Lauretta Jackson spent an hour on a recent Friday morning in the home of Bushra, an Iraqi refugee, trying to help Bushra teach her seven-month-old daughter, Sara, how to gain control of her muscles and live a normal child’s life.

Jackson monitored while Bushra grabbed a miniature plastic train engine and placed it about a foot away from Sara, who was lying on her stomach. The secondhand toy, a language-learning tool for infants, lit up, and a recorded voice offered a congratulatory phrase in Spanish. Bushra helped her daughter roll toward the toy and watched as Sara extended her arms to grab it. Again the train engine lit up and offered a second phrase in Spanish. Sara smiled.

As a newborn, Sara had trouble swallowing food and keeping it in her stomach, Jackson said. She struggled to gain weight, and a doctor recently diagnosed her with failure to thrive. He referred Bushra to Any Baby Can, a nonprofit provider in the state’s Early Childhood Intervention program, which serves children with disabilities and developmental delays until they are three years old.

After a little more than a month of weekly therapy sessions, the muscles in Sara’s neck and torso are rapidly strengthening, Jackson said, but she still cannot roll over on her own. Bushra has been practicing this exercise and others with her daughter every chance she gets: when they are alone together in the living room, with Sara’s siblings when they return from school, or while the family waits for the bus. This she told Jackson through a translator, Sonia Elo, who looked on from the couch.

In-home therapy providers have warned for nearly a year that the work they do for families like Bushra’s could be in jeopardy because of severe budget cuts ordered in 2015 by state lawmakers. Sara has health insurance through Medicaid, the federal-state insurer for the poor and disabled, and the state’s two-year budget includes a roughly 25 percent reduction in Medicaid payments to pediatric therapists. (Bushra spoke on the condition that her last name be withheld.)

Conservative lawmakers slashed those payments in the hopes of saving about $150 million in state revenue — forfeiting roughly $200 million in federal matching funds — because, they argued, Texas Medicaid overpaid home therapy providers when compared to other public insurance programs. A group of for-profit home health agencies filed suit, saying the cuts would put them out of business and thereby endanger children’s health. A Texas appeals court last month ruled the lawsuit had no standing.

“We remain hopeful that a solution can still be reached to protect children from these cuts.”— Stephanie Rubin, chief executive of Texans Care for Children



Now, with the cuts all but certain to take effect, nonprofit providers are speaking out about the challenges on their own — and appear to be distancing themselves from the for-profit providers state officials challenged in court. Specifically, nonprofit providers are warning about the dangers the payment cuts would put on the state’s Early Childhood Intervention program, which is distinct from other in-home pediatric therapy services paid for by Medicaid.

The program pays for caseworkers and encourages therapists to teach family members how to work with children. It typically pays for fewer individual therapy sessions. And its services are only available until a child turns three years old.

Early Childhood Intervention, which serves approximately 50,000 children in Texas each year, also has its own dedicated stream of federal and state funding, but nonprofit providers say they must bill Medicaid to pay for the bulk of the program’s services. Child welfare advocates have warned that the Medicaid cuts will cause providers to drop out of the program.

“As ECI services take a hit, our elementary schools should plan on providing expensive special education to more students,” said Stephanie Rubin, the chief executive of advocacy group Texans Care for Children, in a recent statement after the for-profit providers lost in court.

“We remain hopeful that a solution can still be reached to protect children from these cuts, whether it’s through the courts, federal officials, the Health and Human Services Commission, or the Legislature,” she added.

Despite growing enrollment, state lawmakers declined to allocate more funding for the Early Childhood Initiative program in 2015, which providers say has left them with fewer dollars to spend on each child. When the Medicaid funding is reduced, many nonprofit providers say they will likely have to lay off workers.

In a telephone interview, executives at Austin-based Any Baby Can spoke frankly about their finances in order to outline the difficulties they project after the Medicaid cuts take effect.

They expect the cuts to cost about $200,000, which the nonprofit says it will try to make up through charitable donations.

The nonprofit employs about 30 people in its Early Childhood Intervention team, including 24 health care workers and six administrative staff. Entry-level therapists are paid about $70,000, which executives said was barely enough to remain competitive with their for-profit competitors, which typically offer better pay.

Any Baby Can’s Early Childhood Intervention program serves about 240 children at any given time and about 550 children each year. It costs about $2.4 million each year for the nonprofit to run the program, and its Early Childhood Intervention contract with the state is worth about $615,000.

That contract was cut by about $80,000 between 2015 and 2016, despite a requirement to treat the same number of children, said Chris Adams, the nonprofit’s chief financial officer.

Medical billing makes up the largest source of the program’s revenue, at about $1.4 million each year — and Medicaid is by far the largest payer.

About 77 percent of the children the nonprofit sees in its Early Childhood Intervention program are covered by Medicaid. As a percentage of all payments, though, Medicaid is far higher because its payment rates are much more generous and tend to make up for meager rates paid by the private sector, Adams said.

“We have many private insurance companies that pay $5 for an hour of therapy, which is something that Medicaid pays $170 for,” Adams said.

Any Baby Can currently raises about $250,000 in charitable donations to make up the shortfall, said Andy Miller, its chief executive.

“We don’t make a profit,” Miller said. “We compensate our employees fairly. We run a very lean program.”

Other nonprofit providers in the Early Childhood Intervention program tell a similar story.

Susan Garnett, the chief executive of MHMR Tarrant County, said her Early Childhood Intervention program was looking at “staffing changes” and other ways of reducing administrative costs in order to cope with the impending Medicaid cuts.

Garnett said it was difficult to attach a financial value to the cuts because there are “a lot of uncertainties.” The private insurance companies that operate in Texas’ Medicaid managed care program, she said, could set lower rates, below even what lawmakers ordered.

About 64 percent of MHMR Tarrant County’s children in the Early Childhood Intervention Program are covered by Medicaid, Garnett said. That program has differentiated itself from other in-home therapy services offered through Medicaid because it empowers family members to help their children heal, she said.

State lawmakers’ cuts specific to the Early Childhood Intervention program in 2015 had already resulted in “a reduction of several million dollars,” she said.

Laci Phillips, the Early Childhood Intervention program coordinator for Texas Panhandle Centers, also said it was hard to predict the exact financial hit her nonprofit would take as a result of the Medicaid cuts. But she was not optimistic.

She said her organization could offer therapists in the Panhandle a starting salary of just $32,000, which made it hard to find people to fill the positions. About 78 percent of children in her program, which has an annual budget of about $2 million, were on Medicaid, she said.

Phillips said some observers had suggested to her that the Medicaid cuts could actually be a windfall for her nonprofit because it could put for-profit competitors out of business. But Phillips said that was incorrect and that her nonprofit was bracing for a loss.

“It’s definitely hurting people,” she said.