Stakeholders try to get ahead of Medicaid cuts

Friday, May 22, 2020

WASHINGTON – HME industry stakeholders are laying the groundwork to push back against anticipated Medicaid cuts, as states grapple with budgetary pressures brought on by the COVID-19 pandemic.

In a recent letter, AAHomecare urges Calder Lynch, deputy administrator and director of the Center for Medicaid & CHIP Services, to clarify for state Medicaid directorsthe obligation of states to comply with Medicare’s equal access provision, even during the current public health emergency.

“States are looking for different agencies to reduce budgets by certain percentages or dollar amounts,” said David Chandler, director of payer relations for AAHomecare. “We need to really highlight that we are not just a line item costing states money. It’s the same argument that we have always had: Investing in DME and keeping people healthy in the home should resonate loud and clear during this pandemic.”

That’s the message the association’s Payer Relations Council is hoping to convey to not only to Medicaid programs but also commercial payers, says Chandler.

“If the state says they are going to reduce reimbursement, those other companies are going to look for reductions, as well,” he said. “It all flows downward.”

Between increases in the number of unemployed and increases in the number of people receiving Medicaid compared to even a few months ago, payers could also look for savings beyond just rate cuts, says Craig Douglas, vice president of payer relations for VGM.

“They might have to cut back on the services they cover or they may question medical necessity,” he said. “You can’t get blood from a turnip. If the money isn’t there, they have to cut something.”

One state that highlights the impact of the pandemic: California. The state went from a projected $7 billion surplus to a $55 billion deficit for the next fiscal year, says Bob Acherman, executive director of CAMPS. Providers there also face a 10% clawback—retroactive to Jan. 1, 2019—on top of rate cuts that took effect in April as Medi-Cal seeks to comply with the 21st Century Cures Act.

“They had a rainy day fund, but they chewed through that with unemployment increases and (other costs),” he said. “It’s hard to argue when they want to cut rates across the board.”

Other states, including Arkansas and Oklahoma, are rolling out changes to comply with the Cures Act, too. Oklahoma, for example, plans to implement rate cuts across several product categories July 1, says Laura Williard, vice president of payer relations.

“We don’t deny the changes need to happened, but the timing is bad,” said Willard, vice president of payer relations. “They’ve known about this for 2.5 years and now they are doing it in the middle of a pandemic.”