Idaho health providers ask federal court to widen span of lawsuit over Medicaid rate changes

Idaho health providers seek to widen suit’s scope

BOISE, Idaho — A group of private agencies that serve hundreds of severely developmentally delayed people across Idaho have asked a federal judge to allow them to broaden their lawsuit against the state and Medicaid over reimbursement rates.

The groups sued in April after the Idaho Department of Health and Welfare decided to cut Medicaid reimbursement payments by as much as 55 percent, contending the change would put them out of business, infringe on the care provided to more than 2,000 adults and children, conflict with federal law and violate state law because the rate structure was never vetted by the Idaho Legislature.

U.S. District Judge Justin Quackenbush temporarily blocked the scheduled cuts while the lawsuit went forward. And the state followed up with a surprising move: It asked the judge to make the injunction permanent.

“It was taking a lot of staff time, and we need to move forward. We need to work with the providers and come up with an equitable fee-for-service arragement,” Idaho Department of Health and Welfare spokesman Tom Shanahan said.

James Piotrowski, the attorney representing the health care groups, said the state wanted the lawsuit to end rather than to comply with discovery requests from his clients, who wanted records of rate-changing decisions made back to 1997.

“We think we’re going to find that previous rate cuts were just as illegal as the rate cut attempted in 2009,” Piotrowski said last week. “We want to amend the complaint to say not only was the 2009 rate change invalid but some of the prior rate changes going back to 1997.”

The state can’t just change the reimbursement rates based on the money available in the budget, Piotrowski said — it must make the changes based on methodology, and that methodology must be described in federal and state documents. The most recent methodology listed in the state plan and federal documents is from 1995, he said.

“We think we’re going to find that the description of the rate-setting methodology hasn’t changed until recently, despite rate changes so significant that they couldn’t have been based on the methodology from 1995,” he said.

The private providers don’t want retroactive pay, he said.

“My clients have been paid the same rates for seven years, with no adjustments for new regulatory requirements, no cost of living increases,” he said. “We just want to get to a legally valid rate-setting process.”

Shanahan said the rates were set using methodology requested by the Centers for Medicare and Medicaid Services — the federal agency that pays the bulk of Idaho’s Medicaid bill.

“They want states to go for a fee-for-service arrangement, and we were paying $7.95 a day to the providers for technical support services. If you average that out, it’s probably about $2,900 a year for each client,” Shanahan said. “So what our methodology proposed, and what was approved by CMS (the federal agency), is that we pay in 15-minute increments when the services are actually provided.”

The department also set a limit on the amount of services provided each year, for a total amount of just over $1,500 the first year and just over $1,300 in subsequent years.

“We developed what we thought was an equitable rate, and they preferred to stay with the $7.95 a day. Our rules only say they have to be in the home once a quarter, so we didn’t know how often they were actually providing the service,” he said.

The private providers — located in Boise, Lewiston, Moscow, Idaho Falls and other cities — represent more than 50 percent of the state’s residential rehabilitation clientele. Those clients include adults and children with autism, Down Syndrome or other mental or emotional developmental challenges.

The agencies contract with the state to provide services and training to people who take care of those clients in their own homes, the homes of family or in other certified, third-party homes. Medicaid reimbursement also covers money management and job training, daily living skills, and community integration, among other things.