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Reuse Program to Focus on Equipment Purchased With Medicaid Dollars

The Health and Human Services Commission will create a program to promote the resale of certain equipment that was purchased with Medicaid dollars. This story is part of our 31 Days, 31 Ways series.

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By calling for a program that encourages the reuse of equipment like wheelchairs and hospital beds that were bought with Medicaid dollars, legislators hope that they are creating a new way for the state to save money.

Senate Bill 1175, which passed through the 83rd Legislature, authorizes the Health and Human Services Commission to implement a program that would promote the resale of “durable medical equipment” — which also includes items like insulin pumps and crutches — when purchased through Medicaid.

Lawmakers want Medicaid recipients to have an option to give that equipment back to the state when they’re done it.

“The equipment has value. It can be used again,” said state Sen. Bob Deuell, R-Greenville, who authored the bill. He added that if patients purchased their equipment with Medicaid dollars, “I see no reason for those people to sell it and keep the money.” 

Under the law, HHSC is instructed to create a reuse program by September 2014, but it’s not clear how exactly such a program would work. 

Deuell said the state could collect used equipment and resell it to people, or it could rent the equipment for Medicaid patients rather than purchasing it permanently. Currently, Medicaid recipients who need durable medical equipment can purchase it from providers who accept the insurance plan. The equipment is often used by people with chronic conditions, such as diabetes or paralysis, or long-term injuries.

Such legislation could theoretically lead to the state authorizing the reuse of old, dangerous equipment, but SB 1175’s language mitigates much of that concern, said Tom Banning, CEO of the Texas Academy of Family Physicians. 

SB 1175 specifies that the program HHSC establishes must ensure that “reused equipment meets applicable standards of functionality and sanitation,” a provision Banning said would reduce the likelihood of outdated equipment being reused.

“No one wants a defective product to be reused or a product that has become defective to be reused,” he said. “I think the legislation acknowledges that.”

Deuell said the legislation was prompted by cases where patients no longer need their equipment — perhaps because they have outgrown it, moved to a nursing home or recovered from an injury — and resell it for their own benefit, despite having purchased it with state funds.

Linda Edwards Gockel, a spokeswoman for HHSC, said the agency is still talking to stakeholders and conducting research to have a program set up by September 2014. She said HHSC would need to set up multiple dropoff locations around the state. She said the state is also determining what specific equipment would be eligible for reuse.

The state could consider modeling its program after the durable medical equipment reuse program in Kansas, which is about a decade old, Gockel said. The Kansas government tracks equipment purchased through Medicaid, recovers it at sites across the state and then pays for its refurbishment before making it available for reuse.

Banning said he imagined the state would have to balance what durable medical equipment would be most cost-effective to recycle with patient safety when figuring out how the reuse system would work.

Because potentially reusable equipment includes a range of items, it’s difficult to determine an average lifespan for most equipment, Gockel said.

“It probably depends on what it is, and it probably depends on how much use it gets,” she said. 

Prices of durable medical equipment vary. For patients receiving Medicaid, insurance coverage for equipment ranges from $3,400 to $11,000 for electronically powered wheelchairs, $740 to $6,800 for hospital beds and $55 to $580 for walkers, Gockel said. 

A reuse program probably would not constitute “significant savings” for the state, Banning said, but he added that durable medical equipment has been “a growing expense within both the Medicare and Medicaid programs.”

The state spent about $781.5 million of Medicaid funding on durable medical equipment in fiscal year 2012. The total state Medicaid budget that year was $29.4 billion.

Deuell said such medical equipment is often resold at pawn shops for “a third or 40 percent” of its original cost.

“Whatever we get back is money that could go to help other people,” he said.

This story was produced in partnership with Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.   


Medicaid Spending on Durable Medical Equipment
Source: Texas Health and Human Services Commission
These figures have been rounded.
Fiscal YearFee-for-service Medicaid spent on Durable Medical EquipmentSTAR and STAR Plus funds spent on Durable Medical EquipmentTotal Medicaid Spent on Durable Medical EquipmentTotal Medicaid budget
FY 2008 $426.346 million $93.606 million $519.952 million $22.309 billion
FY 2009 $495.797 million $115.189 million $610.986 million $24.557 billion
FY 2010 $596.204 million $133.206 million $729.410 million $27.651 billion
FY 2011 $620.103 million $161.383 million $781.485 million $29.433 billion

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Health care State government Medicaid Texas Legislature