Cures Act update: Deadline looms for Medicaid

Letter outlines two options to demonstrate compliance
Thursday, December 28, 2017

WASHINGTON – CMS finally sent a letter to state Medicaid directors on Dec. 27 with guidance on a DME-related provision in the 21st Century Cures Act, just three business days before implementation.

The six-page letter provides an outline of the provision, which requires CMS to cap its contribution to Medicaid reimbursement for certain DME at Medicare reimbursement starting Jan. 1; describes the options available to states to demonstrate compliance; and offers technical information to facilitate their calculation of expenditures.

States have two basic options to demonstrate compliance, per the letter. They can base Medicaid reimbursement on Medicare’s fee schedule or competitive bid rates, or a lesser percentage thereof. Or they can 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 described in the statute.

CMS will also consider “alternative approaches” that will meet a state’s specific needs provided that such approaches are sufficient to ensure compliance, the letter says.

States have little time to notify CMS on how they plan to demonstrate compliance. If they choose to base Medicaid reimbursement on Medicare’s fee schedule or competitive bid rates, or a lesser percentage thereof, they must submit a plan amendment no later than March 31, 2018, with an effective date no later than Jan. 1, 2018.

If states choose to submit an aggregate payment comparison, or an alternative approach to compliance, they must inform CMS by Dec. 31 and calculate the limit for their state using expenditures for the period of Jan. 1, 2018, through Dec. 31, 2018.

CMS also notes in the letter that this will likely be an ongoing process for states, as they must account for changes to Medicare reimbursement under the Part B benefit and under the competitive bidding program to continue to remain in compliance with the statute from year to year.