CMS stacks deck against Medicaid

Guidance letter about rate cuts comes days before implementation date
Friday, December 29, 2017

WASHINGTON – With little time to make an informed decision, an increasing number of states, including Georgia, Indiana and Washington, are planning to adopt Medicare reimbursement for certain DME to comply with a provision in the 21st Century Cures Act.

CMS finally published a letter to state Medicaid directors on Dec. 27 with guidance on the provision—which requires CMS to cap its contribution to Medicaid reimbursement for certain DME at Medicare reimbursement—just three business days before its implementation on Jan. 1.

“We plan to go on the record with CMS and the administration about our concerns with not only the timeframe, but also the missing information,” said Laura Williard, vice president of payer relations for AAHomecare.

The letter outlined two options for states to demonstrate compliance with the provision: base Medicaid reimbursement on Medicare’s fee schedule or competitive bid rates, or a lesser percentage thereof; or 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 to demonstrate that Medicaid reimbursement is less than the allowable amount.

If they choose the first option, states must submit a plan amendment no later than March 31, 2018, with an effective date no later than Jan. 1, 2018; if they choose the second option, or an alternative approach, they must inform CMS by Dec. 31, 2017.

The problem with the second option, Williard says, is that state Medicaid directors don’t have all the information they need to conduct a “robust comparison.” The letter refers to a number of appendices with source data that were never provided. CMS has not even officially published a list of affected HCPCS codes.

“Without all of this, a state can’t make an informed decision,” she said. “Even with it, a little over two days is not enough time to analyze everything.”

While some states have chosen the first option—what CMS calls in the letter “the simplest way”—states like Alabama have delayed making a decision until they receive additional information. Alabama has run data and sent it to CMS for validation but has been told it won’t hear back until after Jan. 1, said Leigh Ann Matthews, the manager at Complete Care in Fort Payne, Ala., and the president of the Alabama Durable Medical Equipment Association.

“We have a good relationship with Medicaid and they understand the potential access issues if they go forward with this,” she said. “So they want to aggressively look at the data.”

While states where Medicaid programs are largely administered by managed care organizations are exempt from the provision, stakeholders know MCOs will be keeping a close eye on the changes to see how they play out in January and beyond.

“Will they follow suit?” said Karyn Estrella, executive director of the Home Medical Equipment and Services Association of New England. “Our understanding is it doesn’t affect those plans, but when have MCOs not followed Medicare?”

AAHomecare is keeping tabs on each state’s decision and has shared the letter with legal counsel, Williard says.

“We plan to put together some type of strategy,” she said. “We will continue to work, not only from a state perspective but also from a legal perspective. We want to impact this any way we can.”