Healthcare Providers & Healthcare Companies Take Major Reimbursement Cuts in Medicaid

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By Barbara Day, M.S., R.D., C.N.

Below are the NEW reimbursement rates set for Medicaid patients across Kentucky. The rates are already extremely low, but many health care businesses and physicians across the state will be forced to take an additional 35% reduction for their reimbursements.  In some cases, health care providers may decide to no longer see Medicaid patients due to the low reimbursement rates because they cannot afford the extra dollar burden on their practices, they may restrict the number of Medicaid patients they care for, or they may have to simply lay off workers to cope with decrease in rates. These reductions are effective from April 1, 2011 until June 30, 2011. This strategy is supposed to save $438 million. What will happen after June 30 is the great question? On the bright side, one might speculate if less health care providers are available to see patients than this can actually save dollars unless, of course, the patients just visit the emergency rooms to get treatment which is more costly.

With Governor Beshear’s plan to borrow from the 2012 budget or essentially put the financial burden off until the next budget year may not be the answer but it seems to make sense in Beshear’s financial management of the state budget. However, being a small business owner, I am appalled that anyone would find that creative financing acceptable especially since the number of Medicaid patients continues to grow by leaps and bounds and will grow by 15 – 20% in 2014 when the new Health Reform Law is fully implemented and more people will be allowed on Medicaid.

 

COMMONWEALTH OF KENTUCKY
CABINET FOR HEALTH AND FAMILY SERVICES
DEPARTMENT FOR MEDICAID SERVICES
PUBLIC NOTICE

The Cabinet for Health and Family Services (CHFS), Department for
Medicaid Services (DMS), in accordance with 42 CFR 447.205 and 42 USC
1396a(a)(13), hereby provides public notice of its intent to reduce
reimbursement for Medicaid services provided for dates effective April
1, 2011 through June 30, 2011 as follows:
• DMS will reduce reimbursement rates for services provided by
ambulatory surgical centers as follows:
o For ambulatory surgical center payment groups 1 through 8 by 35%
o For procedures which do not belong to a group from 45% of charges to
29.25% of charges

• DMS will reduce the fee for dispensing prescriptions as follows:
o Generic drugs from $5.00 per prescription to $3.25 per prescription
o Brand name drugs from $4.50 per prescription to $2.90 per prescription

• DMS will reduce reimbursement for drug acquisition cost as follows:
o Generic drugs from average wholesale price (AWP) minus 14% to AWP minus 56%
o Brand name drugs from AWP minus 15% to AWP minus 57%

• DMS will reduce reimbursement rates for Early and Periodic Screening, Diagnosis and Treatment (EPSDT) services as follows:
o Reimbursement for screenings will be reduced by 35%
o Reimbursement for diagnosis and treatment services will be reduced by 35%
o Reimbursement for EPSDT special services:
§ Services similar to those covered in another Medicaid program will
be reduced by 35%

§ Services which do not have a reimbursement rate or methodology
established elsewhere in the Medicaid program will be reduced from a
negotiated fee not to exceed 100% of the usual and customary charge to
a negotiated fee not to exceed 65% of the usual and customary charge

• DMS will reduce reimbursement for laboratory services provided by
outpatient hospitals, except for critical access hospitals, by 35%
• DMS will reduce reimbursement rates for independent laboratory services by 35%

• DMS will reduce reimbursement for outpatient radiological services
from 60% of the upper payment listed for the given service on the
Medicare physician fee schedule to 39% of the upper payment limit for
the service listed on the Medicare physician fee schedule
• DMS will reduce the reimbursement for home health services by 35%

• DMS will reduce reimbursement for hearing services provided under
the audiology program as follows: 2
o Hearing services performed by an audiologist by 35%
o Hearing instruments by 35%
o Hearing instrument repair by 35%
o Replacement cords by 35%

• DMS will reduce reimbursement for swing bed services (hospital-based
skilled nursing facility) from a rate equal to the average rate per
patient day paid for routine services to a rate that is 35% lower than
the average rate per patient day paid for routine services
• DMS will reduce reimbursement rates for community mental health
center services by 35%
• DMS will reduce reimbursement for community mental health substance
abuse services by 35%
• DMS will reduce reimbursement for family planning services by 35%
• DMS will reduce encounter rates for primary care centers which are
not federally-qualified health centers by 35%
• DMS will reduce ambulance transportation reimbursement base rates,
flat rates and mileage allowances by 35%

• DMS will reduce reimbursement for advanced practice registered nurse
(APRN) services as follows:
o Services on the fee schedule by 35%
o Reimbursement for all other APRN services by 35%

• DMS will reduce the upper payment limit for supports for community
living (SCL) waiver services by 35%
• DMS will reduce the intensity payments for SCL waiver services by 35%
• DMS will reduce the upper payment limits for home and community
based (HCB) waiver services by 35%

• DMS will reduce reimbursement for adult day health centers as follows:
o Level I and Level II service rates by 35%
o The upper payment limit for ancillary therapy services from $75 per
encounter to $48.75

• DMS will reduce the reimbursement rates for podiatry services by 35%

• DMS will reduce reimbursement for durable medical equipment (DME) by 35%

• DMS will reduce psychiatric residential treatment facility service
per diem rates by 35%
• DMS will reduce the per unit reimbursement limit for targeted case
management services for adults with chronic mental illness by 35%
• DMS will reduce the per unit reimbursement limit for targeted case
management services for children with a severe emotional disability by
35%

• DMS will reduce renal dialysis center service reimbursement to a
rate that is 35% lower than the composite rate set by Medicare
• DMS will reduce the fixed fees for Model Waiver II services by 35%

• DMS will reduce reimbursement for services provided under the dental
program as follows:
o Upper payment limits for dental services by 35%
o Rates for a comprehensive orthodontic procedure, a service for an
early phase of moderately severe or severe disabling malocclusion, a
service for a moderately 3 severe disabling malocclusion, a service for a severe disabling
malocclusion, and oral surgeon services by 35%

• DMS will reduce reimbursement for services provided under the vision
program as follows:
o Upper payment limits for services and materials provided by
optometrists and ophthalmic dispensers by 35%
o Eyeglass frames and lenses by 35%

• DMS will reduce the reimbursement for Kentucky Early Intervention
Program, also known as First Steps, services, from the amount of each
fee listed on the fee schedule (established in 911 KAR 2:160) to an
amount equal to 35% of each fee listed on the fee schedule

• DMS will reduce reimbursement for physician services as follows:
o For services on the fee schedule reduce rates by 35%
o The dollar conversion factor by 35%

§ Reimbursement for physician injectable drugs at 65% of average
wholesale price (AWP) minus 10%
• DMS will reduce the reimbursement for IMPACT Plus services by 35%
• DMS will reduce the upper payment limits for acquired brain injury
services by 35%
• DMS will reduce reimbursement for chiropractic services by 35%
• DMS will reduce the upper payment limits for long term acquired
brain injury services by 35%
• DMS will reduce payments for outpatient hospital services as follows:

o Services derived from the calculation of outpatient hospital
cost-to-charge ratios by 35%, except for critical access hospitals
o Services paid using a set rate will be reduced by 35%
• DMS will reduce:
o Reimbursement for non-ancillary services provided in privately-owned
intermediate care facilities for individuals with mental retardation
or a developmental disability (ICF MR DD) by 35%
o The payment derived from the calculation of cost-to-charge ratios
for ancillary services provided in privately-owned ICF MR DDs by 35%

• DMS will establish a final reimbursement for state fiscal year 2011
which reflects a 35% reduction in reimbursement for the following:

o Non-ancillary services provided in privately-owned ICF MR DDs that
are reimbursed on a cost basis
o Ancillary services provided in privately-owned ICF MR DDs

• DMS will reduce the fixed per diem rate paid to nursing facilities
with a Medicaid-certified brain injury unit by 35%
• DMS will reduce the fixed per diem rate paid to nursing facilities
(hospital-based and freestanding) with a distinct part ventilator unit
by 35%
• DMS will reduce the per diem reimbursement for dually-licensed
pediatric facility services by 35%
• DMS will reduce the standard price reimbursement paid to each
price-based nursing facility by 35%
• DMS will reduce the per diem reimbursement rate paid:
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o To inpatient services provided in long-term acute care hospitals,
freestanding psychiatric hospitals, and freestanding rehabilitation
hospitals, except for critical access hospitals, by 35%
o To acute care hospitals that have a Medicare-designated
rehabilitation or psychiatric distinct part unit by 35%
o For rehabilitation or psychiatric care provided in a hospital that
does not have a Medicare-designated distinct part unit by 35%
• DMS will reduce the base rate reimbursement to inpatient hospitals
that utilize diagnosis related groups (DRGs) for purposes of
reimbursement, except for critical access hospitals, by 35%
• Nothing in the above shall be construed to revise the manner in
which disproportionate share payments are calculated and reimbursed.
DMS estimates that the reimbursement reductions will reduce
expenditures in aggregate by $438 million.

The public notice is being published in newspapers of general
circulation and is available on the Department of Medicaid Services
webpage at http://chfs.ky.gov/dms to give interested parties a
reasonable opportunity to learn of the proposed rates and to comment
on them. Comments or inquires may be submitted by e-mail within
fifteen (15) days to: medicaidrates@ky.gov or by mailing written
correspondence within fifteen (15) days to:

Neville Wise
Acting Commissioner
Department for Medicaid Services
Commissioners Office
275 E. Main Street, 6W-A
Frankfort, Kentucky 40621

 

Barbara Day, M.S., R.D., C.N, is a registered dietitian (www.DayByDayNutrition.com) who has been teaching healthy lifestyles strategies to consumers for over 35+ years.