States are not required to change how they pay for items because of the statute. If a Medicaid program only purchases Medicare capped rental items, then that is the payment and utilization we will compare to Medicare’s rates in determining the aggregate expenditures. States are not obligated to alter their coverage of durable medical equipment due to the statute.

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.

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.

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.

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.

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 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.

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.

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.

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.