Medicaid to Cap Equipment Payments at Medicare’s Rate

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By Victoria Pelham

Medicaid will begin capping reimbursement for durable medical equipment at equivalent Medicare pay rates starting this week, under a provision of the 21st Century Cures Act.

The Centers for Medicare & Medicaid Services in December advised states on implementing the reimbursement changes and pressed for details on medical equipment spending as part of the effort.

The move has left Medicaid programs “scrambling” to keep up and make decisions, Laura Williard, vice president of payer relations for the American Association for Homecare, told Bloomberg Law.

Regulators are pushing to bring Medicaid spending on the devices—which include supports such as wheelchairs and blood sugar monitors—closer to Medicare, the safety-net insurer for seniors, which operates a competitive bidding program for the equipment. State Medicaid programs in the past have been billed more for the same devices than the CMS and could save $30.1 million with pricing alignment, according to a report from the Health and Human Services Office of Inspector General.

The Trump administration has pledged to rein in spending on the $550 billion-and-growing Medicaid safety net.

But the manufacturer lobby has warned that rate reductions under a Medicare-like pricing scheme could harm health-care access and exacerbate closures of equipment suppliers, especially in rural areas. Supplier groups also fought back against the Medicare competitive bidding process.

State Choices

Most states are still evaluating their options, Williard said: update a State Plan Amendment to adopt Medicare rates by March 31; negotiate a reconciliation plan (which they would have had to notify the CMS of by Dec. 31); or pursue “alternative approaches that will meet a state’s specific needs” while still being compliant, according to the guidance. If a state chose to update its plan amendment, it also would have to go through comment periods and public hearings on any expected rate changes. Some states had already adopted their rates when Medicaid regulators sent out the guidance in late 2017.

“We’re definitely going to continue to fight this as far as we can take it,” she said.

About half of states will likely adjust rates to reflect Medicare’s, with some seeing “drastic” cuts, she said. Others are looking to do a reconciliation process that would allow them to pay back the federal government in 2019 if they spend more than they would have under the Medicare rates.

Competitive Bidding

Medicare’s competitive bidding program for medical equipment and prosthetics and orthotics is supposed to curb fraud and abuse. The CMS projects it will save $25.7 billion from 2013 to 2022.

But device makers lament that almost half (42 percent) of the suppliers have shut their doors or consolidated since July 2013, creating access problems for needy patients as certain services or supplies are cut.

More could be forced to shut down when state Medicaid programs adopt Medicare-like rates, with the effects felt even sooner in rural areas, Williard said.

The Advanced Medical Technology Association, a medical technology group, is also concerned that expanding the Medicare approach to reimbursing for the equipment could pose challenges.

Don May, executive vice president of payment and health care delivery policy for AdvaMed, told Bloomberg Law in a statement that the Medicare program had grown “without rigorous evaluation and a clear understanding of its impact on beneficiaries’ access to the products that they and their physicians have determined are necessary for their conditions.”

“With so many unanswered questions, we are concerned that this program will now be used to set maximum payment rates for Medicaid where low-income and disabled patients and families may also be negatively impacted,” he said in a Jan. 3 statement.

Further, Williard warned that Medicare and Medicaid serve different demographics, and reimbursement should take that into account. Medicaid patients who need equipment like power wheelchairs tend to be kids and teens whose needs grow and evolve over time and who live more actively, for example. Medicare patients generally are seniors who need long-term services in their home.

To contact the reporter on this story: Victoria Pelham in Washington at vpelham@bloomberglaw.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bloomberglaw.com

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