Calif. proposes $13 million from DME budget

Thursday, July 31, 2003

SACRAMENTO - As part of an effort to reduce a $35 billion shortfall, state lawmakers have crafted a budget bill that, if approved, would reduce DME reimbursement by about $13 million.

To do that, lawmakers have proposed paying no more than 80% of the Medicare allowable and contracting with manufacturers for respiratory equipment. Lawmakers have also proposed reducing reimbursement for custom wheelchairs from MSRP to 80% of MSRP or a contracted price, whichever is less.

The state currently contracts with 10-12 manufacturers for incontinence supplies and then guarantees that providers can buy product from the designated manufacturers at the contracted price or less. For incontinence items, the state reimburses providers acquisition cost plus 38%. How much above acquisition price the state would pay for wheelchairs and respiratory equipment has not yet been determined.

“They say they can get better pricing if they contract,” said Bob Achermann, executive director of the California Association of Medical Equipment Suppliers (CAMPS). “I told (Medicaid officials) the proof will be if providers start to bail out of the program.”

As part of the proposed legislation for DME, legislators have included a possibility for “alternative methodology” to be worked out by the department.

“We’re trying to look for alternatives, but the administration is not going to budge on that ($13 million) number,” Achermann said.

While DME providers don’t relish a $13 million cut, it could have been much worse. Early on in state budget negotiations, lawmakers talked of doing away with DME reimbursement for Medicaid altogether.

California was supposed to approve a new budget by June 15, and enact it by July 1. But those deadlines came and went with Democratic and Republican lawmakers still trying to work out their differences. HME