Indiana: Medicaid rethinks manually priced products

Tuesday, November 23, 2010

INDIANAPOLIS - The state's Medicaid program is on a mission to limit the number of HME products that aren't part of the fee schedule and are manually priced.

Earlier this year, Medicaid notified HME providers that they had to include cost invoices with claims for manually priced products beginning Oct. 1. The reason: The state wants to see if it can save money and time by creating a fee schedule for inexpensive, routinely dispensed products.

"The encouraging part is that they understand that complex manually priced items like bath systems and custom seating--there's too large a universe of these types of products, so it's impossible to create a fee schedule for those," said David Hartley, CEO of Home Health Depot in Indianapolis. "They're saying, at this point, that they have no intention of altering the long-term payment process for those."

Right now, providers bill MSRP minus a certain percentage for manually priced products.

Medicaid has told HME providers that it plans to collect cost invoices for manually priced products for six months. HME providers aren't happy about having to do extra paperwork.

"If someone wants compression hosiery, we're going to have to spend an hour going through all the invoices from the past year, which could be 100 pages of stuff, looking for a particular line-item," said Dave Anderson, the owner of Andersons Medical Products in Terre Haute, Ind.

Still, the extra paperwork is better than the state transitioning to a cost plus 30% pricing methodology for manually priced products, which was where HME providers thought Medicaid was headed.

"If you want to change the paradigm and have all of this stuff on a shelf and have everyone come down and take it off the shelf themselves, then you can think about reducing margins," said George Kucka, president of Fair Meadows Home Health in Schererville, Ind. "But we're home care. By definition, we take care of people who can't get out of the house and need stuff delivered and need to have the billing done for them. We're required to have a certain infrastructure."