The application of sales tax to DME and medical supplies is a difficult area that caused problems for providers in the past. We make available a Sales Tax Guide for our members that provides the relevant statutes and Board of Equalization regulations that detail what items of DME and medical supplies are taxable or non-taxable.

Recently we have become aware of several DME companies who have had recent BOE audits that found them liable for sales tax on hospital beds. Hospital beds are in fact subject to sales tax, yet they were not aware. We encourage you to monitor this issue within your own company. In some cases specific types of DME are exempt from sales tax based upon a specific statute, for example oxygen delivery equipment, while in other cases it is a matter of interpretation of what is a "medicine, medical supply,  device or appliance." Just because it is prescribed and is used for medical purposes does not mean it is exempt from sales tax.

Medi-Cal and the Duals Initiative

DHCS recently announced some changes in the implementation of the Duals Initiative or MediConnect program to transition dual eligible beneficiaries to a Medi-Cal managed care plan. The initial pilot program involving 8 large counties has been slowed multiple times, with staggered implementation dates or delays, and the use of passive enrollment.

DHCS announced this week that Alameda County and the use of the Alameda Alliance will not go forward. The Alliance has had serious financial issues and the Department of Managed Health Care recently took action to restore their financial solvency. They also announced that due to the prior issues identified in Medi-Cal and Medicare audits of Cal Optima they will not allow passive enrollment until at least August 2015 and that patients may opt in no earlier  than July 2015.

The Medi-Cal program has also had recent criticisms about problems in enrolling new beneficiaries eligible due to the ACA roll-out. Similarly, even those who were successfully  enrolled in Medi-Cal earlier must reenroll in the last quarter of 2014 during the open enrollment period for 2015.  A lawsuit was filed against DHCS by a patient advocacy group over the time constraints and requests for additional information on renewal that was not required in initial enrollment.