Attention Medicaid Providers: Potential SPA Decreases PCS Rates By 60 Cents Per 15 Minutes

The North Carolina State Medicaid Plan (State Plan) is constantly revised.  The result of its constant revisions make for an 1800+ page, jumbled mess of plans, rules, amendments, and effective dates that make the State Plan as much fun to read as reading every volume of the Encyclopedia Britannica in Japanese with the aid of a Japanese translation dictionary.

First of all, what the heck is the State Plan?  Basically, a State Plan is a contract between a state and the Federal Government describing how that state administers its Medicaid program.  It “assures” the federal government that we, here in NC, will follow the State Plan because the federal government has “blessed” our State Plan.  Whenever we need to change the State Plan, we file an amendment.  In circumstances that call for much greater deviation from the State Plan, we can apply for a Waiver…or an exception.

On or about August 15, 2013, the Department of Health and Human Services (DHHS) issued a Public Notice providing notice of its intent to amend the Medicaid State Plan for the purpose of defining the reimbursement methodology of Personal Care Services as directed by Section 10.9F of Session Law 2013-306 (House Bill 492). “

Personal Care Services (PCS) are Medicaid-covered, in-home services to recipients “who have a medical condition, disability, or cognitive impairment and demonstrates unmet needs for, at a minimum three of the five qualifying activities of daily living (ADLs) with limited hands-on assistance; two ADLs, one of which requires extensive assistance; or two ADLs, one of which requires assistance at the full dependence level. The five qualifying ADLs are eating, dressing, bathing, toileting, and mobility.”  See DHHS Website.

In a letter dated September 30, 2013, and signed by Sec. Aldona Wos, DHHS sent what is called a SPA or a State Plan Amendment to the Centers for Medicare and Medicaid Services (CMS), in part, asking to be allowed to change the PCS unit rate from $3.88 to $3.28.

$3.88 to $3.28…

It may not sound like a huge decrease in pay to you, but a 60 cent drop per unit will be extremely harmful to providers who provide PCS services and, ultimately Medicaid recipients because less providers will be willing to serve the population.

One PCS unit is 15 minutes.  There are 4 units in an hour.  A 60 cent/unit cut to the rate will result in a $2.40 hourly cut.

Providers who employ staff who provide PCS are not paying staff upwards of $20/hour.  Oh, no, most PCS providers make, maybe, $7-9. 

Think about it…a small business provider of PCS (Let’s call it ABC Provider) employs 5-10 staff to provide PCS to recipients.  ABC Provider has to pay its overhead (lease, office supplies, salaries of execs) plus pay the hourly wages of the PCS staff, and, supposedly, still make a profit…otherwise why even work?

For one hour of PCS, prior to a rate reduction, ABC Provider grosses $15.52/hour.  Obviously, a portion of the $15.52 must go to overhead.  ABC Provider pays her staff $9.00/hour. So ABC Provider nets $6.52/hour to pay for overhead.  After 1000 man-hours, maybe ABC Provider can pays its rent and its utility bill.  BTW: In order to reach 1000 man hours, it would take a person to work 41.66 days, 24 hours/day.  Or it could take 10 staff working 10 hours/day for 2 weeks…just for the provider to make $6520 to pay bills…we aren’t even talking about profit…

After the rate reduction?

$2.40 has to be recouped somehow.  Does the provider’s profit margin shrink or does the employee’s hourly rate decrease?  Maybe a little of both.

According to the September 30, 2013, Sec. Wos letter, NC DHHS requested a retroactive date for the PCS rate reduction to July 1, 2013, or, in the alternative, October 1, 2013.

What? Retroactive reduced rates?  Would DHHS recoup payments already made?

As of the day of this blog, I have not found out whether CMS approved the SPA sent to CMS September 30, 2013.  I looked on CMS’ website.  So if anyone reading has information as to whether CMS approved, is approving, denied, or is denying the rate reduction, I, as well as other people, would be much obliged for the information.

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on December 4, 2013, in Administrative Costs, CMS, Division of Medical Assistance, Federal Government, Health Care Providers and Services, Medicaid, Medicaid Costs, Medicaid Recipients, Medicaid Recoupment, Medicaid Reimbursements, Medicaid Services, NC, NC DHHS, North Carolina, Personal Care Services, Rate Reductions, Reduction in Medicaid Payments, Reductions, State Plan and tagged , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. 8 Comments.

  1. How does this not run afoul of Article I, Section 10 of the Constitution (and technically, section 9 as well, since they’re using federal as well as state funds)?!

    Article I, section 10 says (in pertinent part):
    “No State shall…pass any Bill of Attainder, ex post facto Law,or Law impairing the Obligation of Contracts.”

    Also, Article I, section 9 says (in pertinent part):

    “No Bill of Attainder or ex post facto Law shall be passed.”

    If they are retroactively changing the rates, they are creating an ex post facto law, and it seems to me that it runs afoul of the Constitution in two areas just for that, and I could hypothetically see it running afoul of the Constitution due to it impairing the government’s ability to hold to its contractual obligations. I realize this is regulatory law, but regulatory law is just congressional authority that has been delegated to the executive by congress. It remains firmly under the restrictions applied under article I, and they are therefore barred from doing this.

    “I am altering the deal. Pray I don’t alter it any further.”
    -Darth Vader

  2. Bartleby — the Medicaid provider participation agreements are almost certainly going to have a provision saying that state Medicaid can do this.

    Knicole — I don’t know about NC, but if it does it like my state (, Medicaid institutes the rate cuts and then asks permission to do so. If memory serves, as long as it submits the SPA for approval within thirty days, it’s all kosher. (But it’s been a few years since I looked at this, so don’t hold me to it.

  3. Sorry, I meant 90 days.

  4. Thanks Josh!

    …also, you got another reader. 🙂

  5. NC Medicaid have started the recoupments!

  6. Tammy, You mean the state is beginning the retroactive recoupments for PCS?

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