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New York Health Plan Association
41 State Street, Suite 900
Albany, NY 12207
Response to New York Health Plan Association Memo in re: S.3468/A.3408
October 30, 2023
To Whom It May Concern:
We are reaching out to the New York Health Plan Association (NYHPA) on behalf of the New York State (NYS) chapter of the American Academy of Orthotists and Prosthetists (NYSAAOP) in regards to the recent memorandum published by the NYHPA in opposition to S.3468/A.3408 championed by Gustavo Rivera and John McDonald, respectively. This bill would require Medicaid managed care organizations to reimburse durable medical equipment (DME), as well as orthotic and prosthetic (O&P) providers, at no less than one hundred percent of the NYS Medicaid DME Services fee schedule, which includes O&P clinical services . In reviewing NYHPA’s memo, we noted several misinformed or misleading statements. We are reaching out to provide clarity on these misconceptions, as well as extend an invitation to the NYHPA to collaborate with us on meeting shared Medicaid recipients’ needs in NYS. We noted the following areas of concern:
1. Adequate Networks:
The NYHPA memo states that “plans currently have robust durable medical supply networks.” Since the bill in question applies to DME, as well as clinical O&P services, we find this statement to be misleading. As far as networks for clinical O&P services, the state has seen a substantial change in the number of O&P providers available, in both metro and rural areas. A large factor in the dramatic reduction of the number of providers available has to do with the poor reimbursement rates from both Medicaid and Medicaid Managed Care plans, negatively impacting economic viability for providers. In fact, according to the relevant accrediting organization, the American Board for Certification in Orthotics, Prosthetics, and Pedorthics (ABC), there has been a 19% reduction in accredited facilities in New York state over the past 10 years. This is in conjunction with an overall population growth over this period (i.e., a reduced number per capita of providers), as well as an increased need, including a 48% increase in Medicaid enrollment in the same 10-year period. Thus, the current network is far from robust and is in fact quickly dwindling.
2. Incentives for Quality Care:
The NYHPA states: “Mandating specific payments levels without any accountability for those levels or compliance with quality improvement metrics will undermine incentives for providers to improve the quality of care while keeping costs down.”
This statement is misleading as it relates to custom clinical services. Currently, there are no such incentives for O&P providers. We would welcome the opportunity to work with the health plans to collaborate on quality improvement metrics that drive better patient outcomes resulting in reduced overall healthcare costs. Importantly, reduced healthcare costs are only possible when patients have access to care that prevent their medical conditions from progressing to more expensive symptoms and diseases.
3. Costs to the State:
The NYHPA notes that “imposing specific reimbursement levels ultimately increases costs for the State.” The impact to cost is unclear at this time in the context of the NYS DME Services fee schedule. In our assessment, the state would not be imposed any higher costs by having health plans pay the Medicaid rates to their providers for DME/O&P services. Passage of the bill may result in a minor reduction in the profits/surplus levels seen by managed care health plans which charge additional fees to DME/O&P providers to administer their benefits, but since DME/O&P represents a very small portion of the healthcare spend, this effect will likely be negligible and not borne by the state itself. Furthermore, these services, as noted in point two, can effectively prevent the need for more expensive healthcare resultant from condition or disease progression. On the contrary, poor reimbursement levels negatively impact access by enabling fewer providers to survive within these unviable financial models. As noted in point one above, this fact is evidenced by a drop of 19% of accredited facilities over the past 10 years.
4. Competition:
The NYHPA continues by stating “Robust plan networks of DME providers create competition to help drive high prices down.” As noted above, providers subject to S.3468/A.3408 include DME and O&P service providers. Furthermore, in the state of New York, the number of O&P service providers and accredited practice entities have dwindled as a result of poor reimbursement by the state. The NYSAAOP has worked hard in recent years to increase Medicaid fee schedules from rates that had remained unchanged since 1987. Though some rate increases have been obtained on particular codes, there are a slew of codes that have not seen reimbursement increases since 1987. Given that Medicare updates their rate on an annual basis based on the Consumer Price Index (CPI), a lack of rate change in 35 years, combined with inflation rates and pandemic-related costs, renders the current reimbursement schedule untenable. Specifically, over the past five years alone, Medicare has increased its reimbursement rates by 17.2%. As a result, as covered in the above points, 19% of O&P service providers for the Medicaid population have closed their doors over the last ten years.
The NYPHA further states, “This legislation will eliminate that competition and likely result in reducing the number of DME vendors in health plans’ networks.” It is unclear how offering fair reimbursement rates would promote fewer service providers from joining health plan networks. The reality is that when an entity is paying an unsustainable rate for a service, there are always fewer individuals or practices who are willing and able to provide the service.
5. Request to Join Networks:
The NYHPA notes that “health plans report that DME vendors regularly approach plans to participate in their Medicaid networks.” This statement may be true but incomplete based on industry reports that note otherwise. In particular, providers may approach plans to participate in their Medicaid networks, but ultimately do not finalize an agreement due to unsustainable rates. O&P service providers have struggled with the proposed low reimbursement rates offered by Medicaid HMO networks and third-party groups (which implement further fees) who manage such networks. These networks have reduced the transparency to both health plans and their membership for the publishing of contracted locations and accuracy of that data.
6. Value-Based Payment Arrangements:
The NYHPA states that “mandating high reimbursement rates for DME providers will have a negative impact on value-based payment arrangements, as plans work to move toward a value-based delivery system.”
The primary note of correction to this statement is that the proposed legislation does not mandate a reimbursement rate. Rather, it establishes a reimbursement floor at which providers are unable to, or struggle to, provide services and remain solvent. Notably, the floor is no less than the rate the state pays on state-provided Medicaid plans. It is also worth noting NY Medicaid rates are already lower than neighboring states.
It is in the state’s best interest to maintain a healthy network of providers. The current system cannot sustain its network as evidenced by the ongoing reduction of O&P providers. It is reasonable for the state to mandate a floor for reimbursement given that the state funds the health plans to manage their beneficiaries.
Lastly, value-based delivery systems hinge on providing timely and medically necessary services that create a positive clinical outcome and prevent utilization of more expensive healthcare services. Thus, O&P services perfectly fit these criteria. For example, evidence demonstrates access to timely prosthetic care reduces emergency department utilization.2 This example is critically important to understand given that, for Medicaid beneficiaries, the cost of emergency department utilization is incurred by the state.
7. Available Funding:
The NYHPA response also states, “Proposals like this increase costs and reduce the amount of funding available to implement pay for performance contracts with all providers, which does nothing to improve care outcomes for Medicaid members.”
In response to this statement, we question how the legislation increases costs and reduces the amount of funding available. Paying fair rates to ensure sustainable practices are able to provide valuable services will reduce utilization of higher cost services. The subsequent result will save money and reduce cost to taxpayers. Secondly, although the NYHPA response has noted the use of pay-for-performance arrangements multiple times, these are currently limited among O&P service providers.
Thank you for taking the time to review our comments. We are happy to engage with the NYHPA directly regarding the bill and the above points and welcome a meeting as our goal is to be able to continue to provide service to NY Medicaid recipients across the state. We look forward to hearing from you.
Kind Regards,
New York State Chapter
Academy of Orthotists and Prosthetists
518-512-9263
nysaaop.meeting@gmail.com
References:
1. Miller TA, Paul R, Forthofer M, Wurdeman SR. (2020) Impact of time to receipt of prosthesis on total healthcare costs 12 months postamputation. Am J Phys Med Rehabil. 99(11):1026-1031.
2. Miller TA, Paul R, Forthofer M, Wurdeman SR. (2021) The role of earlier receipt of a lower limb prosthesis on emergency department utilization. PM R. 13(8):819-826.
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