AAHomecare Addresses COVID-19’s Impact on Medicaid Rates

WASHINGTON, D.C. (July 10, 2020)—As the COVID-19 pandemic continues, the increased utilization of products directly responding to related respiratory challenges (ventilators, oxygen, sleep equipment, etc.) have the potential to skew state Medicaid programs’ spending and impact rates for the broader range of home medical equipment.

In a letter to the Centers for Medicare & Medicaid Services addressing this issue, the American Association for Homecare (AAHomecare) explained that Medicaid Upper Payment Limits (UPLs) for HME mandated in the 2016 Cures legislation has created a “zero-sum equation” for the DME Medicaid spend, and added that “As state Medicaid programs increase the payment rate or experience increased utilization for particular items of DME, the increased spend for that DME necessarily leaves them with less room to adequately reimburse for other DME.”

To limit the possible unintended negative effects involving the interplay between the UPLs for HME and the pandemic, the association has shared three policy/regulatory approaches with CMS to address this issue. The options, presented in descending order from the most effective to the least effective, in the view of the association, include:

• Clarify that for the duration of the COVID-19 public health emergency, CMS will allow state Medicaid programs to use the highest payment rate in the state, instead of current guidance to use the lowest rate in the state, for purposes of calculating their aggregate Medicaid spending in order to provide states with needed liquidity during the PHE.
• Issue a section 1135 waiver that waives the application of the CURES legislation language related to Medicaid DME spending [section 1903(i)(27)] for the duration of the COVID-19 PHE.
• Modify the set of HCPCS codes which state Medicaid programs use to calculate their aggregate Medicaid spending, and remove HCPCS codes associated with essential respiratory, ventilator, and sleep equipment utilized for treatment of COVID-19. 

The letter concludes by noting that “CMS could address these concerns quickly and effectively through subregulatory guidance, consistent with how CMS has implemented section 1903(i)(27) in the past.”

See the letter to CMS here.