Home-care providers, patients sue Idaho over Medicaid cuts

The Idaho Department of Health and Welfare earlier this month announced deep cuts to Medicaid reimbursement rates for in-home care of the developmentally disabled.

Now, facing possible layoffs and loss of care, several providers and patients are fighting back in court.

Eight care providers from around the state and two developmentally disabled patients filed the lawsuit last week in Boise against the Department of Health and Welfare as a whole, as well as its director, Richard Armstrong, and Lisa Hettinger, an administrator for its Medicaid program.

The complaint alleges the department did not go through the proper state rule-making procedure before announcing plans to slash Medicaid reimbursement rates next year, in some cases by nearly 50 percent. It requests the cuts be prevented until the rule-making issue is resolved.

“There’s no legislative or public review of this (decision) at all,” said James Piotrowski, a Boise attorney representing the providers and patients.

The department first announced the cuts Dec. 18 in an information release posted on its website. It said the sharpest decline in reimbursements would be for “intense” services, or services provided to about 200 of Idaho’s developmentally disabled patients that require care at all times of the day. Those reimbursements would be cut by nearly half, from about $500 per day down to $270.

For about 600 patients in the “high” needs category, who need less-intensive care, the cuts amounted to about a 9 percent cut. At the lowest level of care support, reimbursement rates would be cut by 37 percent, the department said.

The changes would reduce payouts to providers by about $20 million per year, said Tom Shanahan, a department spokesman. That includes about $5.9 million a year from the state, he said.

The lower reimbursements were initially scheduled to take effect Friday, but on Dec. 22 the department said it would delay the cuts until Feb. 1 to “allow providers more time to adjust to the change and provide accurate information to participants about service options.”

The cuts triggered widespread backlash among the state’s disabilities advocates. An Idaho Falls-based care provider, H.A.S. Inc., said it wouldn’t be able to make payroll under the new rates. A Meridian health care company, A New Leaf, told the Idaho Statesman it planned to lay off 39 employees and cut services to its developmentally disabled patients as a result of the cuts.

The lawsuit alleges the department did not follow the proper procedure for setting its new Medicaid reimbursement rates.

The correct procedure, according to the Idaho Administrative Procedure Act, would have involved publishing the new rule publicly and then asking for input from stakeholders, Piotrowski said. It also would require final approval from the Idaho Legislature. Instead, the lawsuit states the department sought “to create a rule and disguise it as an information release.”

Shanahan said his department doesn’t comment on pending litigation.

The complaint said many of the providers have already begun to give notice to some patients that they won’t be able to provide services after the lower rates are put in place.

“Many participants to whom (these agencies) provide services would otherwise be institutionalized in state hospitals, intermediate care facilities, or nursing homes,” the suit said. “In fact, it is for this specific purpose that the Medicaid waiver program was created, so that such individuals could reside in the community rather than being ‘warehoused’ in institutions.”

Shanahan said the department has heard from several providers concerned about the cuts. However so far, he said the department has only received notice from two patients who need to be transitioned to a different provider because their current provider is no longer going to provide them with care services.

“Providers who opt out are required to continue providing services until a safe transition is completed,” Shanahan said. “We are monitoring the situation very closely. If we see any access or quality issues arise due to the rates, we will reevaluate them.”

The cuts would return providers to reimbursement rates last updated in 2006. The increase in rates to their current levels was due to a lawsuit filed by some Idaho providers saying the rates were far too low.

But in March, the U.S. Supreme Court ruled in favor of the state in that case, saying in a 5-4 decision that providers don’t have the right to sue the state over its Medicaid reimbursement formula.

This story was originally published December 30, 2015 at 9:21 AM with the headline "Home-care providers, patients sue Idaho over Medicaid cuts."