Page Reviewed / Updated - Apr. 2015
Prior to discussing Medicaid’s role in paying for durable medical equipment (DME), it is helpful to briefly explain how Medicaid works. Medicaid is an insurance program for Americans with low incomes and limited assets, primarily the elderly or disabled but also some adults and children. Within each state, there are multiple Medicaid programs and several Home and Community Based Services Waivers.
Eligibility rules and benefits are determined at the program or waiver level by each individual state. Therefore there is not a single set of rules regarding Medicaid’s role in paying for durable medical equipment instead there are 100’s of different sets of rules depending on the state and the Medicaid program in which one is enrolled.
Given there are many different sets of rules, generally speaking, Medicaid will pay for medical equipment when it is determined to be medically necessary, cost effective and meet their strict definition of what is durable medical equipment. Most states define DME as “equipment that can withstand repeated use, is primarily used to serve a medical purpose, is appropriate for home use and is not useful to a person without an illness or injury.”
“Cost-effective” usually means that Medicaid will pay for the most basic level of equipment only. For example, it may be clear that it is a medical necessity for an aging or disabled individual to have a powered wheelchair. However Medicaid may determine that the individual only needs a less-expensive, rear-powered chair instead of a center-powered chair that has a tighter turning radius.
Despite there being 100s of different Medicaid programs, most programs have similar processes for DME acquisition. These processes largely depend on the location in which the individual resides and intends to use the item. The process and rules are different for those living at home vs. in a nursing home.
When an individual resides in a Medicaid approved nursing home, the process of acquiring durable medical equipment is largely invisible to the care recipient. The acquisition and approval process occurs behind the scenes and the individual is provided with the durable medical equipment item for which they have been approved.
Medicaid can be provided outside of nursing homes, when this occurs it is referred to as Home and Community Based Service or Waivers. Individuals participating in a Medicaid Waiver program typically have a higher degree of personal involvement in the acquisition of DME than Medicaid Nursing Home residents.
Individuals must obtain a medical justification letter for the durable medical equipment item from their doctor or therapist. They select a Medicaid-approved, DME supplier and provide them with the medical justification letter. The supplier completes a Prior Approval (PA) application and sends it to the state Medicaid office for approval. The Medicaid office approves or denies the purchase and notifies both the individual and the supplier of their decision. If approved, the item is delivered by the supplier with the bill sent directly to Medicaid. If denied, the individual should receive the reason why and notification of the process to appeal the decision.
As one might assume, this process can be rather lengthy. For less expensive items, some seniors choose to purchase the item out-of-pocket rather than waiting months to gain approval. Buying durable medical equipment online is usually the least expensive route.
Certain types of Medicaid Waivers allow for Consumer Direction (sometimes referred to as Cash and Counseling), which means that the participants are allocated a budget and the flexibility to manage their own care providers and suppliers. Individuals’ care needs are assessed and they are allocated the financial resources to pay for all of their care services, medical equipment and supplies. Since these individuals are working within a defined budget and have the freedom to allocate it as they see fit, they have significant incentive to purchase inexpensive durable medical equipment and supplies to preserve their budget for other purposes. Click here to learn more about Consumer Direction and Medicaid Waivers.
This is special Medicaid program designed to help individuals that currently reside in nursing homes to return to their homes or to living in the community. To make this possibly, the program will purchase some durable medical equipment to enable participants to live at home, such as hospital beds and wheelchair lifts. There are currently MFP Programs in 44 states. The following 6 states do not have MFP programs: Alaska, Arizona, Florida, New Mexico, Utah and Wyoming. Read more about the Money Follows the Person Program.