Texas Medicaid puts CB on hold

Wednesday, July 31, 2002

AUSTIN, Texas - Texas Medicaid officials, listening to industry concerns about patient access to quality service, decided not to issue an RFP for competitive bidding last month but reserved its right to do so.

Texas had planned to issue an RFP July 5 and use competitive bidding to shave its DME payments by $7.3 million but instead will work with a provider coalition to develop possible alternatives.

At the moment, those alternatives have focused on eliminating excess utilization and rooting out other waste. That could include, for example, making sure patients receive appropriate wheelchairs and seating systems, not unnecessary advanced models; and putting limits on incontinence supplies.

"Nobody needs 1,000 diapers a month, but some people get them," said Kathleen Weir Vale, CEO of Hope Medical Supply in Austin, Texas.

In all, Texas Medicaid needs to trim $7.3 million from its $100 million DME budget for fiscal 2002-2003. However, in all, Texas DME providers will be out $18.25 million. That's because a reduction in state Medicaid spending triggers a corresponding reduction in federal matching funds. And while it may be possible to find $7.3 million in waste, there's no way $18.25 million will turn up, said Ron Kieschnik of Houston-based Seating Profiles.

"We're talking dramatic numbers," said Kieschnik, who's part of the coalition working with the state to identify savings. "And in an industry that has traditionally had single-digit profits, I'm not sure you'll find double-digit cuts without decreasing services to beneficiaries."

After fingering wasteful expenditures, the state will most likely make targeted reductions to the fee schedule, followed by, if necessary, an across-the-board reduction, Kieschnik said. He said he wouldn't be surprised if the state had to resort to some modified form of competitive bidding to hit its target.

Kieschnik also said he's "hopeful" that through education state legislators will see that draconian cuts to the DME budget will drive some providers out of business and decrease beneficiary access to quality care. That, he said, 'is not the right thing to do."

"I would hope that one of the things that come out of this dialogue is that the state is convinced that suppliers aren't holding back," said Darrell Scott, a healthcare attorney with Brown & Fortunado in Amarillo, Texas, who has been following the plight of Texas HME providers. "If we cut to the point were suppliers can't stay in business and Medicaid beneficiaries can't get service, then what have we accomplished?" HME