Chris Traylor, as Executive Commissioner of the Texas Health and Human Services Commission And the Texas Health and Human Services Commission v. Diana D., as Next Friend of KD, a Child Karen G., as Next Friend of TG and ZM, Children Guadalupe P., as Next Friend of LP, a Child Sally L., as Next Friend of CH, a Child Dena D., as Next Friend of BD, a Child OCI Acquisition, LLC

ACCEPTED
03-15-00657-CV
7745200
THIRD COURT OF APPEALS
AUSTIN, TEXAS
11/9/2015 2:07:47 PM
JEFFREY D. KYLE
CLERK
NO. 03-15-00657-CV

FILED IN
3rd COURT OF APPEALS
IN THE AUSTIN, TEXAS
THIRD COURT OF APPEALS 11/9/2015 2:07:47 PM
AUSTIN, TEXAS JEFFREY D. KYLE
Clerk

CHRIS TRAYLOR, EXECUTIVE COIMMISSIONER OF TEXAS HEALTH
AND HUMAN SERVICES COMMISSION AND THE TEXAS HEALTH
AND HUMAN SERVICES COMMISSION,
APPELLANTS

V.

DIANA D., et al
APPELLEES

ON APPEAL FROM THE 200TH JUDICIAL DISTRICT COURT,
TRAVIS COUNTY, TEXAS, HON. TIM SULAK, PRESIDING

APPELLEES’ RESPONSE TO APPELLANTS’ MOTION TO VACATE
COUNTER-SUPERSEDEAS ORDER, OR IN THE ALTERNATIVE,
INCREASE COUNTER-SUPERSEDEAS BOND
______________________________________________________________

TO THE HONORABLE THIRD COURT OF APPEALS:

I. INTRODUCTION

1) Appellants have filed a Motion To Vacate Counter-Supersedeas Order, Or In

The Alternative Increase Counter-Supersedeas Bond (“Appellants’ Motion” or “the

Motion”) in which Appellants claim that the trial judge abused his discretion

because: a) the U.S. Secretary of Health and Human Services has exclusive
authority to enforce the federal Medicaid statutory provisions relating to access to

care; and b) the temporary injunction violates various clauses of the U.S. and

Texas Constitution. Alternatively, Appellants’ Motion claims that this Court

should set the bond for denial of supersedeas at $100,000,000.00 because that is

the alleged two-year budget impact of the temporary injunction.

2) The Court should deny Appellants’ Motion because:

a. Appellants’ attack on the trial court actions has nothing to do with

their factual or legal basis.

b. There is no federal constitutional or statutory ground to challenge the

trial court’s actions.

c. The trial court’s actions do not violate the Texas Constitution.

d. None of Appellants’ objections were ever presented to the trial court.

e. Appellants expressly consented to and waived any objection to the

bond for the denial of supersedeas.

f. Appellants’ claims as to the budgetary impact of the temporary

injunction lack any evidentiary, or logical, basis.

2
Because there is no factual or legal basis for the Appellants’ Motion, no error has

been presented for review, and all claims in the Motion have been waived, the

Court should deny the Motion.1

II. STATEMENT OF FACTS

3) Because this is the Court’s first opportunity to review any aspect of this

case, Appellees offer this abbreviated statement of facts to provide context for

Appellants’ Motion and this response.

4) Appellees include the next friends of five children who suffer from severe

and disabling conditions, including seizure disorders, delayed development,

autism, speech developmental delays, epilepsy, cerebral palsy, and other

conditions. CR 5, 587–88. These children and thousands of other like them receive

speech, occupational, and physical therapy services from home health agencies

under the Texas Medicaid Program to assist with their disabling symptoms such as

1
As Appellees were finalizing this response, Appellants filed a letter asking the Court to
consider the trial court’s comments at a recent hearing when making its determination of
Appellants’ Motion. Letter from Kristofer S. Monson, Assistant Solicitor General, to Jeffrey D.
Kyle, Third Court of Appeals (Nov. 9, 2015) (on file with Court). This request is improper for at
least three reasons. First, Appellants are asking the Court to consider statements made after their
Motion was filed, which are not part of the Court’s record. Second, Appellants have not attached
the hearing transcript to their letter, apparently hoping the Court will adopt Appellants’
misleading and incorrect characterization of Judge Sulak’s words, which in any event did not
modify the order Appellants are challenging. Third, by filing this letter the same day Appellees’
response to the Motion is due, Appellants are attempting to amend their argument and avoid a
response from Appellees. The Court should disregard Appellants’ letter and decide the Motion
based on the record and briefing schedule the Court has already defined. If the Court is inclined
to consider Appellants’ letter, Appellees ask that the Court instruct Appellants to include in their
filing all portions of any supplemental record on which they will rely, and set a reasonable
briefing schedule for any response the Court would like from Appellees.
3
the inability to speak, walk, control bodily movement, or mentally process

information. CR 5, 588. Appellees also include three providers of these home

health therapy services. CR 5, 588. Appellees filed this suit on August 11, 2015, to

enjoin The Texas Health and Human Services Commission (“HHSC”) from

implementing dramatic cuts to Medicaid reimbursement rates for home health

therapy services, which HHSC planned to implement on September 1. CR 4–64.

5) Appellees’ suit is based, among other things, on the fact that in promulgating

its proposed rates, HHSC did not comply with its own rules, including 1 TAC

§355.8021(a)(2)(B), which requires that periodic rate reviews include a study of

payments for, as well as costs associated with, providing Medicaid reimbursable

therapy services. CR 343, 507–08. Because HHSC failed to comply with its own

rules, the proposed rates constitute an effective adoption of a new administrative

rule under El Paso Hosp. Dist. v. Tex. Health & Human Servs. Comm’n, 247

S.W.3d 709 (Tex. 2008). CR 507–08; see also CR 203–05, 343–46. Appellees

sought to enjoin HHSC from implementing the proposed rates because they had

not followed the steps required by the Administrative Procedures Act (“APA”) to

adopt a new rule. Id. (citing TEX. GOV’T CODE ch. 2001 et seq.). Alternatively,

Plaintiffs assert that Commissioner Traylor’s acts were ultra vires, and should

likewise be enjoined. Id. (citing TEX. CIV. PRAC. & REM. CODE §37.009; City of El

Paso v. Heinrich, 284, S.W.3d 366, 372 (Tex. 2009)).

4
6) The trial court ordered accelerated discovery, which included a deposition of

Pam McDonald as the representative of HHSC. CR 98–101. During that

deposition, Appellants handed Appellees a second set of proposed rates that HHSC

had created over the previous weekend in response to the litigation and discovery.

2 RR 10; 3 RR 201–02. At 9:17 a.m. on the date of the initial temporary injunction

hearing, Appellants filed “HHSC’s Advisory to the Court” announcing that HHSC

would “start over, with a new rate proposal, pursuant to Rider 502 and HHSC’s rate

methodology as prescribed by its administrative rules.” CR 270–71. Because

HHSC abandoned the proposed September 1, 2015 implementation of new rates,

the injunction hearing was moot and did not proceed.

7) Nine days after abandoning the first two sets of proposed rates and

promising to start over, HHSC published a third set of proposed rates to take effect

on October 1, 2015. CR 342, 51–73. This led Appellees to amend their petition,

CR 336–92, obtain additional discovery, CR 491–94, and set another temporary

injunction hearing for the week of September 21. At the hearing, HHSC’s witness

admitted that HHSC had not complied with the §355.8021(a)(2)(B) requirement of

a study to determine the costs associated with providing the Medicaid-

reimbursable services. 3 RR 229–30. The trial court found, among other things,
2
“Rider 50” refers to a rider to the H.B. 1 General Appropriations budget of the 84 th Legislative
Session, which was introduced as Exhibit 9 at the temporary injunction hearing. 6 RR at Ex. 9 p.
2–4. Subsection (c) of Rider 50, which provides that HHSC “should” and “may” (not “shall”)
achieve General Revenue Funds savings, is the basis for Appellants’ claim that the Legislature
mandated $100,000,000.00 in rate cuts over the next two years.
5
that the proposed rates did not comply with the requirement of a cost study under

§355.8021(a)(2)(B). CR 590–92. Because the proposed rates failed to comply with

HHSC’s own rules, the trial court found that the proposed rates constituted a rule

change that failed to comply with Government Code Chapter 2001 et. seq. under El

Paso Hosp. Dist., 247 S.W.3d at 715. CR 592.

8) Contrary to the characterizations of Appellants’ Motion, Rider 50 of the

H.B. 1 General Appropriations Bill does not mandate $100,000,000 in cuts to

Medicaid over the next two years because the relevant provisions only state that

HHSC “should” and “may” (not “shall”) achieve General Revenue Funds savings.

6 RR at Ex. 9, p.3–4. The trial court evidence included letters from legislators to

Commissioner Traylor pointing out that this language of Rider 50 did not compel

the proposed rate reductions. 6 RR at Ex. 32, App. Tab 1.

9) Appellants’ Motion claims that the legal basis of the temporary injunction is

a federal statutory provision of access to care. Although the trial court found that

the proposed rates would result in denial of care for Medicaid recipients, CR 597,

this finding was not the legal violation that formed the basis of the trial court’s

injunction, which was the failure to comply with HHSC’s own rules and the failure

to fulfill the obligations to implement new rules as required by El Paso Hosp.

Dist., 247 S.W.3d at 715 and Texas Government Code Chapter 2001 et. seq. CR

592. Furthermore, the trial court did not enjoin HHSC from implementing all rate

6
reductions because the injunction only prohibits the implementation of rates

“without conducting a review of payments for providing Medicaid-reimbursable

therapy services and conducting a review of costs associated with providing

Medicaid-reimbursable therapy services as required by 1 TAC §355.8021(a)(2)(B).

CR 595–96.

10) At the conclusion of the temporary injunction hearing, Appellees asked the

trial court to deny supersedeas under TRAP 24.2, conditioned on Appellees’

posting a $500 bond. 5 RR 5–7. Appellants opposed the denial of supersedeas, but

agreed that if the trial court denied supersedeas, a $500 bond is reasonable. 5 RR 9.

The trial court denied supersedeas under TRAP 24.2(a)(3), and ordered that $500

of the funds Appellees had already deposited in the clerk’s registry would serve as

security for the denial of supersedeas. CR 596–97.

11) Nineteen days after the trial court’s temporary injunction hearing,

Appellants filed a motion to modify the temporary injunction and attached an

affidavit of Pam McDonald dated October 14, 2015. CR 674–89. This affidavit

was not before the trial court during the temporary injunction hearing or the

supersedeas hearing, which occurred on September 21–23, 2015. 3 RR 1 – 5 RR 9.

Despite the fact that this affidavit was never presented to the trial court during the

relevant proceedings, Appellants attached it to their Motion under Tab D and refer

7
to it as evidence in support of their claim that the trial judge abused his discretion.

Appellants’ Motion at 22–23.

12) In their appeal, Appellants waived the stay of trial court proceedings. CR

735. The case remains set for trial on January 18, 2016. In their Motion, Appellants

admit that the standard of review is abuse of discretion. Appellants’ Motion, p. 3.

III. ARGUMENT

A. Appellants’ Motion should be reserved for full panel consideration.

13) Appellants’ Motion, if granted, would grant case-dispositive relief as

measured by the impact on the lives and livelihood of Appellees and many Texans.

Based on the evidence presented, the trial court found that if the proposed rates are

implemented, Medicaid beneficiaries would be denied essential Medicaid-funded

services and service providers would be forced out of business. CR 595. The trial

court found that allowing the State to supersede the temporary injunction would

render any relief granted ineffective. CR 596. The Texas Supreme Court has

recognized in a similar case that the “State's position—boundless entitlement to

supersede adverse non-money judgments—would vest unchecked power in the

executive branch, at considerable expense to the judicial branch, not to mention the

wider public we both serve.” In re State Board for Educator Certification, 452

S.W.3d 802, 808 (Tex. 2014). In that case, the Supreme Court recognized that

allowing the State to supersede the trial court’s order without security would cause

8
unrecoverable loss to the prevailing party. “The State—as yet unsupported by a

victory on the merits in any court—wants to strip Montalvo of his livelihood while

the appellate process grinds on, and if he manages to regain his professional

license after having been kicked out of his profession for years—well, bygones.

That's a striking assertion of unbridled executive power—to enforce administrative

orders that a trial court has reversed—and TRAP 24.2(a)(3) recognizes the

judiciary's authority to say no.” Id. at 809. Just as the State requested in In re State

Board, HHSC asks this Court to allow them to supersede the temporary injunction,

which would cause devastating setbacks to children in need of services and force

many service providers out of work. Repairing the damage caused by such

deprivation after the fact is impossible, and the citizens of Texas deserve the

Court’s protection from such “unbridled executive power.” Because the outcome

of Appellants’ Motion would in effect permanently deprive Appellants, and many

other Texans, of any relief in this case, the Court should reserve Appellants’

Motion for consideration by the full panel.

B. Appellants’ Motion is actually an attack on the temporary
injunction, not the denial of supersedeas.

14) Pages 5–21 of Appellants’ Motion consist of arguments that the Appellees’

substantive claims are barred by federal law, the U.S. Constitution, and the Texas

Constitution. This is a substantive attack on the temporary injunction mislabeled as

a challenge to the denial of supersedeas because all of the arguments are directed at
9
the underlying claims and causes of action, not at the trial court’s discretion to

deny supersedeas under TRAP 24.2(a)(3) and In re Board of Educator

Certification. The temporary injunction is already the subject of a pending

interlocutory appeal with a schedule for briefing on the merits. The Court should

disregard Appellants’ arguments regarding the substantive claims because such

arguments are not properly before the Court in the form of briefing on the merits of

the interlocutory appeal. The Court should limit the consideration of Appellants’

Motion to only those issues actually directed at the trial court’s discretion to deny

supersedeas. However, nowhere in Sections I, II, III or IV of the Motion is there

any explanation as to how the denial of supersedeas, as distinct from the temporary

injunction itself, constitutes a violation of any of the cited constitutional

provisions. Accordingly, the Court should limit its consideration of the Motion to

Section V, which is the only part of the Motion that actually addresses the trial

judge’s decision on the denial of supersedeas.

C. The grounds for relief asserted in Appellants’ Motion have nothing
to do with the basis of the temporary injunction and denial of
supersedeas.

15) Appellants’ Motion is premised on the argument that only the U.S.

Secretary of Health and Human Services has authority to enforce the access to care

provisions under the federal Medicaid statute. Armstrong v. Exceptional Child Ctr.,

Inc., 135 S. Ct. 1378 (2015). As discussed below, Appellants’ reading of

10
Armstrong is overly broad. Infra at §III.E. Although that case does stand for the

proposition that only the Secretary may enforce §30(A) of the Medicaid Act, that

proposition is completely irrelevant to this lawsuit because: a) this lawsuit is based

exclusively on Texas law, not federal law; and b) access to care is not the basis for

the trial court’s temporary injunction. HHSC’s own regulatory rules provide that

“HHSC may conduct periodic rate reviews that include, but not be limited to,

payments for as well as costs associated with providing these Medicaid-

reimbursable therapy, nursing, and aide services.” 1 TAC §355.8021(a)(2)(B)

(emphasis added). HHSC admits that it did not comply with the requirement of a

cost study under this rule when it promulgated the proposed rates. 3 RR 229–30.

When HHSC fails to follow its own regulatory rules in making rate decisions, such

rates constitute a new rule which must comply with the APA under Texas

Government Code Chapter 2001. El Paso Hosp. Dist. v. Tex. Health & Human

Servs. Comm’n, 247 S.W.3d 709 (Tex. 2008). Because HHSC did not comply with

§355.8021(a)(2)(B) and did not undertake the necessary steps for the adoption of

new rules under the APA, the trial court enjoined implementation of the proposed

rates because they were promulgated in violation of Texas law. CR 592–97.

Nowhere in the pleadings, briefing, or temporary injunction, is there any reference

to the federal statutory Medicaid right to access to care. Appellants’ Motion

therefore wholly ignores and completely mischaracterizes the legal basis of the

11
lawsuit and the temporary injunction in an effort to argue that the claims and the

temporary injunction are preempted by federal law. Because the lawsuit and the

temporary injunction are based exclusively on the violation of Texas law by

HHSC, the Court should disregard Appellants’ arguments regarding federal

preemption.

D. Fundamental Error under McCauley is irrelevant to Appellants’
Motion.

16) Appellants’ Motion cites to McCauley v. Consolidated Underwriters, 304

S.W.2d 265 (Tex. 1957) for the proposition that the temporary injunction and the

denial of supersedeas are reviewable under the doctrine of fundamental error. The

purpose of this argument is not clear because the temporary injunction and the

denial of supersedeas are already subject to ordinary review under applicable

statutes and rules of appellate procedure. However, the citation to McCauley is

irrelevant. Fundamental error is a discredited doctrine used in rare circumstances.

McCauley holds that when an appellate court lacks jurisdiction, the Texas Supreme

Court can address the lack of jurisdiction even if the parties fail to present

jurisdiction as assigned error. Id. at 265–67. This is merely an early recitation of

what is now a common doctrine of jurisdiction. “[J]urisdiction cannot be waived or

conferred by agreement, must be considered by a court sua sponte, and can be

raised for the first time on appeal. Reata Constr. Corp. v. City of Dall., 197 S.W.3d

371, 379 (Tex. 2006). Clearly in considering the interlocutory appeal of the
12
temporary injunction, the Court may, either by issue presented or sua sponte,

consider whether there is jurisdiction either in the trial court or the Court of

Appeals. To the extent that any doctrine of fundamental error continues, it has no

bearing on Appellants’ Motion. [D]ue to the policy concerns favoring preservation

of error during trial or during appeal, the fundamental error doctrine is a

discredited doctrine that is used in rare circumstances only.” Goodson v.

Castellanos, 214 S.W.3d 741, 750 (Tex. App.—Austin 2007, pet. denied).

Appellants’ Motion does not present any rare circumstance and the fundamental

error doctrine is irrelevant.

E. There is no federal basis to challenge the trial court’s actions.

17) The exclusive right of the U.S. Secretary of Health and Human Services (the

“Secretary”) to enforce §30(A) of the Medicaid Act does not preempt Texas law

regarding adoption and compliance with regulatory rules. Appellants argue that

Armstrong v. Exceptional Child Ctr., Inc., 135 S.Ct. 1378 (2015), preempts any

challenges of any sort to a state’s implementation of Medicaid. Appellants’ Motion

at 5. This reading of Armstrong is far too broad, and is contradicted not only by

other Supreme Court holdings and subsequent lower court decisions interpreting

Armstrong, but by Armstrong itself. In Armstrong, the Supreme Court held broadly

that the United States Constitution’s Supremacy Clause does not by itself create a

federal cause of action. Armstrong, 135 S.Ct. at 1383. The Supreme Court went on

13
to hold that the Medicaid Act (42 U.S.C. §§ 1396 et seq.) “implicitly precludes

private enforcement of §30(A).” Id. at 1385 (emphasis added). Armstrong goes no

further.

18) Armstrong is still very new law, but the only trial court within the Fifth

Circuit that has examined it has confirmed the limit of its holding. See Planned

Parenthood Gulf Coast, Inc. v. Kliebert, 2015 U.S. Dist. LEXIS 146988 (M.D. La.

Oct. 29, 2015). In Kliebert, the District Court rejected the Louisiana Department of

Health and Hospitals’ argument that Armstrong prevented the plaintiffs from

bringing a cause of action under Section 1396a(a)(23)(A)of the Medicaid Act. Id.

at *86 (“Armstrong can be read as definitive as to the breadth of [§30A] but of no

other section”). Armstrong does not even reach the entire Medicaid Act, much less

beyond it. The Kliebert court determined this by looking at Justice Breyer’s

concurrence, which, as the narrowest position supporting the judgment, is the

holding of the Court. See Marks v. United States, 430 U.S. 188, 193 (1977). Justice

Breyer’s concurrence discusses numerous alternative remedies available to the

plaintiffs, including their right to bring an action under the federal Administrative

Procedure Act. Armstrong, 135 S. Ct. at 1389–90 (Breyer, J., concurring in part

and concurring in judgment). Accordingly, although Armstrong holds that private

enforcement of §30A is foreclosed, it does not stand for the proposition that the

Medicaid Act broadly preempts any other state or federal cause of action. Because

14
this case does not involve a challenge under §30A, or any other federal law,

nothing in Armstrong can be construed to hold that the temporary injunction or the

denial of supersedeas constitutes a violation of the U.S. Constitution or the

Medicaid Act.

19) Furthermore, the Supreme Court has previously held that the Medicaid Act

does not preempt state laws that do not conflict with the Act. In Pharm. Research

& Mfrs. Of Am. v. Walsh, 123 S.Ct. 1855 (2003) a group of prescription drug

manufacturers claimed that the Medicaid Act preempted a Maine statutory

provision regarding Medicaid prescription drug rebates. The Court held that a party

asserting Medicaid preemption bears the burden to prove that there is no Medicaid

related goal or purpose served by the allegedly preempted state law. Walsh, 123

S.Ct. at 1868. Because there was no showing that the Maine rebate program would

result in any impediment to any Medicaid recipient’s access to prescription drugs,

or any other impediment to any Medicaid purpose, the Maine statute was not

preempted. Walsh 123 S.Ct. at 1870. In the case at bar, HHSC claims that the trial

court’s temporary injunction is somehow preempted by the exclusive remedy of

the Secretary under §30A, even though the temporary injunction is not based in

any way on §30A or any other Medicaid provision.

20) The actual basis for the temporary injunction is HHSC’s failure to comply

with the cost study requirements of 1 TAC §355.8021(a)(2)(B) and HHSC’s failure

15
to follow the APA as required by El Paso Hosp. Dist. v. Tex. Health & Human

Servs. Comm’n, 247 S.W.3d 709, 715 (Tex. 2008). In order to challenge the

temporary injunction on the basis of Medicaid preemption, Walsh requires HHSC

to demonstrate that §355.8021(a)(2)(B) results in an impediment to a Medicaid

goal or purpose. Because HHSC has not made any attempt to do so, Appellants’

Motion presents no basis to claim that the temporary injunction is preempted by

the Medicaid Act.

F. The trial court orders do not violate any provision of the Texas
Constitution.

21) Rider 50 does not mandate rate reductions. On page 18, Appellants’ Motion

claims that the temporary injunction violates the separation of powers clause of the

Texas Constitution because the reductions are mandated by Rider 50. This is a

mischaracterization of Rider 50, Subsection (c) of which provides: “HHSC shall

reform reimbursement methodology to be in line with industry standards, …while

considering stakeholder input and access to care. … $50,000,000 in General

Revenue Funds savings should be achieved through rate reductions and

$25,000,000 in General Revenue Funds savings may be achieved through various

medical policy initiatives…” and Subsection (d) of which provides: “HHSC shall

develop a plan to allocate the reductions required by Subsection (a) of this rider by

taking actions such as those suggested under Subsections (b) and (c) of this

rider…” 6 RR at Ex. 9, p.3. (emphasis added). The only mandate in this provision
16
is the requirement that reimbursement methodology shall be reformed. The

language regarding rate reductions and other savings is in permissive, not

mandatory language. The absence of mandatory language was pointed out to

Appellants by letters from legislators which were introduced as evidence at the

temporary injunction. 6 RR at Ex. 32. Because Rider 50 did not compel the

proposed rate reductions, there is no basis to claim that the temporary injunction

improperly interfered with any legislative or executive authority in violation of the

Separation of Powers clause.

22) The temporary injunction does not prevent Appellants from adopting rates

in conformity with applicable rules. On pages 6–8, Appellants’ Motion claims that

the temporary injunction constitutes “judicial review” of HHSC’s rates, which is

yet another mischaracterization of the temporary injunction. The trial court found

that HHSC failed to comply with state law, namely 1 TAC §355.8021(a)(2)(B) and

the APA in adopting and promulgating the proposed rates and merely prohibited

the implementation of rates promulgated in violation of Texas law. CR 592–96.

This is not a substantive review of the rates themselves, but is merely a reflection

of the unremarkable proposition that HHSC, like all other State actors, is not

authorized to act in an arbitrary and capricious manner in disregard of Texas law.

23) Furthermore, Appellants claim that the temporary injunction somehow

prevents HHSC from complying with an alleged legislative mandate to implement

17
rate reductions. This is completely false – nothing in the temporary injunction

prohibits HHSC from promulgating and adopting rates in conformity with Texas

law. The temporary injunction only prohibits two things: a) implementation of the

rates that were adopted and promulgated in violation of Texas law, CR 595; and b)

adoption and implementation of new rates without complying with the

requirements of §355.8021(a)(2)(B). CR 595–96. While the temporary injunction

remains in effect, HHSC is fully permitted to implement new rates so long as the

rates comply with Texas law. Therefore the temporary injunction has not prevented

HHSC from adopting rates to implement the alleged mandatory budget

requirements of Rider 50. It merely, and unremarkably, requires that HHSC

comply with state law while doing so. Because the temporary injunction allows

HHSC to promulgate and implement rates in accordance with state law, there is no

violation of separation of powers or business with the United States clauses of the

Texas Constitution.

24) The Texas Supreme Court has expressly approved the judicial review of

reimbursement decisions made by HHSC in violation of state law. In El Paso

Hosp. Dist. v. Tex. Health & Human Servs. Comm’n, 247 S.W.3d 709 (Tex. 2008),

HHSC had ignored its own regulatory rules in changing its system of calculating

Medicaid reimbursement rates. The Texas Supreme Court did not dismiss the case

on the basis that the separation of powers or the business with the United States

18
clauses of the Texas Constitution prohibited the courts from reviewing HHSC’s

failure to comply with its own rules and the APA. The Court held that because

HHSC did not comply with its own regulatory rules and did not comply with the

APA to promulgate new rules, the change in reimbursement calculation was a

violation of Texas law. El Paso Hosp. Dist. at 715. This case is no different and

there is no basis to claim that the temporary injunction violates the Texas

Constitution.

G. Appellants never presented any of these arguments to the trial
court, nor have they cited any record references for any briefing or
evidence in support of their contentions.

25) Appellants admit that this Court should apply an abuse of discretion

standard of review to their Motion. Appellants’ Motion at 3. In order to show this

Court that they have preserved error as claimed in the Motion, Appellants must

show that the complaint was presented to the trial court by a timely request,

objection, or motion that stated the grounds for the ruling sought. TRAP 33.1(a).

“As a rule, a claim, including a [federal] constitutional claim, must have been

asserted in the trial court in order to be raised on appeal.” Osterberg v. Peca, 12

S.W.3d 31, 39 n.6 (Tex. 2000). Appellants never presented any request, objection,

or motion to the trial court claiming that the relief sought in this lawsuit violated

the Medicaid Act, any provision of the U.S. Constitution, or any provision of the

Texas Constitution. Furthermore, Appellants’ Motion is wholly devoid of any

19
citations for presentation of preserved error, evidence in support of their

contentions, or trial court rulings on their objections. Appellate courts are not

required to search the record for support for an appellant’s objections. Fredonia

State Bank v. General Am. Life Ins., 881 S.W.2d 279, 283 (Tex. 1994). If the

appellant does not include record references, the Court may consider the point

waived. Id. at 284. Because Appellants’ Motion does not comply with TRAP

33.1(a) and fails to cite any record support, the Court should deny the Motion

because all grounds have been waived.

26) The only evidence cited by Appellants’ Motion is the October 14, 2015

affidavit of Pam McDonald. Appellants’ Motion p. 22–23. The temporary

injunction and denial of supersedeas hearings took place from September 21–23,

2015. 3 RR 1 – 5 RR 9. Clearly the Court did not consider Ms. McDonald’s

affidavit in entering the temporary injunction and the denial of supersedeas,

because the affidavit did not even exist. Appellants cannot claim that the trial judge

abused his discretion based on evidence that did not exist and was not presented

prior to the ruling on the temporary injunction and denial of supersedeas, therefore

the Court should disregard the affidavit of Pam McDonald and any arguments

based on it.

20
 H. Appellants expressly consented to the bond and have not preserved
any appellate review.

27) As an alternative to vacating the denial of supersedeas, Appellants now urge

the Court to “reduce the Counter-Supersedeas Bond.” Appellants’ Motion at 21.3

During the hearing on the request for denial of supersedeas, Appellants expressly

consented to the $500 bond. Appellants’ counsel stated that Appellants’ had

“proffered $500,” and acknowledged “that that’s reasonable.” 5 RR 9. This

constitutes express consent to the amount of the bond. Appellants cannot contend

that the trial judge abused his discretion in ordering a bond amount which

Appellants agreed was reasonable.

28) Not only did Appellants consent to the bond, they never requested the trial

court to review the adequacy of the bond. An appellate court “cannot review the

trial court’s exercise of discretion in ordering the amount of security unless the

record demonstrates that a request was presented to the trial court to determine the

sufficiency of the bond and that the trial court made a ruling thereon.” Law Eng’g

& Envtl. Servs. v. Slosburg Co., 100 S.W.3d 389, 390 (Tex. App.—Houston [1st

Dist.] 2002, order) (citing Hamilton v. Hi-Plains Truck Brokers, Inc., 23 S.W.3d

442, 443 (Tex. App.—Amarillo 2000, no pet.)). Without a motion in the trial court

to increase the amount of the bond, the court of appeals “does not have jurisdiction

3
Presumably, Appellants meant “increase.” Appellees have no objection to a reduction in the
bond amount.
21
to consider this matter.” Law Eng’g, 100 S.W.3d at 390. Because the request to

increase the bond was not presented to the trial court, the Court has no jurisdiction

to consider the request and Appellants’ Motion should be denied.

I. There is no evidentiary or rational basis for the alleged budgetary
impact of the temporary injunction.

29) Appellants have requested the Court to order a $100,000,000 bond as the

alleged harm to be caused due to the supposed mandatory budget obligations that

span the next two years. There is absolutely no evidence to support Appellants’

claim of $100,000,000 in harm – Appellants have not cited to any documentary

evidence, trial court testimony, or affidavit supporting this claim. One obvious

reason for this is that no rational person could provide such testimony because it

has no relation to the effect of the temporary injunction. Even if Rider 50 is a

mandate — which it is not — the $100,000,000.00 would be saved over the next

two fiscal years. 6 RR at Ex. 9 p. 3–4. Trial in this case is set for January 18, 2016.

CR 596. At most, the Appellants’ exposure is for whatever portion of the savings

would be realized by that date. But more fundamentally, the only evidence relating

to the impact of the rate cuts on HHSC is the testimony of Richard Allgeyer,

Director of HHSC’s Center for Strategic Decision Support. Mr. Allgeyer testified

that “because Medicaid is an entitlement, if we run out of our appropriation, they

will give us a supplemental appropriation next session. They won’t like it, but they

22
will, and they almost always do because this is a lot of money.” 4 RR 240. There is

simply no evidentiary basis for the alleged impact of the temporary injunction.

30) Even if this Court were inclined to consider Appellants’ request without the

benefit of an underlying trial court order or supporting evidence, Appellants bear

the burden to show that their request for a $100,000,000.00 bond is not likely to

cause Appellees substantial economic harm. Accord TEX. CIV. PRAC. & REM. CODE

§52.006(c); TEX. R. APP. P. 24.2(b) (instructing trial courts to lower amounts of

security required to suspend enforcement of judgments to amounts that will not

cause substantial economic harm to judgment debtors). Such a bond amount would

obviously cause Appellees tremendous substantial harm. Though Appellees would

be happy to offer evidence to that effect in an appropriate proceeding with the trial

court, this Court can infer as much from Michael Reiswig’s testimony. Mr.

Reiswig is president and CEO of Care Options for Kids, 3 RR 80, whose revenue

makes up approximately 9% of the home health market for pediatric therapy. 3 RR

84. He testified that an annualized loss of just $4.5 million dollars would force his

company to “close the doors.” 3 RR 100. Posting a $100,000,000.00 bond would

certainly have the same effect.

31) Finally, Appellants cannot show that the temporary injunction has any actual

impact on the HHSC budget because HHSC is not prohibited from adopting rate

reductions so long as they comply with their own regulatory rules and the APA.

23
The temporary injunction permits HHSC to adopt rate reductions so long as it

complies with 1 TAC §355.8021(a)(2)(B). CR 595–96. If HHSC believes it is

under a legislative mandate to implement the rate reductions, all it needs to do is

comply with its own regulatory rules, or adopt new rules as required by the APA,

to promulgate and implement the new rates. HHSC has not made any attempt to do

so, therefore the failure to implement rate reductions to achieve the alleged

mandatory budget savings is due to HHSC’s own inaction, not the temporary

injunction.

IV. CONCLUSION

32) Appellants’ Motion constitutes a direct attack on the temporary injunction

without even a thin disguise in the form of a motion to vacate the denial of

supersedeas. The Motion wholly mischaracterizes the basis for the relief sought

and the legal grounds for the temporary injunction in order to fabricate claims of

federal preemption and constitutional violations out of whole cloth. Nothing in the

relief requested or granted violates any federal statute or any constitutional

provision. Furthermore, Appellants failed to preserve and have waived all

objections in the Motion because Appellants never presented those objections to

the trial court, nor is there any attempt to show preservation of error or evidentiary

support through record citations. Appellants expressly consented to the bond

amount and never requested the trial court to reconsider the bond, therefore there is

24
no basis for the Court to consider the request to increase the bond. Even if such

request had been preserved for appellate consideration, there is absolutely no

evidence to support the claimed bond amount, which is wholly divorced from any

actual impact that might result from the temporary injunction. Accordingly, the

Court should deny Appellants’ Motion.

Respectfully submitted,

RICHARDS RODRIGUEZ & SKEITH, LLP
816 Congress Avenue, Suite 1200
Austin, Texas 78701
Telephone: 512-476-0005
Facsimile: 512-476-1513

By: /s/ Daniel R. Richards_____________
DANIEL R. RICHARDS
State Bar No. 00791520
drichards@rrsfirm.com
BENJAMIN H. HATHAWAY
State Bar No. 09224500
bhathaway@rrsfirm.com
CLARK RICHARDS
State Bar No. 90001613
crichards@rrsfirm.com
CHASE C. HAMILTON
State Bar No. 24059881
chamilton@rrsfirm.com

ATTORNEYS FOR APPELLEES

25
 CERTIFICATE OF SERVICE

I hereby certify that the foregoing document has been delivered to the
following counsel of records on this, the 9th day of November 2015 by electronic
notification and e-mail:

Kristofer S. Monson
Assistant Solicitor General
Office of the Attorney General of Texas
P.O. Box 12548, (MC 059)
Austin, Texas 78711-2548
Kristofer.monson@texasattorneygeneral.gov

/s/ Daniel R. Richards_____________
DANIEL R. RICHARDS

26
 APPENDIX

TAB 1 Letters from legislators to Commissioner Chris Traylor
(6 RR at Ex. 32)

27
TAB 1
 STATE of TEXAS
HOUSE of ILEPILESENTATIVES

JUL

Chris Traylor, Executive Commissioner July
Texas Health and Human Services Commission
Brown-Heatly Building
49oo N. Lamar Blvd.
Austin, TX 7875I-~3~

Re: HHSC proposed rate reductions for certain acute care providers in home health and
outpatient settings.

Dear Commissioner Traylor,

I first want to reiterate both my enthusiasm for and congratulations on your
appointment as Executive Commissioner of the Health and Human Services
Commission. The agency is in great hands, and that is great news for all Texans,

I therefore write to you with the hope that you hear my strong opposition to the rate
reductions that HHSC has proposed for physical, occupational, and speech therapy
provided in certain home health and outpatient settings, While other states are
accepting billions in federal dollars to create actual healthcare systems for their poor
and working class citizens, Texas is now deciding whether to implement changes that
could deny critical services to 50,000 poor and sick children.

This does not have to happen. First, Rider 50 does not compel these reductions,
and in light of what we kamw now, I question whether it even allows such reductions,
The language contained in the rider does not require HHSC to reduce rates by a certain
amount, The rider was carefully written to use the word "should" - not "shall" - in
reference to a potential dollar amount with regards to these redflcfions. This is no small
difference, particularly when the same subsection does in fact compel - by the use of the
word "shall" - HHSC to make these reimbursement reforms "while considering
stakeholder input and access to care,"

Exhibit
Date
Kelly Fisi:iel;

HHSC00002354_00022
I therefore ask whether HHSC h~s in fact considered these two required f~ctors, Access
to care will certainly be cut off for tens of thousands of Texas children, many of whom
have chronic but very treatable conditions. As for stakehb]der input~ you have not just
heard from me and so many of my colleagues; you have also heard from the almost 200
people who were able to make it to HHSC’s Overcrowded public hearing on Monday to
describe the harm these reductions would cause.

Meanwhile, I do not know of any Legislator who has written in support of these cuts.
A.~er all, what elected official would want to put their name next to a decision so
harmful to Texas children? And that is exactly the problem with HHSC moving forward
with the proposal. We all lauow that tough choices must be made, but the citizens of this
state deserve do have their elected representaf2ves make - and defend - those choices. It
is not HHSC’s job to make the unpopular deci.sions the Legislature will not, and doing so
would be a disservice to you, the agency, and the people of this state.

I therefore ask that HHSC not move forward with the proposed cuts. They are
unnecessary, harmfi~l, and could even be self-defeating in terms of cost hy allowing
currently manageable conditions to transform into chronic, lifelong ailments.

Thank you for your good work and service to the State of Texas.

Sincerely,

Garnet F. Coleman
Texas State Representagve
District 147
5t2.453.o5~4

HHSC00002354 00023
 TEXAS HOUSE OF REPRESENTATIVES

GENE Wu
Dis’rl?lc’r I ;37

-July 16, 2015
The H~norable Chris Traylor
EXecutive Commissioner
Texas Health and Human Services Commission
Attn: Rate Analyslse Mail Code H-,tO0
Brown-Heatl~, Building
490O North Lama,
Austin, Texas 78751

Deaf Commissioner Trayior:

I am writing to express my deep concern about the proposed cuts to Med[cald reimbursement
rates for physical, occupational, and speech therapy. Such cuts are projected to result In the
disastrous loss of access to medically necessary services for t~ns of thousands of low4ncome
children with devel.opmetlta] delays arid.~pedal needs. I Join fellow legislators In opposing these
cuts, and ask thai: you priorttize the needs of our most vulnerable Texans by ensuring access to
these services,

Medical communities widely accept that children with disabilities reach thelr fu!les~ potential
when they have access to eady and consistent Intervention. Klds who use these much needed
evldence~based :~beraptes are mare likely to succeed In school and later In the workfotce, which
reduces.their dependence on care and services later tn life. It ls our s~te’s legal and e~hlcal
obligation to ensure access to care for children with special needs - and this rate @I: will mean
that many low-income families will no longer have access to necessary care.

.Many of the clinics tha~ provide these, medical!y necessary services wlll not be able te Continue
to. operBte when these deep raise ~uts go into effecL S~afF at one clinic In my dls~c’~ wh!ch
serves over 600 child[on told my offtcetha~ theywou d need to shuI~ their doors. Not only will
the children they serve lose the care they need, but their 100 employees wll lose their Jobs.
Tliis wll!. be the situation for Clinics aci’o~ T~as if HHSC authorizes this rate change. Children

C^~rou; P.O. Box 2910 . Aus’no, TX 78768-29 I0. (512) 463-0492. F~x: (512) 463-1182
D~rmcr; 6500 Roo~m. S,ao. C, HousTon, TX 77074. (713) 271-3900

H HSC00002354_00003
from families with means wil! continue to have access to the services they need, while children
from low-Income families wlll be left behind,

I do not belleve that budget Rider 50 mandates these drastic cuts, especially given the effec~
they would have on access to care. The lmpac~ of this rate change’may violate the righl: of
children with disabilities to access medically necessary services, ;1 urge you not to proceed with
this dangerous plan. :[t threatens the well-being of Texas children, and Is counter to our duLM as
a state to provide medical care for low-income klds.

Thank you t~or your consideration. Please do not. hesitate b~ contact my office If you have any
questions or would like to dlscuss this issue further.

Sincerely,

Gone Wu
State Representative
Dlstdct 137

HHSC00002354_00004
 Mary E, Gonz ez
Sta~o Represen~atlve, District 75

July 17, 2015
JUL 2015
Commissioner Chris Traylor
Texas Health and Human Services Commission
Attention: Rate Analysis, Mail Code H-400
Brown-Heatly Building
4900 North Lamar
Austin, Texas 78751

Re: Proposed changes to reimbursement rates under Rider 50 of the 2016-2017 Biennium Budget

Dear Commissioner Traylor,

]t has come ta my attention that HHSC is currently reviewing proposed changes for the reimbursement
rates as a part of fulfilling the cost reduction plans outlined in Rider 50 of the 20 ! 6-20] 7 budget. ] want to
share, in no. unclear terms, my deep concern about the possibly devastating potential of the proposed rate
reductions for Medicaid reimbursements,

Reducing reimbursement rotes entries a significant risk for those who rely on Med~cald. When
reimbursement rates fall, the impact is felt most distlnefly by the patients - in this case, children and
families with serious medical needs. Ira Medicaid patient becomes a financial burden, physicians may
have no choice but to turn them away.

According t6 conservative estimates, a $50 m~lllon reduction in reimbursement rates for these Texans
would leave’60,000 pediatric patients without access to vital healthcam services - and this is the low end
of the potential cost to publi~ health in our state.

Further, these reimbursement rate reductions stand to impact the availability of therapy services. At a time
when Texas faces shortages of tralned healthcare l~rofessionals across the state, we could lose a further
7,500 therapists who would find themselves unemployed as a result of these rate r~duotions.

The patients who receive these services are lacing birth defects, genetic disorders, and physical or
cognitive disabilities, They have cerebral palsy, developmenta! delays, or were born preterm and require
intensive medleal services and ewe. By ~’ocusing the reimbursement r~duetions requested in Rider 50 on
~ese services, we are placing the burden on the Texans who most need our support - and their families,

For me, this isn’tjust about policy - it is personal, My youngest sister has a developmental disability, and
I have soon firsthand the importance ofhealtheare access to her quality of Itfe, My family strives to
support her the best way we can, but if she were ever unable to access healtheare services duo to an
attempt to reduce reimbursement rotes, the impact would be devastating. For the ten.s of~oussnds of

2910, Agstln, T~s 78768-~910 ¯ ~hone (5!2) 468-0613, fax 1~12)4’~,3-1237. rnao’.gonzale~@house.~l~le,~.us
Dhlrkt O~ic~: 1 }200 Sanlo~ ,~nch~z Roed, Socorro, Texas 79927, phone (915) 790-229?, fox (9~ 5) 790,2

HHSC00002354_00008
 Mary E. Gonz lez
Slate RepresentatiVe, Dislr~c~ 75

famillesjust like mine, who have children and brothers and sisters they love, who stand to feel the most
dir~ot impact ~om this rate reduot}on - f ask you to rejeot th~s proposal. We should be supporting these
families, not asking them to carry an oven greater burden,

Thank you for your consideration, If there is ever any way 1 ~an be of assistance on this issue ot any
future rule proposal, please feel free to contact me at any time by calling my office at (512)463-0613 or
emailing me at Mary.G6nzalez@house,state.tx,us,

Sineemmert~e,.

House Dis~et 75

P.O. Box 2910. Ausgn~ T~×os 78768.2910 ¯ phone (512) 4fi~-0613, t’a~ (512) 463.1237. rnapi.f]onzalez@house.slale.lx.us
Dis{’ri¢/Office: 11200 Sonlos Soncl~ez Rood ¯ Socorro, Texos 79927 ’ phone {915) 790-2299,/’o~ (915)790.2144

HHSCO0002354_O0009
 Re, so~ 2~1o

SYLV~STI~R TURNEH
STAT~ REPREs ENTATIV~:

July 20, 2015

Mr. Chris Traylor
Executive Commissioner
Texas Health and Human S~rviees Commission
Atlention: Rate Analysis, Mall Code H-400
Brown-Heafly Build~g JUL 21 ’ 015
4900 North Lamar
Austin, Toxas 78751 0FR~EOF~E

Dear Commissioner Traylor:

Thank you for yourprompt reply to my previous inquiry regarding pediatric therapy rates.

Pi~asO allow me to :dt~e0t your attention to the *~access to ear~" referenez in Rider 5.0. This !aaguago first
app~arecl, and was adopted overwhelmingly, in the Texas HoUse. The words are pur~0sOful anti carry
intent. " ’

provide .m~ With a copy Of all impact s.tudles and e~onom[~ analyses ~athavo b~n. conduced
pmvtder no~orks. Pteaso al~o fd~d to me ~y slm~l~ stu~os Or e~omin ~alyses ~at hav~ be~n
e0ndueted by anyon~ of~SC~s con~ae~d managed-care organt~ons ~g~ding ~is Issue.

.~iS,..SO ~hat lmay ~a~e?f~lly mvie~ me aee~ t0 ~ta whloh you ~o basing ~ d~o~Si0ns rog~dlng
~hese ra~reducaom. ’ ......

Thank you wry muoh,

Sincerely,

Rep. 8ytvester Turner
Distrlot 139~ Houston, Texas

HHSC00002354_00001
 COMMI’fTISES;

PRE~81DENI" PRO TEMPORE
1999 - 2000
Tranepodallon

July 20, 2015

Mr. Chris Traylor, Executlvo Commissioner
Health and Human Services Commission JUL 2, t ’2015
4900 N. Lamar Blvd.
Austin, TX 78751.2316

Dear Commissioner Traylor,

It has come t0 .my attehtioa !hat them are proposed reductions to Medlca~d reimbursements for
physical, occupational, and _~..~e~h therapy provided by Comprehensive Outpatient Rehabilitation
Facilities/Outpatient ~-ehabfl~tation Facilities .(CORF]ORF), Home Health Agencies (HHA), and
.~dependemt Therapists set to .,go into effect in September, Medical providers of these criti~at
s~,r~ices in my district have ~i~ress~d concern that ahese reductions could make it difficult to
provide fllese esse.,afial services.

Reducing all Medicaid reimbursement rotes for physical, occupational and speech therapy to 145-
pereen~ of the median Texas commeroi~ reimbursement rate will have a damaging impact on access
to services for medically £ragiie.elflldren, Thes~ rate reductions will likely decrease patient options
for thet~p~ services in my d~Striet~ reduce the tir~e frame for when services can begin, and risk
provider eontlnuity for therapy services needed by tSe~patient,

I untierstand that tlie.Health and Human.~,erwces’ Commission
..... (HHSC)
RiderS0"
..... (e) in H;B, i, g4th
Legi~Iature, Regular Session, 20i5, directs. ~8C to achieve at feast $50 million in General
Re~)enue ~avings each fiscal yoaz~ through rate reduetions~ However, Rider 50 (~): allows I-II-ISC to
e0nsider~stakeholder input and ae~ss: to ears wlae:n determini.ng the methodology to be usod for
reimbursement of therapy services,

1 would urge you to carefully consider how these reductions will impact therapy services throughout
the state b~£ore making a decision to implement reductions that COuld rextuee access ~o essential
therapy services,

Thank you for your consideration, Please contact my office if you need additional Information or
have any questions,

Lydo aani’m P.o. ~ax 12068 2440 Texas Parkway, Sulle 110
Houslon, Texaa ~f102 (612) 463-01t8
(713) 236-0308 (281) 281-2380
FAXt (512) 403.0008
FAX~ (713} 236,0604 FAX: (281) 26!~726
Dial 711 For Relay Dells
E.MaI/: rods ey, ellls @son ate,slata.~,u8

HHSC00002354_00002
 COMMITTEES
COMMITTEE8
FINANC~ W~ Chair THE SENATE OF TEXAS NATURAL RESOURCE8 &
LEGISLATIVr~ BUDGRT I~OARD.
ECONOMIC DEVELOPMENT
SUNSh’TADV~SORY COMMISSION JUAN aCHUY" HINOJOSA AGRICULTURE, WAT~iR~:
PRESIDENT PRO TEMPORE RURAL A~AIP~
C~E~AL JLTSTIC~
DISTRICT 20

July 20, 2015

C VED
Comm~!o..neeChrls Traylor
Texas Health anti Human Services Commission
Brown-Heafly Building
4900 N, Lamar Boulevard
Austin, Texas 78751-2316

Dear Commissioner Tro!! or,

I am concerned with the proposed Medicaid payment rates that the Health and Human Services
Commission h~s recommended for physical, cecupationfl, and speech therapy provided by
.Comprehensive Outpatient Rehabilitation Facilities/Outpatient Rehabilitation Fa0illties
(CORF/ORF), Home HeMth Agencies (HHA), 0rid Independent Therapists. The proposed rate
reductions are not equitable and I am concerned that a significant access to care problem will
ensue should these rates be implemented.

As Vice Chair of the Senate Finance Committee, I am well aware of the legislative directive for
rate reductions in Medicaid spending by the State of Tex~s, and that these proposed rates are
intended to accomplish the goals of the General Appropriations Act, Heal~ and Human Services
Commission Rider 50 (House Bill 1, 84R). Utilizing cost containment measures to reduce our
state’s Medicaid burden is necessary and frequently beneficial, however, these proposed rates are
a very Iorge rate reduction in a short amount of time.

Implementing the proposed rates could result in an inadequate network of these providers in our
state, ~ud threaten the aocesslbility to therapy for our most vulnerable populations, Many therapy
providers will not be able to absorb such a large rate cut and may no longer remain viable
causing them to go out of business. This is particularly concerning in rural areas ~d areas with
high Medicaid populations such as my Senate District in the Rio Grande VMley.

P,O, BOX 12068 SOUTH FADRE ISLAND DRIVE, SUITE 291
McALLEM~ TEX.4S 7~504-30~9 CAPITOL DUILD1NG CORPUS CHRISTI, TEXAS 784aS
AUffHN, TF~KAS 787H 3611ZZ%1200 ¯ FAX:361/225,0119
TOLL FREI~ 866/269-5016
S12/465-1)120 ¯ FAX:512/dfi3..03..93
DIALTI1 IZOR RELAYCALLS

HHSC00002354 00005
 It is critical that the HHSC rate setting process take into account the comments, suggestions, and
perspectives of our Texas therapy providers, all of whom have first.hand insight of the situation
and wilt be impacted by your decisions, The intent of the Legislature is to effectively reduce
Medicaid spending, yet implement an equitable rate reduction ~hroughout provider types and
allow providers to remain viable and maintain the quality of care Texans deserve.

Thank you for your time and consideration of this matter. Should you have any questions or need
additional information, please contact my office.

~I2 NOLANA, SUITI3 410B P,O, IIOX 12088 ~OUTH PADRE I~LAND DR1VE~ SUITE 291
CAI’D’OL B UILDING CoRPus C[-[RIS"TI~ TII,YAS 78415
AUSTIN, T~..
methodology ~t.o..-i.~,j!;m:~e with industry, standards, policies, and
utilization for acute care theraPY .~..
Sd~’~’,k;’:~i~~’dludin
~.S.--: ~. g physical,. occupational,
" and s eech
therapies) whale considering stakeho!~< ~,’.~a)esS.to care."
. . .
,e goal .9f this rider ~ 1o ~s~e.:X~,.-p,~yerqd~!I.~s .are .used efficiently and.. providers~ are
.~dm~ursed at a rate simila~{:~to.:.4hd:’:~{o.,~erei:at. :~."m~kket and MedieVal-rates;:~f 0~er States,
services,’ -:,-," . ,"-, . , . " , ’ . , ,. . , o ¯ ., ,

:M.. ~g !~o:u.s..e);~era-.5av6 ,eaehe;d ~out-Tm-.,he::; C~ssion wi~ ~_e~f:4oneer:n;’: ,W.N.~h: I ’share,:

. :........ .... ,.. p -. _"......

network adequacy,!~:it ~iates {0 a¢cesg~b d~’~ls a eri{erio~i to maintain’~g~

I.t is my belief the ianguage in Rider $0 gives the Commission the necessary flexibility to achieve
certain rate reductions without jeopardizing access to care or compliance with federal law.

Sincerely,

Cc: Governor Greg Abbott Lt, Governor Dan Patrick
Speaker of the House Joe Straus Senate Finance Chair Jane Nelson
Members, Texas House of Representatives
COMMITTEE ON HOUSE _A_PPKOPKtATIONS, CHAHK
REPRESENTING LIBERTY, SAN JAGINTO AND WALKE1K COUNTIES
DI STRICT18.OTTO @FIOU S E.STATE,TY~US
 P,O, BOX 12068
CAPITOL BUILDING
AUSTIN, TEXAS 78711 FINANCE, CHAIR
512/463-0112 SUNSETADVISORY COMMISSION, CHAIR
FAX: 512/468-092~] LEGISLATIVE AUDIT COMMITTEE
LEGISLATIVE[ BUDGI2Pl" BOARD
DISTRICT OFFICE STATE AFFAIRS
1235 S, MAIN STREEt, SUITE 280
GRAPEVINE~ TEXAS 76051
8171424-3446
F~X’, 8171488-6646
E.MAlL: jane.nelson@senate.state.tx.us

September 10, 2015

Executive Commissioner Chris Traylor
Health arid. Human Services Commission
4900 N. Lamar Bird
Austin, Texas 78751

Dear Commissioner Traylor:

I am writing to reiterate my strong support for the Health and Human Services Commission (HHSC) to follow ¯
the LeNslature’s clear written instructions and intent that adjustments to Medicaid therapy rates proceed in a
mamaer that preserves access to these important services.

Last year, an independent study conducted by rese~ehers at the Texas A&M School of Public Health concluded
that’Texas Medicaid rates for pediatric acute care therapy services are sigttificanfly higher than the Texas
commercial rate, commercial rates in other states, and MediCaid rates in other states. This is ha addition to
research conducted by HHSC that demonstrated similar findings.

As a result, the Legislature included HHSC Rider 50 in the 2016-17 General Appropriations Act, which directs
the Commission to reduce Medicaid pediatric acute care therapy rates to a more appropriate level. Rider 50
explicitly states that the Commission should consider access to care when implementing these rate
reductions. Furthermore, federal Iawreoub’es.that in setting Medicaid rates states must.preserve access to care.

We must re-align mtr rates to prevent tgxpayers from being overcharged for these services. However, we need
to move forward in a responsible manner that complies with Rider 50 and federal law. I believe, mad have
c6mmutticated to you, that the language in the rider gives the Commission the flexibility to phase-’m the rate
reduction to prevent any disruption in the delivery of these important services to children across the state.

Very truly yours,

Senator Jane Nelson

CC: Governor Greg Abbott Speaker of the House Joe Straus
Lieutenant Governor Dan Patrick House Appropriations Committee Chairman John ~)tto
 911112015 Quorum

September 10, 2015 3:23_PM

Speaker Straus puts ~SC on notice: The agency needs to tell
lawmakers if cuts will harm access to.. care for disabled kids
Straus says it is HHSC’s "responsibility to inform the Legislature if the proposed
reductions would harm access to care and network adequacy."

Speaker Joe Straus on Thursday afternoon posted this statement on Facebook:

"My office has received a number of inquiries regarding proposed Medicaid rate reductions for acute
care m~lJy se~wc~s. ~11e~ seiwices m’e crmcm~y important to many Texas families.

The state is required to provide Medicaid recipients with the services for which they are qualified.
The state is also committed to making sure that the Medicaid program is managed efficiently and that
taxpayer dollars are used wisely. ;

Earlier this year, the LegisIature directed the Health and Human Services Commission to reform the
acute care therapy reimbursement methodology to be in line with industry stanciards, policies and
utilization. That realignment calls for a reduction of rates. The Legislature also directed IzII-ISC to get
stakeholder input and to consider access to care, which includes network adequacy, as required by
federal guidelines, when deciding how to implement those reductions.

The Commission originally proposed reducing therapy rates by $50 mitlion per year for the next two
years. My office was in regul.ar contact with the other members of the Legislature, the Commission,
and pro~,iders of acute therapy services to ensure that sufficient access to services were maintained.
HHSC also proposed a modified plan that I viewed as a reasonable compromise. However, before a
final proposal could be considered, a court challenge was filed.

That lawsuit has been dismissed, which means the agency will begin the process again by proposing
new rates. I expect the Commission to keep us in compliance with federal law as it works through a
new proposal. I also believe it is the agency’s responsibility to irffo~au the Legislature if the proposed
reductions would harm access to care and network adequacy.

I wiI1 continue to monitor this issue closely as HHSC considers how best to implement these
reductions. It is important to me and many of my House co!leagues that I-!HSC implement these rate
changes in a way that does not harm access to care."
http:llwww.quommreport.com/Subscfibers/Arficle.cfm?IID=24282 112
 91! 1/20.I5 Quorum Report: Article
By Scott Braddo,:k

lid 24282

Copyright September 10, 2015, I-Iarvey Kronberg, www.quorumreport.com, All rights are reserved

http:/Iwww .quorumrepomcom/Subscribers/Ar tiele .cfm.OllD=24282 2/2
 Senator
¯ Craig Estes

September 14, 2015

Commissioner Chris Traylor: ,
Executive Commissioner, Health and Human Services Commission
Mail Code-4001, 4th Floor
¯ 4900 North Lamer Blvd,
.Austin, TX 78751

Dear Commissioner Traylor,

Medicaid providers in my district have alerted me to serious concerns tl~at will result from
proposed rate cuts for acute care therapy providers, including physical, occupaV~onal and
speech therapists. It is my understanding that the Legislature directed Health and Human
Services ComraiSsio~ to implement Medicaid fundingre~U~ions and cost containment
strat~g~es.ir~:~HS.~Rider #~0; I hard :learned the eff6ct 0~the:proposed rate reductions, if
implemented as scheduled, may unintentionally limit access to care, particularly in rural
areas,

~ ~ ~:. Rider #S0 was meant to safeguard taxpayer dollars by directing those dollars be used
~:, efficiently and providers be reimbursed at a rate similar to the commercial market and
¯ Medicaid rates of other states. As you know, commercial rates may be affected by
,-’"i~dditional factors including limits on utilization, coinsurance and copayments.

’,, .. ’ Pl.ease ensure HHSC gives full and due consideration to stakeholder proposals that have met
¯ :.’ . ):~h HH~C.toprovide:al~e~nafive strategies to achieve the S~vings required while.ensuring
¯ "" ,,!~;..":
:::. :~t,.. anyrate, efi~. do noth:a~ea.
. disr~ro~ortiona~e
.......... share on access to se~ces for the Texans".
¯
¯ ’. ¯ :’~.k Who depend on these services in rural areas. ~.

:’. : :.~i ~ppr.eciate your consideration and thank you for your leadership of the Texas Health an~
~.~. .Hum,.a.n Services Commission. As always, please feel free to contact me if I may ever assist
you in any way.

Respec ~t~Yl .~

CAPITOL O~F~CE:
~,O. Box 12068 DENTON DISTRICT OFFICE: SI-~ RMAN DISTRICT OFI~ICJ]:
A~Jetin~ Texas 78711 4401 NortI~ 1-35, Suite 202 1117 GalJaghcr~ Su][e 340
512-463-0130 Denton Texss 76207 8herm~, ~x~ 750~
lAX: 512-463-8874 ¯. 940-898-0331 903-86~2~7
Dial 711 for Relay C~lls Yax~ 940.898-0926 Fax: 903-868-9666