State of New Mexico
Human Services Department

HUMAN SERVICES
REGISTER

I. DEPARTMENT
NEW MEXICO HUMAN SERVICES DEPARTMENT

II. SUBJECT
DURABLE MEDICAL EQUIPMENT AND MEDICAL SUPPLES
AUGMENTATIVE AND ALTERNATIVE COMMUNICATION (ACC) DEVICES

III. PROGRAM AFFECTED
(TITLE XIX) MEDICAID

IV. ACTION
FINAL REGULATIONS

V. BACKGROUND SUMMARY

The New Mexico Human Services Department (HSD) Register, Volume 21, No. 50, dated October 22, 1998, issued proposed regulations to Sections MAD 602, MAD 754, and MAD 757 (sections which govern the provision of Durable Medical Equipment (DME) and Medical Supplies) to clarify when Augmentative and Alternative Communication devices are covered.

Medicaid covers Durable Medical Equipment (DME) which meet the definitions of DME, the medical necessity criteria and the prior approval requirements. Medicaid covers repairs, maintenance, delivery of durable medical equipment and disposable and non-reusable items essential for use of the equipment subject to the limitations specified in Section 754 and 602. All items purchased or rented must be ordered by providers who are eligible to participate in Medicaid.

Medicaid coverage for DME and Medical Supplies may be listed for recipients in institutional settings when institutions are expected to provide the necessary items. Institutional settings are hospitals, nursing facilities, intermediate care facilities for the mentally retarded and rehabilitation facilities.

A public hearing was held on Tuesday, December 15, 1998, to receive testimony on the proposed regulations. Twelve people attended the hearing with 9 people offering testimony. Written testimony was provided by 7 persons.

New Mexico Human Services Register Vol. 22, No. 8
February 12, 1999 Page 1
Four people expressed concern about the language excluding from Medicaid coverage for a device whose purpose is educational and/or vocational. The language in 754.34 has been clarified that this type of use is covered when it has been clarified that this type of use is covered when it has been determined the device meets medical criteria.

Other testimony commended MAD for the proposed coverage of AAC Devices.

Clarification language added to MAD 754.32 in item #3 and #4 explains that repairs to Augmentative and Alternative Communication Devices require prior authorization and replacement batteries and battery packs for Augmentative and Alternative Devices owned by the recipient are a covered service.

VI. REGULATIONS

These regulations will be contained in Section MAD 754, Section MAD 757, and Section MAD 602 of the Medical Assistance Division Program Manual. A copy of the regulations may be requested by contacting the Medical Assistance Division at 827-3153.

VII. EFFECTIVE DATE

These regulations are effective March 1, 1999.

VII. PUBLICATION

Publication of these regulations approved on February 12, 1999 by:

J. Alex Valdez, Secretary
Human Services Department
  

  
  
New Mexico Human Services Department
Published Regulations Governing the Funding of AAC Systems
for Persons who are Medicaid Eligible
  
  
    
 

INDEX

754 DURABLE MEDICAL EQUIPMENT AND MEDICAL SUPPLIES

754 DURABLE MEDICAL EQUIPMENT AND MEDICAL SUPPLIES

The New Mexico Medicaid program (Medicaid) pays for medically necessary services furnished to eligible recipients, including durable medical equipment and medical supplies, as specified at 42 CFR § 440.70 (c).

This section describes eligible providers, covered services, services restrictions, noncovered services, and general reimbursement methodology.

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754.1 Eligible Providers

Upon approval of Medical Assistance Program Provider Participation Agreements by the Medical Assistance Division (MAD), all suppliers of medical supplies and/or durable medical equipment which are licensed to do business may become Medicaid providers.

Once enrolled, providers receive a packet of information, including Medicaid program policies, billing instructions, utilization review instructions, and other pertinent material from MAD. Providers are responsible for ensuring that they have received these materials and for updating them as new materials are received from MAD.

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754.2 Provider Responsibilities

Providers who furnish services to Medicaid recipients must comply with all specified Medicaid participation requirements. See Section MAD-701, GENERAL PROVIDER POLICIES.

Providers must verify that individuals are eligible for Medicaid at the time services are furnished and determine if Medicaid recipients have other health insurance.

Providers must maintain records which are sufficient to fully disclose the extent and nature of the services provided to recipients. See Section MAD-701, GENERAL PROVIDER POLICIES.

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754.3 Covered Durable Medical Equipment and Medical Supplies

Medicaid covers durable medical equipment (DME) which meet the definition of DME, the medical necessity criteria and the prior approval requirements. Medicaid covers repairs, maintenance, delivery of durable medical equipment and disposable and non-reusable items essential for use of the equipment, subject to the limitations specified in this section. All items purchased or rented must be ordered by providers who are eligible to participate in Medicaid.

1. "Durable medical equipment" is defined as equipment which can withstand repeated use, is primarily used to serve a medical purpose, is not useful to individuals in the absence of an illness or injury and is appropriate for use at home.

2. Equipment used in a recipient's residence must be used exclusively by the recipient for whom it was approved.

3. To meet the medical necessity criterion, durable medical equipment must be necessary for the treatment of an illness or injury or to improve the functioning of a body part.

Medicaid covers medical supplies which are necessary for an ongoing course of treatment within the limits specified in this section. As distinguished from DME, medical supplies are disposable and non-reusable items.

Medicaid also covers oxygen, nutritional products and shipping charges as specified in this section.

Medicaid coverage for DME and medical supplies may be limited for recipients in institutional settings when the institutions are expected to provide the necessary items. Institutional settings are hospitals, nursing facilities, intermediate care facilities for the mentally retarded and rehabilitation facilities.

754.31 Covered Services for Non-Institutionalized Recipients

Medicaid covers certain medical supplies, nutritional products and durable medical equipment provided to eligible non-institutionalized recipients without prior approval. Medicaid covers the following for non-institutionalized recipients:

1. Needles, syringes and intravenous (IV) equipment including pumps for administration of drugs, hyper alimentation or enteral feedings;

2. Diabetic supplies, chemical reagents, including blood, urine and stool testing reagents;

3. Gauze, bandages, dressings, pads, underpads and tape;

4. Catheters, colostomy, ileostomy and urostomy supplies and urinary drainage supplies;

5. Parenteral nutritional products prescribed for recipients who have a documented medical need for increased nutrition; and

6. Apnea monitors. Prior authorization is required if the monitor is needed for six (6) months or longer.

754.32 Covered Services for Institutionalized and Non-Institutionalized Recipients 

Medicaid covers the following items without prior approval for both institutionalized and non-institutionalized recipients:

1. Trusses and anatomical supports which do not need to be made to measure;

2. Family planning devices; and

3. Repairs to DME. Medicaid covers repair and replacement parts if recipients own the equipment for which the repair is necessary and the equipment being repaired is a covered Medicaid benefit. Repairs to Augmentative and Alternative Communication Devices require prior authorization. See 754.53.

4. Replacement batteries and battery packs for augmentative and alternative communication devices owned by the recipient.

754.33 Covered Oxygen and Oxygen Administration Equipment

Medicaid covers the following oxygen and oxygen administration systems, within the specified limitations:

1. Oxygen contents, including oxygen gas and liquid oxygen;

2. Oxygen administration equipment purchase, with prior approval;
    
   Oxygen administration equipment may be supplied on a rental basis for one (1) month without prior approval. Rental beyond the initial month requires prior approval.

3. Oxygen concentrators, liquid oxygen systems and compressed gaseous oxygen tank systems;
    
   Medicaid approves the most economical oxygen delivery system possible for a specific recipient when considering types of oxygen concentrators.

4. Cylinder carts, humidifiers, regulators and flow meters;

5. Purchase of cannulae or masks; and

6. Oxygen tents and croup or pediatric tents.

   1. or recipients in nursing facilities, Medicaid covers oxygen contents but does not cover oxygen administration equipment or disposable supplies associated with oxygen. The oxygen administration equipment and associated supplies must be provided by nursing facilities.
       
      If it is cost-effective to cover oxygen concentrator rental rather than oxygen contents for gaseous systems, Medicaid approves oxygen concentrator rental for recipients in nursing facilities.

   2. Rental of oxygen concentrators is limited to twelve (12) months. If the medical need for a concentrator extends beyond twelve (12) months, Medicaid covers monthly service and repair fees rather than the monthly rental fee. Prior approval must be obtained for rentals which extend beyond twelve (12) months. The monthly service and repair fee includes any repairs, parts or replacement of the entire unit, as needed.

   3. Medicaid does not cover oxygen tank rental (demurrage) charges as separate charges when renting gaseous tank oxygen systems. If Medicaid pays rental charges for systems, tank rental is included in the rental payments.

754.34 Augmentative and Alternative Communication Devices 

Medicaid covers medically necessary electronic or manual augmentative communication devices for Medicaid recipients. Medical necessity is determined by the Medical Assistance Division or its designee(s). Communication devices whose purpose is also educational and/or vocational are covered only when it has been determined the device meets medical criteria.

1. A recipient must have the cognitive ability to use the augmentative communication device and meet one of the following criteria.

1. The recipient cannot functionally communicate verbally or through gestures due to various medical conditions in which speech is not expected to be restored; or

2. The recipient cannot verbally or through gestures participate in his/her own health care decisions (i.e., making decisions regarding medical care or indicating medical needs or communicate informed consent on medical decisions).

2. All of the following criteria must be met before an augmentative communication device can be considered for approval. The communication device must be:

   1. A reasonable and necessary part of the recipient's treatment plan;

   2. Consistent with the symptoms, diagnosis or medical condition of the illness or injury under treatment;

   3. Not furnished for the convenience of the recipient, the family, the attending practitioner, or other practitioner or supplier;

   4. Necessary and consistent with generally accepted professional medical standards of care (i.e., not experimental or investigational);

   5. Established as safe and effective for the recipient's treatment protocol; and

   6. Furnished at the most appropriate level suitable for use in the recipient's home environment.

754.36 Rental of Durable Medical Equipment 

Medicaid covers the rental of durable medical equipment. All rental payments must be applied toward purchase of the equipment. When the rental charges equal the amount allowed by Medicaid for purchase, the equipment becomes the property of the recipient for whom it was approved.

1. Medicaid does not cover routine maintenance and repairs for rental equipment.

2. Low cost items, defined as those items for which the Medicaid allowed payment is less than one hundred and fifty ($ 150) dollars, may only be purchased. Purchased DME becomes the property of the Medicaid recipient for whom it was approved.

3. Oxygen concentrators are not subject to the mandatory provisions of applying the rental payments toward purchase. See Section MAD-754.33, COVERED OXYGEN AND OXYGEN ADMINISTRATION EQUIPMENT.

754.36 Delivery of Equipment and Shipping Charges 

Medicaid covers the delivery of DME only when the equipment is initially purchased or rented and the round trip delivery is over seventy-five (75) miles. Providers may bill delivery charges as separate additional charges only when the providers customarily charge a separate amount for delivery to non-Medicaid patients. Medicaid does not pay delivery charges for equipment purchased by Medicare, for which Medicaid is responsible only for the coinsurance and deductible.

Medicaid covers shipping charges for DME and medical supplies when it is cost effective or practical to ship items rather than have recipients travel to pick up items. Shipping charges are defined as the actual costs of shipping items from providers to recipients by a means other than that of provider delivery. Medicaid does not pay shipping charges for items purchased by Medicare for which Medicaid is only responsible for the coinsurance and deductible.

754.36 Rental and Purchase of Used Equipment

Medicaid covers the rental and purchase of used equipment. The equipment must be identified and billed as used equipment.

754.36 Customized Equipment 

Medicaid covers customized durable medical equipment made for specific recipients. Written prior approval is required. MAD or its designee cannot give verbal approvals for customized equipment. When equipment is highly specialized and unique, items may be covered even if recipients are institutionalized.

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754.4 Prior Approval and Utilization Review

All Medicaid services are subject to utilization review for medical necessity and program compliance. Reviews may be performed before services are furnished, after services are furnished and before payment is made, or after payment is made. See Section MAD-705, PRIOR APPROVAL AND UTILIZATION REVIEW. Once enrolled, providers receive instructions and documentation forms necessary for prior approval and claims processing.

754.41 Services for Non-Institutionalized Recipients Which Require Prior Approval 

Medicaid covers certain medical supplies, nutritional products and durable medical equipment provided to eligible recipients with prior approval. Medicaid covers the following benefits with prior approval for non-institutionalized recipients:

1. Enteral nutritional supplements and products provided to recipients who must be tube fed or who otherwise demonstrate a medical need for the product;

2. Adult disposable diapers prescribed for recipients who are incontinent;
   
   Recipients are limited to two (2) cases of disposable adult diapers per month.

3. Disposable diapers prescribed for recipients under twenty-one (21) years of age who suffer from neurological or neuromuscular disorders or who have other diseases associated with incontinence;

4. Supports and positioning devices which are part of a DME system, such as seating inserts or lateral supports for specialized wheelchairs;

5. Protective devices, such as helmets and pads;

6. Bathtub rails and other rails for use in the bathroom;

7. Electronic monitoring devices, such as electronic sphygmomanometers, oxygen saturation, fetal or blood glucose monitors and pacemaker monitors;

8. Passive motion exercise equipment;

9. Decubitus care equipment;

10. Equipment to apply heat or cold;

11. Hospital beds and full length side rails;

12. Compressor air power sources for equipment which is not self- contained or cylinder driven;

13. Home suction pumps and lymph edema pumps;

14. Hydraulic patient lifts;

15. Ultraviolet cabinets;

16. Traction equipment;

17. Prone standers and walkers;

18. Trapeze bars or other patient helpers which are attached to bed or freestanding;

19. Home hemodialysis and/or peritoneal dialysis systems, replacement supplies and/or accessories;

20. Wheelchairs and functional attachments to wheelchairs;
     
    Wheelchairs are only approved every five (5) years. For recipients under twenty-one (21) years of age, wheelchairs can be approved every (3) years.

21. Wheelchair trays;

22. Whirlpool baths designed for home use; and

23. Intermittent or continuous positive pressure breathing equipment.

24. Manual or electronic augmentative and alternative communication devices.
     
    Augmentative and alternative communication devices are approved every five (5) years for adults and every three (3) years for recipients under twenty-one (21) years of age, unless earlier approval is dictated by medical necessity.

754.42 Services for Institutionalized and Non-Institutionalized Recipients Which Require Prior Approval 

Medicaid covers the following items with prior approval for both institutionalized and non-institutionalized recipients:

1. Trusses and anatomical supports which require fitting or adjusting by trained individuals, including JOBST hose;

2. Elastic support stockings and TED type hose;

3. Artificial larynx prosthesis.

4. Repairs to, and replacement parts for, augmentative and alternative communication devices owned by the recipient.

754.43 Additional Review 

Services for which prior approval was obtained remain subject to review at any point in the payment process.

754.44 Eligibility Determination 

Prior approval does not guarantee that individuals are eligible for Medicaid. Providers must verify that individuals are eligible for Medicaid at the time services are furnished and determine if Medicaid recipients have other health insurance.

754.45 Reconsideration 

Providers who disagree with prior approval request denials or other review decisions can request a re-review and a reconsideration. See Section MAD-953, RECONSIDERATION OF UTILIZATION REVIEW DECISIONS.

754.46 Reasons for Prior Approval Denial 

Requests for prior approval are denied for any of the following reasons:

1. Prescribing providers have not examined recipients within two (2) months or have insufficient knowledge of the recipient's condition to enable them to prescribe or recertify the need for DME;

2. Prescriptions do not document recent physician involvement in the estimate of duration of need or recipient's condition; or

3. Requests are not signed by attending physicians. Signature stamps or signatures by employees are not acceptable.

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754.5 Service Limitations and Coverage Restrictions

754.51 Non-Covered Multiple Services 

Medicaid does not cover multiple services. Recipients are limited to one wheelchair, one hospital bed, one oxygen delivery system or one of any particular type of equipment.

754.52 Special Requirements for Purchase of Wheelchairs 

Before billing for custom fabricated wheelchairs, providers who deliver chairs to recipients must make final evaluations of chairs to ensure that they meet the medical, social and environmental needs of the recipients for whom they were approved.

1. Suppliers assume responsibility for correcting defects or deficiencies in chairs which make them unsatisfactory for use by recipients.

2. Providers are responsible for consulting physical therapists, occupational therapists, special education instructors, teachers, parents or guardians, as necessary, to ensure that the recipient's needs are met by the chair.

3. Medicaid does not pay for special modifications or replacement of custom fabricated wheelchairs after the chairs are furnished to recipients.

754.53 Special Requirements for Purchase of Augmentative and Alternative Communication Devices

1. Requests for prior approval of augmentative communication devices must be submitted to HSD or its designee using the required form. Devices must be prescribed by the recipient's physician and be accompanied by a systematic and comprehensive speech/language evaluation completed by a speech-language pathologist who is Medicare certified and/or licensed by the New Mexico Speech Language Pathology and Audiology Advisory Board. The speech pathologist may not be a vendor of augmentative communication systems nor have a financial relationship with a vendor.

2. A trial rental period of up to 60 days is required for all electronic devices to ensure that the chosen device is the most appropriate device to meet the recipient's medical needs. At the end of the trial rental period, if purchase of the device is recommended, documentation of the recipient's ability to use the communication device must be provided showing that the recipient's ability to use the device is improving and that the recipient is motivated to continue to use this device.

3. Medicaid does not pay for supplies for augmentative and alternative communication devices, such as, but not limited to, paper, printer ribbons and computer discs.

4. Prior approval is required for equipment repairs.

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754.6 Noncovered Services

Medicaid does not cover certain durable medical equipment and medical supplies. See Section MAD-602 GENERAL NONCOVERED SERVICES for an overview of the criteria used to assess whether equipment and supplies are not covered.

Medicaid does not cover the following specific items and/or classifications of items:

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754.7 Reimbursement

Durable medical equipment or medical supply providers must submit claims for reimbursement on the HCFA-1500 claim form or its successor. See Section MAD-702, BILLING FOR MEDICAID SERVICES. Once enrolled, providers receive instructions on documentation, billing, and claims processing.

Reimbursement for purchase or rental of DME and for nutritional products is made at the lesser of the provider's billed charges, the Medicare fee schedule, or the MAD maximum allowed amount.

1. The provider's billed charge must be the lesser of the usual and customary charge for the item or service, or the actual acquisition cost plus a percentage as described below:

   1. For items for which the provider's actual acquisition cost, reflecting all discounts and rebates, is less than one thousand dollars ($1,000), the provider must bill the actual acquisition cost plus twenty-five percent (25%).

   2. For items for which the providers' actual acquisition cost, reflecting all discounts and rebates, is one thousand dollars ($1,000) or greater, the provider must bill the actual acquisition cost plus fifteen percent (15%).

2. "Usual and customary charge" refers tot he amount which the individual provider charges the general public in the majority of cases for a specific item or service.

3. Medicare fees are implemented when MAD is advised by Medicare of changes in the fee schedule. MAD implements Medicare fees retroactively.

4. If there is not a Medicare fee schedule for the item, the MAD maximum allowed amount is the provider's actual acquisition cost plus the applicable percentage as described in 754.7 (A).

5. All rental payments must be applied towards purchase, with the exception of oxygen concentrators and liquid oxygen units. Providers must keep a running total of rental charges identifying the total of all rental charges for each piece of equipment.

6. "Set-up fees" are considered to be included in the payment for the equipment or supplies and are not reimbursed as separate charges.

754.71 Reimbursement for Medical Supplies 

Reimbursement to providers is made at the lesser of the following:

1. The provider's billed charge; or

   1. The provider's billed charge is their usual and customary charge for services.

   2. "Usual and customary charge" refers to the amount which the individual provider charges the general public in the majority of cases for a specific service or item, or

2. The maximum established by MAD, which is the Department's estimated acquisition cost of the item plus twenty-five percent (25%). The Department's estimated acquisition cost will be calculated using the average wholesale price less 10.5 percent (10.5%).

754.72 Reimbursement for Delivery and Shipping Charges 

Delivery charges are reimbursed at the MAD maximum amount per mile. Shipping charges are reimbursed at actual cost if the method used is the least expensive method of shipping. Medicaid does not pay for charges for shipping items from suppliers to the providers.

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Memorandum from Medical Assistance Division with Procedural Codes for AAC Devices.