Why Device Manufacturers Should Care About Managed Medicaid: The Critical Role of Fee Schedules

Author: Tracy Davis MS, RD, Director of Market Access/Payer Engagement

In the ever-evolving healthcare landscape, device manufacturers often focus on the reimbursement strategies tied to private insurance and traditional Medicare. However, there’s an important area that many overlook: Medicaid Managed Care. This represents a growing portion of the U.S. healthcare system, which has grown rapidly to 90 million Americans with a range of healthcare needs.

But why is it important for device manufacturers to focus on not just Traditional but also Medicaid Managed Care? The answer lies in fee schedules.

The Power of Fee Schedules

Fee schedules are critical to understanding how Medicaid Managed Care Organizations (MCOs) reimburse healthcare providers for services, including use of medical devices. MCOs often have their own fee schedules that differ from state Medicaid fee schedules, but they are more likely to create a fee schedule if a device is already listed on the state fee schedule.

The differences between state and MCO fee schedules can significantly impact the reimbursement rates for the device manufacturers’ product. To maximize reimbursement potential, device manufacturers should build Medicaid into their Market Access strategy, particularly when the technology serves women and/or children.  Together, women and children account for approximately 78% of all Medicaid beneficiaries.  Including Medicaid Managed Care in your Market Access strategy can lead to improved market penetration, and greater opportunities in a market that continues to grow.

The Growing Importance of Medicaid

Medicaid has seen a significant expansion in recent years, with MCOs now serving most Medicaid beneficiaries. According to recent reports, over 75% of Medicaid recipients are enrolled in some form of managed care. This means that device manufacturers have a large and growing population to consider when developing pricing strategies and reimbursement models for their products.

Many device manufacturers still prioritize traditional payers like Medicare or private insurers, but with Medicaid spending expected to rise, especially in states with larger populations, managed Medicaid is becoming too important to ignore.

When signed into law by Lyndon Baines Johnson on July 30, 1965, Medicaid was based on a welfare model, and was restricted to people with low incomes and limited resources. However, throughout the decades, Medicaid evolved to cover more people, including those with substantial assets in need of health care services, including long-term care services.

An understanding of Medicaid today really requires a paradigm shift in thinking.

Medicaid is a joint program, funded 60% by the federal government and 40% by the states. There are many different programs, including long-term care, or nursing home Medicaid. Federal and state policymakers have changed the rules over the years, and have altered/made it into a middle-class program. Many people find it hard to let go of their conception of the Medicaid program from 1965, and it is common to see news reports mistakenly describing it as a program for those in poverty.

Why Fee Schedules Matter

Managed Medicaid plans negotiate their own reimbursement rates with device manufacturers, and the details of these agreements are often influenced by state-specific guidelines and healthcare policies. Fee schedules set the maximum allowable reimbursement for healthcare providers, and as these can vary by region or plan, manufacturers need to navigate these differences carefully.

The key is to understand not just the standard fee schedule for Medicaid in a particular state, but also the negotiated rates within managed care organizations. Manufacturers should partner with Medicaid MCOs to ensure their devices are competitively priced within these fee schedules, and work to advocate for reasonable reimbursement levels.

What Device Manufacturers Can Do:

Stay Informed – Medicaid fee schedules and managed care plans can change, and it’s crucial for device manufacturers to monitor these shifts regularly.

Engage with Medicaid MCOs – Building relationships with Medicaid Managed Care Organizations can help manufacturers influence fee schedules and ensure their products are reimbursed at appropriate rates.

Optimize for State Variability – Each state may have different Medicaid fee schedules and coverage rules. Customizing reimbursement strategies for each state’s plan can give manufacturers a competitive edge.

Advocate for Fair Pricing – Device manufacturers should be actively engaged in policy discussions at both the state and federal levels to ensure fair reimbursement practices for medical devices within Medicaid Managed Care.

As Medicaid continues to grow in importance, device manufacturers must recognize the significant impact that Medicaid Managed Care and its fee schedules have on their bottom lines. By staying proactive in understanding fee schedules, engaging with MCOs, and tailoring strategies for each state’s unique system, manufacturers can unlock the full potential of this market segment, ensuring long-term growth and stability in an increasingly competitive healthcare environment.

Source: https://www.medicaid.gov/