Frequently Asked Questions

State Medicaid Director Letter #17-004 addressed this area by stating: “Reductions necessary to implement CMS federal Medicaid payment requirements (e.g., federal upper payment limits and financial participation limits), but only in circumstances under which the state is not exercising discretion as to how the requirement is implemented in rates. For example, if the federal statute or regulation imposes an aggregate upper payment limit that requires the state to reduce provider payments, the state should consider the impact of the payment reduction on access.” In addition, the long-standing policy of the Medicaid program has been that Medicare rates are sufficient to ensure access.

FAQ ID:93521

We acknowledge that there are differences between the Medicare and Medicaid populations, but nothing in the policy guidance or statute compels states to reduce the items that states provide to people with disabilities under the state plan. As noted above, the statute does not expressly compel states to reduce the payment rates for DME. The statute limits the amount of money that the federal government will pay (i.e., FFP) for the relevant DME in the aggregate as compared with the relevant DME provided in the Medicare program. States retain the flexibility to make payments at rates that best serve the needs of their Medicaid beneficiaries.

FAQ ID:93526

It depends on the individual state plan amendment, but if a state submitted a state plan amendment to cover the relevant DME at or below what Medicare would pay for the same items and that was effective January 1, 2018, then a state would be considered to have demonstrated compliance with the statute and be exempt from submitting a DME FFP limit demonstration. If the state does not currently use Medicare’s payment rates (or a lesser percentage thereof) to reimburse providers for DME, the state may submit a SPA to alter its DME reimbursement methodology to set rates at or below the applicable Medicare rates. If there are competitive bidding areas (CBAs) in the state as defined by Medicare, it may choose to either pay the competitive bidding single payment amount for DME in the applicable CBA of the state under the Medicare program, or could set the statewide plan rate at the lesser of the durable medical equipment, prosthetics, orthotics and supplies fee schedule rate, including rural and non-rural areas as defined by Medicare, or the competitive bid single payment amount under the Medicare CBA for the item. States should be aware that if a SPA is submitted to align Medicaid payment rates to Medicare and is effective after January 1, the Centers for Medicare & Medicaid Services (CMS) will require the submission of a demonstration for the year in which a SPA is submitted to ensure compliance with the statute for a full calendar year. Once payment rates are set at Medicare rates for a full calendar year, CMS will consider the state as being compliant with the statute through the state plan.

FAQ ID:93551

In general, public notice is required for any changes in statewide methods and standards for setting payment rates as described in 42 CFR 447.205. Public notice must be published one day prior to the effective date of the SPA. If there are specific questions about this policy, please contact the Medicaid durable medical equipment team by email at: MedicaidDME@cms.hhs.gov.

FAQ ID:93556

A simple statement by a state that its payments for DME will not exceed the FFP limit would not be adequate. The statute establishes a limit on the Secretary’s ability to pay FFP, and we must follow the statutory restrictions. We have discussed two potential approaches that a state might use in the January 4, 2018 letter. Any state that wishes to discuss alternative approaches under the State Medicaid Director Letter should contact the Medicaid DME team with all of the information relevant to their request as early in the year as possible.

FAQ ID:93561

The correct rate will be found from the relevant Medicare fee schedule for where the patient is domiciled when the durable medical equipment item is provided to them.

FAQ ID:93566

The lowest rate is the lesser of the DMEPOS fee schedule rate, including rural and non-rural areas as defined by Medicare, or the competitive bid single payment amount under the Medicare competitive bidding areas for the item.

FAQ ID:93571

The federal financial participation (FFP) limitation imposed by section 1903(i)(27) of the Act applies only with respect to those items of durable medical equipment (DME) covered by a state’s Medicaid program that are also covered by Medicare. Items covered as DME by only one of the programs are not included. This statutory limitation also does not apply to items for which Medicaid is not the primary payer. The statute refers to state expenditures for DME, therefore all funds expended by the state Medicaid agency on purchasing the relevant DME items and for which the state is requesting federal matching funds needs to be accounted for in the demonstration. CMS suggests taking the entire amount spent on a certain DME item (i.e., per Healthcare Common Procedure Coding System code) and divide it by the total volume to get an average price per DME item for the purpose of the calculation tool. If states have specific questions please contact the Medicaid DME team by email at: MedicaidDME@cms.hhs.gov.

FAQ ID:93576

Yes. To the extent that Medicare classifies such items as DME equipment and such items are covered by Medicare, they are included in the FFP limit in the statute. Oxygen supplies are included in the DME limit on FFP according the Medicare definition on DME.

FAQ ID:93581

States have the flexibility to conduct their own analysis and use their own calculation tool to show compliance to the statute. CMS has received approval through the paperwork reduction act to have the calculation tool collection of information be used for ease of administration for states in their durable medical equipment federal financial participation limit demonstration reporting and analysis. CMS asks states not using the calculation tool to contact the resource mailbox: MedicaidDME@cms.hhs.gov.

FAQ ID:93586