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Frequently Asked Questions

Frequently Asked Questions are used to provide additional information and/or statutory guidance not found in State Medicaid Director Letters, State Health Official Letters, or CMCS Informational Bulletins. The different sets of FAQs as originally released can be accessed below.Frequently Asked Questions are used to provide additional information and/or statutory guidance not found in State Medicaid Director Letters, State Health Official Letters, or CMCS Informational Bulletins. The different sets of FAQs as originally released can be accessed below.

FAQ Library

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If a state submits a state plan amendment (SPA) to reduce payment rates for durable medical equipment (DME) to avoid a reduction of federal financial participation (FFP) under 1903(i)(27), would a state still be required to conduct and submit an annual DME demonstration of state expenditures?

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

Will public notice be required for state plan amendments (SPAs) that are submitted to comply with the statute or is this methodology change exempt?

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

Can a state be exempt from the durable medical equipment (DME) federal financial participation (FFP) limit demonstration if they can show that the state's state plan and/or regulations or statues don't allow payments in excess of the new limit?

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

When considering the rate and the region the service was provided, would the Centers for Medicare & Medicaid Services consider the Medicare rate from where the Medicaid provider is located or where the patient list located?

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

What is the lowest rate from the Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) schedule in an individual state?

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

When the Centers for Medicare & Medicaid Services (CMS) references "state payment rate," do you mean the fee schedule rate or the average paid amount for that procedure code? For various reasons procedure codes are often paid less than the product of the fee schedule and the volume (e.g., the provider bills lower than the fee schedule, copays, third party liability, etc.).

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

Are oxygen and related equipment included in the durable medical equipment (DME) limit on federal financial participation (FFP) (e.g., concentrator and its contents, continuous positive airway pressure (CPAP) machines, etc.)?

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

Can states elect not to submit data to the Centers for Medicare & Medicaid Services (CMS) using the calculation tool and instead conduct their own analysis?

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

Considering claims volume is a critical component of the aggregate Medicare expenditure limit, what is the relationship between the Medicaid claims volume and Medicare claims volume for the same durable medical equipment item? Will the claims volume under Medicare be geographically segregated?

For purposes of the federal financial participation (FFP) limit, Medicare claims volume will not be considered in the demonstration of the limit. Only Medicaid claims volume is relevant for the calculation of the FFP limit.

FAQ ID:93591

Will states receive detailed reconciliation data returned to them after submitting their durable medical equipment (DME) federal financial participation limit demonstration?

The Centers for Medicare & Medicaid Services (CMS) will analyze state data provided to CMS and return the detailed information comparing the data sent from the state to the lowest and average Medicare rates for the relevant DME in the state on the aggregate. CMS will work with states during 2018 to assist with reporting necessary information under the new statute, and will run data reports for states before the end of the year if requested. A state that wishes this review should contact the Medicaid DME team by email at: MedicaidDME@cms.hhs.gov.

FAQ ID:93596

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