1. (a) Payment by the department to a provider that is enrolled under 7 AAC 120.300 as a prosthetics and orthotics provider will be made in accordance with 7 AAC 145.020.

2. (b) A provider enrolled under 7 AAC 120.300 as a prosthetics and orthotics provider providing prosthetics, orthotics, related medical equipment, items, and supplies to eligible recipients may submit claims covered by the Healthcare Common Procedure Coding System (HCPCS), adopted by reference in 7 AAC 160.900, for which a rate has been established by CMS or the department or for covered codes with rate-setting methodologies set out in (c) - (e) of this section, as follows:

   1. (1) payment rates set by the department for items and services provided by providers enrolled under 7 AAC 120.300 to recipients physically located in this state will be based on 100 percent of the current quarter's Medicare DMEPOS Fee Schedule established by CMS for these items and services in this state, except items and services billable only by providers enrolled under 7 AAC 120.300 will be based on 120 percent of the current quarter's Medicare DMEPOS Fee Schedule established by CMS for these items and services in this state;
   2. (2) payment rates set by the department for items and services provided by providers enrolled under 7 AAC 120.300 who provide services to recipients when the recipients are physically located outside of this state will be based on 100 percent of the current quarter's Medicare DMEPOS Fee Schedule established by CMS for these items and services in the state where the item or service was provided; the department will base location on the provider's Medicare accreditation location address;
   3. (3) payment rates set by the department for items and services not established on the current quarter's Medicare DMEPOS Fee Schedule established by CMS will be based on the rate-setting methodology set out in (c) - (f) of this section.

3. (c) Payment rates for prosthetics, orthotics, or related items and services under 7 AAC 120.300(a)(2) for covered non-miscellaneous codes that are from the Healthcare Common Procedure Coding System (HCPCS), adopted by reference in 7 AAC 160.900, but for which CMS has not issued a rate on the current quarter's Medicare DMEPOS Fee Schedule as described in (b) of this section or for which the department has not established a rate and published the rate on the Alaska Medicaid DMEPOS Fee Schedules, Tables 1-5 through 1-9, adopted by reference in 7 AAC 160.900, or Alaska Medicaid DMEPOS Interim Fee Schedule, will be based on the submitted unaltered final purchase invoice price plus 35 percent, as follows, for claims submitted on or after June 2, 2019 and before the date the rate is established, until a rate is set by CMS or the department:

   1. (1) if the median unaltered final purchase invoice price of the non-miscellaneous HCPCS item for the first 10 claims is less than $5,000, the final rate will be set at

      1. (A) the median submitted unaltered final purchase invoice price of the first 10 claims plus 35 percent if the first 10 claims were paid to at least two different enrolled providers; or
      2. (B) the median submitted unaltered final purchase invoice price of the number of claims paid, plus 35 percent after 15 claims are paid but have not been paid to at least two different enrolled providers;

   2. (2) if the median unaltered final purchase invoice price of the non-miscellaneous HCPCS item for the first 10 claims is $5,000 or more, the final rate will be set at

      1. (A) the median submitted unaltered final purchase invoice price plus 30 percent if the first 10 claims were paid to at least two different enrolled providers; or
      2. (B) the median submitted unaltered final purchase invoice price of the number of claims paid, plus 30 percent after 15 claims are paid but have not been paid to at least two different enrolled providers;
   3. (3) when applicable, the rental rates for a covered item non-priced, non-miscellaneous HCPCS code for which CMS or the department has not issued a permanent rate will be 10 percent of the rate set out in (1) of this subsection;
   4. (4) all claims paid under this subsection must be submitted with an unaltered final purchase invoice, free of alteration described in (k) of this section; claims submitted without an unaltered final purchase invoice or with anything other than an unaltered final purchase invoice will be denied.

4. (d) Payment rates for covered items submitted using a miscellaneous HCPCS code as defined in 7 AAC 120.399 for which CMS or the department has not issued a rate as described in (b) of this section will be paid, as follows, at the unaltered final purchase invoice price plus 20 percent, except when the covered item is a customized prosthetic or orthotic item manufactured under the oversight of and signed off by a certified professional described in 7 AAC 120.300(a)(2)(C):

   1. (1) the department will not set a generic rate for the miscellaneous HCPCS code, but the department may set a rate based on a national product code or other product identifier and may require the unique identifier to be submitted on claims to facilitate payment;
   2. (2) claims submitted for miscellaneous HCPCS codes under this section for which a product-specific rate has not been established and published on the Alaska Medicaid DMEPOS Fee Schedules, Tables I-5 through I-9, adopted by reference in 7 AAC 160.900, or Alaska Medicaid DMEPOS Interim Fee Schedule must be submitted with an unaltered final purchase invoice, free of alteration described in (k) of this section; claims submitted without an unaltered final purchase invoice or with anything other than an unaltered final purchase invoice will be denied.
5. (e) Rates established by the department under this section for a covered code for which CMS has not issued a rate may be published on the department's Alaska Medicaid DMEPOS Interim Fee Schedule.

6. (f) A provider enrolled under 7 AAC 120.300 as a prosthetics and orthotics provider may submit claims for labor and repair parts for damaged prosthetics, orthotics, and related items and services with the following limitations:

   1. (1) the department will not pay more than the corresponding labor rate listed on the Alaska Medicaid DMEPOS Fee Schedule, Tables I-5 through I-9, adopted by reference in 7 AAC 160.900, for which CMS has issued a price for each 15 minutes of labor costs;
   2. (2) the billing for a repair part must reflect a charge that complies with the applicable standards in 7 AAC 145.020 and this section;

   3. (3) labor and repair parts for the item or service must be documented and the documentation must be submitted with each claim; documentation must include

      1. (A) a statement signed by the recipient or the recipient's authorized representative that describes the cause for and nature of the repair;
      2. (B) a description of the item or service being repaired and its serial number, if available;
      3. (C) the beginning and end dates of warranty coverage, if available;
      4. (D) documentation for labor charges that includes the amount of time spent on the repair, rounded up to the nearest quarter hour, and the hourly rate charged for the repair; and
      5. (E) an itemized list of parts used in the repair and associated costs;
   4. (4) a provider may not submit a claim for labor and repair parts if the item is covered under a manufacturer's or supplier's warranty, or if the labor or parts are necessary to repair an item that needs repair because of a manufacturer's defect;
   5. (5) a provider may not submit a claim for labor and repair parts for a rented item; the provider shall ensure that a rented item functions as intended after the provider repairs or replaces the item.

7. (g) Payment using a miscellaneous HCPCS code as defined in 7 AAC 120.399 for custom-fabricated prosthetics, orthotics, and related items and services manufactured under the oversight of and signed off by a certified professional described in 7 AAC 120.300(a)(2)(C) will be based on the most applicable HCPCS code at the lesser of

   1. (1) billed charges; or

   2. (2) a price ceiling based on the following calculation:

      1. (A) for items with more than 10 parts, an itemized list of the cost, with no provider mark-up, of up to 10 parts, with the total cost multiplied by 180 percent; or

      2. (B) an itemized list of the cost, with no provider mark-up, of all parts used to manufacture the custom prosthetic or orthotic, with the total cost multiplied by 160 percent; additionally, charges and costs under this subparagraph include the following:

         1. (i) a labor charge priced at the L7520 payment rate of the HCPCS per 15 minutes; and
         2. (ii) additional bundled costs paid up to $1,064.10; the bundled cost items include the initial evaluation, diagnostic checks, and follow-up.

8. (h) A provider enrolled under 7 AAC 120.300 as a prosthetics and orthotics provider may request reimbursement for labor and parts costs associated with adjustments to a prosthetic medically necessary to prevent injury to the residual limb due to residual limb measurement changes that do not require a full new customized prosthetic.

   1. (i) Subject to the applicable provisions of 7 AAC 120.300 - 7 AAC 120.399, a provider enrolled under 7 AAC 120.300 as a prosthetics and orthotics provider may request payment for the reasonable direct costs of delivery or shipping as follows:

      1. (1) from the manufacturer to the provider for customized or optimally configured durable medical equipment repair and replacement parts that are specialized or unique to a recipient's equipment and for which the final unaltered purchase invoice price exceeds $250; the shipping method used must be the most cost-effective method available; the unaltered final purchase invoice, free of alterations described in (k) of this section, must include the purchase invoice for the replacement items or repair and must include shipping costs; if the unaltered final purchase invoice is free of alterations described in (k) of this section but contains one or more item in addition to the repair or replacement part, the department will pay for the shipping cost attributed to the repair or replacement part, as calculated by dividing the shipping cost on the unaltered final purchase invoice by the number of items purchased and multiplying by the number of repair or replacement parts specific to the recipient's need; expedited, next day, rush, or delivery charges resulting from the use of a shipping method other than the most cost-effective method available will not be covered;

      2. (2) from the dispensing provider to the recipient when the following conditions apply:

         1. (A) the recipient resides outside the municipality where the business of the enrolled dispensing provider is located;
         2. (B) the item or service is unavailable from a provider enrolled under 7 AAC 120.300 in the municipality where the recipient resides;

         3. (C) the submitted claim and supporting documents include the

            1. (i) recipient's name;
            2. (ii) address to where the item was delivered;
            3. (iii) itemized list of the products included in the shipment or delivery, to include each product name, each product identifier, the quantity, and the serial number, when applicable;
            4. (iv) shipment and delivery date;
            5. (v) recipient's signature with the date of receipt; and
            6. (vi) total shipping and delivery charges minus all discounts, substantiated by a paid shipping invoice reflecting the actual payment;

      3. (3) from the recipient to the dispensing provider for the repair of recipient-owned equipment when the following conditions apply:

         1. (A) the recipient resides outside the municipality where the business of the enrolled dispensing provider is located;
         2. (B) the item or service is unavailable from a provider enrolled under this section in the municipality where the recipient resides;

         3. (C) the submitted claim and supporting documents include the

            1. (i) address to where the item was delivered;
            2. (ii) itemized list of the products included in the shipment or delivery, to include each product name, each product identifier, the quantity, and the serial number, when applicable;
            3. (iii) shipment and delivery date;
            4. (iv) recipient's signature with the date of receipt; and
            5. (v) total shipping and delivery charges minus all discounts, substantiated by a paid shipping invoice reflecting the actual payment;
      4. (4) shipping costs that qualify for coverage under this section due to the recipient traveling within or outside of this state; those costs are eligible for coverage only if the recipient is traveling for medical, educational, or vocational reasons; documentation from the prescribing physician supporting the recipient's reason for travel and including the estimated duration of travel must be submitted with the claim; shipping costs related to recreational travel are not covered.
9. (j) Providers may use the department's price research form to request formal research of a state-based specific price established by the department that has not been established by CMS using the Alaska Medicaid DMEPOS Price Research Form.

10. (k) An unaltered final purchase invoice is considered altered if

    1. (1) information on the original invoice is removed, erased, redacted, omitted, or otherwise modified so that the copy submitted to the department is anything other than an exact copy of the original invoice received by the enrolled provider from the provider's supplier; legible markings made by an enrolled provider on the original invoice as part of the enrolled provider's normal business practices will not result in the department viewing an invoice as altered if the markings

       1. (A) do not remove, erase, redact, omit, or otherwise modify the invoice in a way that results in any of the information on the original invoice becoming illegible; and
       2. (B) appear on both the original invoice and the copy submitted to the department; or
    2. (2) the invoice shows a price other than the final price paid by the enrolled provider.
11. (l) The Alaska Medicaid DMEPOS Fee Schedule, Tables I-5 through I-9, adopted by reference in 7 AAC 160.900, will be available quarterly in accordance with published CMS Medicare DMEPOS fee schedules.

12. (m) In this section,

    1. (1) "out-of-state" means that the provider is physically located in a state other than this state;
    2. (2) "in-state" means that the provider is physically located in this state.

(Eff. 6/2/2019, Register 230)