California slashes HME budget

Tuesday, September 30, 2003

SACRAMENTO, Calif. - Gov. Gray Davis signed a new $99.1 billion budget Aug. 2 that relied on a combination of cuts to state programs and borrowing to reduce an eye-popping $38 billion budget deficit. In all, the cuts trimmed the states $140 million DME budget by about $20 million, said Bob Achermann, executive director of the California Association of Medical Product Suppliers (CAMPS).

For HME providers, state Medicaid (MediCal) cuts look like this:

- California will now pay no more than 80% of the Medicare allowable for listed items. Previously, payment varied:for some items, reimbursement exceeded the Medicare allowable, for others it was less, sometimes it was the same. This will hit oxygen providers hard. Medicaid previously paid $240 a month for home oxygen therapy. It will now pay 80% of $220.

- On unlisted DME items, which includes most custom rehab products, Medicaid will now pay 80% of MSRP. It previously paid 100% of MSRP.

- Reimbursement for all other products, including medical supplies, are subject to the 5% across-the-board cut.