OIG Medicaid memo raises eyebrows

Thursday, September 30, 2004

WASHINGTON – Anyone reading a recent report from the Office of Inspector General might easily get the impression that Medicaid rates for oxygen are soaring out of control. In actuality though, only a handful of states have set Medicaid allowables above the Medicare rate and at least one from that group is reportedly revising it.

An OIG report issued in July found that of 850,000 paid oxygen-related claims totaling $90 million, Medicaid paid six of the nine states audited approximately $12.7 million more than Medicare would have paid. As a result, the agency sent a memo to CMS directing the administrator to “alert state agencies to the opportunity to reduce Medicaid payments by limiting reimbursement rates for oxygen-related DME and supplies to the Medicare-allowable amounts.”

While some $13 million is hardly a drop in the bucket, OIG’s fixation on a handful of states strikes an odd chord in the industry.

“It’s hard to understand their logic,” said Fred Jackson, president of Salida (Colo.) Medical. “A lot of companies already don’t want to deal with Medicaid as it is.”

While Colorado isn’t on the list of states OIG identified as having higher-than-Medicare rates, those that are include Pennsylvania, Texas, Indiana, Michigan, Kentucky and Wisconsin.

Yet even without an OIG directive, the Wisconsin Medicaid Board has contemplated reducing rates - it just hasn’t happened fast enough, said Laurie Corey, administrative director for Waukesha, Wisc.-based Oxygen One.

“They talked about it last year and it was supposed to be retroactive, but so far no changes,” she said. “We’re still getting the old allowables, which is kind of goofy. We’re billing $80 for a portable, but Medicaid sends $100 or even $200. It has put people in an awkward position. Do you take it? We’ve called them about it and they say to go with it until we hear otherwise.”

Don White, president of Associated Healthcare in West Amherst, NY, said as far as he knows, the state has always made it standard practice to base Medicaid rates on Medicare.

“I rarely see Medicaid higher than Medicare but there isn’t always a Medicare fee,” he said. “Overall though, rates aren’t an issue here. Our association, NYMEP, has open communications with the New York State Department of Health. As a result, it ensures that the state and beneficiary get appropriate care at the appropriate price.”