Make sure states are accountable to federal policy

Friday, February 21, 2014

It is time for state Medicaid programs with an exclusion list to re-evaluate their policy before they find themselves in court. In 1998, CMS put out a policy letter to state directors, otherwise known as the DeSario letter, that prohibits “exclusion lists.” The letter advised that states limiting DME coverage must meet three conditions:

(1) The process for deciding coverage must use reasonable and specific criteria that do not arbitrarily exclude items based solely on a type of illness or condition;

(2) The state’s process and criteria, as well as its list of pre-approved DME items, must be publicly available; and

(3) Beneficiaries must be informed of their right to a fair hearing to determine whether an adverse decision is contrary to law. 

The first criterion is the most important. Basically, a state Medicaid program cannot put out a list of DME products saying they are never covered. Any DME product for reimbursement must be based on medical necessity. The state can put a list together for administrative purposes on what is and isn’t covered as long as it is not used as a coverage policy. For instance, having an exclusion list for elevator seats (an option on power wheelchairs) as a not covered item would be a violation. The state is using a “Medicaid population as a whole” tactic, which would be in violation of the DeSario letter. There must be a path for the beneficiary to achieve a decision based on medical necessity. Texas was recently challenged concerning standing systems on power wheelchairs. 

In September 2012, a federal district court in Texas ruled in favor of three plaintiffs, holding that the state’s policy of categorically denying coverage without consideration of medical necessity violates the reasonable standards and amount, duration, and scope provisions of the federal Medicaid Act and its implementing regulations, and is preempted by the Supremacy Clause. In so holding, the court specifically held that the state’s absolute exclusion from coverage violated the terms of the 1998 CMS policy letter that prohibits exclusive lists referenced by the court as the “DeSario Letter.”

In light of the Texas decision, Permobil approached TennCare (Tennessee Medicaid) and asked if its exclusion list was consistent with the DeSario letter. After sharing the DeSario letter and the Texas district court verdict, TennCare is now re-evaluating its exclusion list to cover DME products.

Does your state have an exclusion list? Take these simple steps: Meet with your state representative or state senator and explain the situation that you believe the state is violation of federal law; then ask your representative or senator to request an attorney general’s opinion to determine if the exclusion list is in compliance with federal law, showing him or her the DeSario letter and Texas court case. One of two things will likely happen:

(1) The attorney general will ask that a meeting take place to discuss how the issue may be resolved in-house, without an opinion, or:

(2) The attorney general will issue an opinion that more than likely will be in your favor.

Ask your representative or senator to then approach Medicaid and request that changes be made. If the request falls on deaf ears, ask for legislation to be drawn up to address the exclusion list. If your representative or senator says he or she is not interested in filing legislation, then drop the hammer and file a lawsuit.

It only takes one state to implement an exclusion list before other states start to copy, creating a cascade effect of bad policy. On the converse, when one state gets busted for violating federal policy, others quickly fold when they become aware of the mistake. It’s time we make states accountable to federal policy.

Darren Jernigan is the director of government affairs at Permobil Inc. and is a member of the Tennessee State House of Representatives. Reach him at 800-736-0925 or