The guidance directs state Medicaid directors on how to best set reimbursement rates.

Via AAHomecare, WASHINGTON, D.C. (December 29, 2017)—As mandated in the December 2016 CURES bill, federal Medicaid reimbursement to states for home medical equipment cannot exceed what Medicare would have allowed for these items, in aggregate, beginning on January 1, 2018.

CMS released a letter to state Medicaid directors providing more details on the program, confirming that these new rates do not apply to medical supplies or O&P products, and that states do have flexibility in setting reimbursement rates to ensure access for their patients.

The letter instructs the Medicaid directors as to how they can comply with the CURES-mandated provisions, reading in part:

There are two basic options available to states to demonstrate that their expenditures for DME items subject to this provision do not exceed the amount for which FFP (federal financial participation) is available. The simplest way is for the state to base its Medicaid DME payment rates on Medicare’s fee schedule or competitive bid rates or on a lesser percentage thereof. Another option is for the state to conduct a robust comparison using both rate and unit utilization data to calculate what would have been the aggregate reimbursement under Medicare for those same items in order to demonstrate that the state payments are less than the allowable amount described in the statute.

The letter also adds that CMS would “also consider alternative approaches that will meet a state’s specific needs provided that such approaches are sufficient to ensure compliance with section 1903(i)(27) of the Act.”

State Directors Given Limited Time to Make Decision
AAHomecare has been working with CMS to get this guidance released over the last two months and to keep state Medicaid directors informed.

The letter has been forwarded to AAHomecare's legal counsel to get additional perspective on this guidance, and will provide a more detailed review soon. However, initial concerns involve the extremely short timeframe that CMS is allowing for Medicaid directors to make this review.

If states decide to change rates to Medicare pricing, they have until March 31, 2018 to submit their State Plan Amendment, but it would have to be retroactive back to January 1, 2018, creating retroactive adjustments and take-backs. However, if states are not currently following Medicare rates or are not planning to change to Medicare rates, they have until December 31, 2017 to inform CMS of that choice. This essentially gives states two-and-a-half working days notice during the holiday season to make this decision, which AAHomecare believes is an unacceptably short amount of time for such an important issue.

See CMS’s letter to state Medicaid directors here.

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