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A state method of spending federal Medicaid money for chronically ill children may be forcing local medical supply companies to lose tens of thousands of dollars each year on equipment for which the state refuses to reimburse them.

At least one company may stop giving equipment to children who are on the state-administered Medicaid program because it no longer can absorb the costs the state refuses to pick up.The Utah Department of Health refuses to use Medicaid money to pay for some essential equipment chronically ill children need to survive at home, several parents and health officials said Saturday. The problem surfaced during a panel discussion at the second annual Conference for Caregivers of Chronically Ill and Technology Dependent Children.

One critical piece of equipment the state refuses to pay for is an ambu bag, several parents and medical supply officials said. Yet children on ventilators can't go home without it. If the ventilator breaks, the ambu bag keeps the child alive until paramedics arrive.

Rod Betit, director of the Health Care Financing Division of the Utah Department of Health, acknowledged in a later interview that the state is not paying for the bag.

It's a computer problem, he said. The bag has not yet been assigned a billing code in the Health Department's computer system. As soon as it is given a code, the state will use federal Medicaid money to pay for the bags.

Meanwhile, medical supply companies have just been giving families the needed bags.

"We have to give the families one because ethically I can't set up a ventilator without it," said Robyn Schwerin, a respiratory therapist with Interwest Care.

But parents and medical supply representatives said the problem goes beyond computer codes. The state freely provides children with all the care they need while they are in the hospital, several said. But when the children go home, their care is funded out of a second, more restrictive budget.

That second budget fails to pay the full price of much of the equipment children need at home and won't pay any on other pieces of equipment, several said.

"In the last two years, I would say we have eaten $75,000 in costs on home-care children," Schwerin said. More than $40,000 was equipment for Medicaid children on ventilators. The equipment should have been paid for by the state.

Interwest still has to provide children with the full complement of equipment. "I can't cut corners in setting up a ventilator. These kids' lives depend on it being done safely. If I don't do it safely, the child may die," she said.

She wept as she told the group that her boss was considering denying equipment to Medicaid children because the company was not reimbursed for the equipment by the state.

A representative from Whitmore Medical, another supply company, substantiated Schwerin's story. "We wrote off $11,000 on one child," said Vicky Robbins. "Why would you want to set up a child for home care when you don't get paid," she said. Her company also is leery of giving Medicaid children the equipment they need to live at home because the state isn't reimbursing it.

Betit said his division has only recently selected home care for children as one of its priorities. Betit, who has been with the Health Department for a year, said he is working with his people to pull down the barriers that prevent a family from taking their chronically sick child home.

"It makes sense to get these kids home. It is better for them, better for the family and better for us financially," he said. "It's something we want to do. If there are things getting in the way of financing that, I want to know what they are."

Betit said he didn't know local medical supply companies were not being reimbursed for thousands of dollars of equipment provided to Medicaid children.

"There is money available for maintaining children at home rather than in the hospital," he said.

Home care usually costs a fraction of hospital care, he said. That's why the Department of Health recently decided to seek out and pull down any barriers that keep children from going home.

Betit and Suzanne Dandoy, director of the Health Department, said there is no reason money from the hospital care budget can't be transferred to the home-care budget.

Rep. Ervin M. Skousen, R-Salt Lake, assured those at the convention that he will look into the apparent problem at the department of health.

Skousen is chairman of the Social Services and Health Appropriations Subcommittee.