Medicaid DMEPOS costs exceed Medicare costs in some competitive bidding areas

A report issued by the Department of Health and Human Services’ Office of Inspector General (OIG) found that Medicaid durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) spending may be exceeding the payment amounts of Medicare DMEPOS in the same state.

The study was conducted in response to the Federal Fiscal Year (FFY) 2014 budget proposal, which emphasizes cost containment of Medicaid programs and proposes “limiting Federal reimbursement for a state's Medicaid spending on certain DME services to what Medicare would have paid in the same state for the same services.”

Fee-for-service payment amounts for 32 DMEPOS items covered under both the Texas Medicaid program and the Texas Medicare DMEPOS competitive bidding program in FFY 2011 were examined to compare payment amounts across the two programs in the Dallas/Fort Worth area.

The study found that the Texas Medicaid fee-schedule amounts for 30 of the 32 DMEPOS items exceeded the payment amounts under the Medicare DMEPOS program. During this period, Texas Medicaid spent approximately $12 million on the 32 items, but if it had used the payment amounts from the Medicare program, it could have saved approximately $2 million.

“Our findings provide a tangible example of potential state and federal savings for Medicaid programs if the programs were to use the Medicare competitive bidding program payment amounts for DMEPOS items,” the OIG report stated. “In July 2013, the Medicare DMEPOS competitive bidding program expanded to cover a total of 100 metropolitan areas nationwide.  If the State Medicaid programs were to use the Medicare competitive bidding program amounts—rather than the state Medicaid fee-schedule amounts — the states and the federal government could achieve savings.”

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