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The purpose of this memorandum is to highlight upcoming changes that will take effect on July 1, 2021 for the Durable Medical Equipment (DME) and Supplies program as a result of General Assembly action item #313 MMMM, which set a rate floor for DME, orthotics, prosthetics and supplies. The Department of Medical Assistance Services shall require DMAS Contracted Managed Care Organizations (MCO’s) to reimburse at no less than 90 percent of the state Medicaid program DME fee schedule for the same service or item of DME, prosthetics, orthotics, and supplies. The Department shall have the authority to implement this reimbursement change effective July 1, 2021 and prior to the completion of any regulatory process undertaken in order to effect such change.

In cases where there is no rate available, the MCO is required to utilize the reimbursement methodology set forth in 12VAC30-80-30.A(6) to determine the Fee-For-Service benchmark rate.  If a DME item has no DMERC rate or agency fee schedule rate, the reimbursement rate shall be the manufacturer's net charge to the provider, less shipping and handling, plus 30%. The manufacturer's net charge to the provider shall be the cost to the provider minus all available discounts to the provider. Additionally, when mutually agreed upon, the provider and MCO may still enter into a Value Based Purchasing (VBP) or Alternative Payment Methodology (APM) (including, but not limited to, risk-based payment arrangements and per-member per-month payment arrangements). However, the VBP or APM payment must not fall below 90 percent of the Fee-For-Service rate per item. 

This change is not intended to result in a reduction to 90% of the Medicaid program DME fee schedule, only to ensure Medicaid managed care organizations do not price DME, complex rehab technology, prosthetics, orthotics and supplies below the 90% rate floor.

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