The California Medicaid Program Could Significantly Lower Payment Rates for Selected Durable Medical Equipment

The California Medicaid program (Medi-Cal) could have saved an estimated $3.9 million for calendar year 2011 by establishing a competitive bidding program for reimbursement of standard power wheelchairs, oxygen systems, and oxygen concentrators similar to Medicare's Competitive Bidding Program or by revising its reimbursement methodology to obtain pricing similar to the Medicare payment rates in California's competitive bidding area (CBA). For the three product types reviewed, we determined that Medicare payment rates in California's CBA were significantly lower than the Medi-Cal payment amounts. Medicare's Competitive Bidding Program sets lower payment rates than conventional Medicare payment rates for selected durable medical equipment.

We recommended that the State agency establish a competitive bidding program similar to Medicare's Competitive Bidding Program for reimbursement of standard power wheelchairs, oxygen systems, and oxygen concentrators or revise its reimbursement methodology to obtain pricing similar to the California Medicare CBA payment rates for these product types, which could have resulted in cost savings of approximately $3.9 million for the 1 year period we reviewed. The State agency disagreed with our finding that the Medi-Cal program could have saved $3.9 million but stated that it would make changes to its reimbursement methodology in 2014, which may provide pricing similar to the California Medicare CBA payment rates.