results of the utilization analysis discussed herein are derived from the adjustment model, and afford the ability to make conclusions regarding the effect of the policy variables of interest. These files are specific to both the therapy type and the Comparison Data set and are named with the following convention: Comparison Data Set Name Therapy Type Dx by CPT.xlsx (e.g. Texas Medicaid PT Dx by CPT.xlsx) These pivot Table files contain 3 tabs, Dx by CPT for (1) Spending, (2) Units, and (3) raw summary data. 3. Provider-level Summaries For Texas Medicaid Providers, summary Tables were created for each of the three therapy types, summarizing the number of unique beneficiaries, providers, visits, units, and spending, which can be further selected by State Fiscal Year, FFS vs. MMC, and Service Modality. These files are named using the convention: Texas Medicaid Provider Level Therapy Type.xlsx 82