Medicaid Reimbursement Changes

The South Carolina Department of Health and Human Services (SCDHHS) announces the
following changes to maintain expenditures within budget appropriations for State Fiscal Year
2012. Public Notice of the proposed changes was published June 6, 2011. Comments were
accepted and considered through 5:00 p.m. July 6, 2011. The reductions in this notice are in
addition to the previous reduction of 3% that was applied on April 8, 2011.

Because capitation premiums to the managed care plans are based on fee-for-service (FFS) rates,
these adjustments will also reflect cost savings in managed care initiatives. Providers contracted
with Managed Care Organizations (MCOs) should contact the individual plan for information about
rate and/or reimbursement changes.

SCDHHS will apply the reimbursement changes based upon how the provider is enrolled and how
the rendered procedures and services link to a fee schedule. SCDHHS will update the Medicaid
fee schedule using the following methodologies:

1. The Medicare Physician Fee Schedule - For procedures that are covered by Medicare,
SCDHHS will adjust the percentage of the Medicare rate by the aggregate reduction from
the combined April 8th and July 11th fee schedule reductions. For example, if you were
reimbursed at 86% of Medicare prior to the April 8, 2011, reduction of 3% and you will be
receiving an additional 2% reduction on July 11, 2011, you will now be reimbursed at 81%
of the April 2009 Medicare Fee Schedule.

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