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CMS Final Rule 6050-F

OVERVIEW

On December 30, 2015 the Centers for Medicare & Medicaid Services (CMS) issued a final rule that would establish a prior authorization process as a condition of payment for certain DMEPOS items that are frequently subject to unnecessary utilization. The final rule is published here - Opens in a new window  - External Link Policy - Opens in a new window .  This prior authorization process will help ensure that Medicare patients are not held responsible for the cost of items that are not eligible for Medicare by determining whether certain DMEPOS items are provided in a manner that is consistent with Medicare coverage, coding, and payment rules.  The CMS believes the final rule will prevent unnecessary utilization while safeguarding Medicare patients’ access to medically necessary care.

Under the final rule, the prior authorization process will require the same information necessary to support Medicare payment, just earlier in the process.  There are no new clinical documentation requirements. The prior authorization process assures that all relevant coverage, coding, and clinical documentation requirements are met before the item is furnished to the beneficiary and before the claim is submitted for payment. The CMS believes prior authorization is an effective way to reduce or prevent questionable billing practices and improper payments for DMEPOS items.  Access is preserved in this rule by having both specified timeframes for review and approval of requests, and an expedited process in cases where delays jeopardize the health of beneficiaries.

The CMS announced in the Federal Register (here) - Opens in a new window  - External Link Policy - Opens in a new window , as published on December 21, 2016, the selection of two items of durable medical equipment to be subject to required prior authorization, which began on March 20, 2017:

  • K0856: Power wheelchair, group 3 std., single power option, sling/solid seat/back, patient weight capacity up to and including 300 pounds
  • K0861: Power wheelchair, group 3 std., multiple power option, sling/solid seat/back, patient weight capacity up to and including 300 pounds

Suppliers or beneficiaries submitting claims in one of the 4 states listed below must receive prior authorization before the item is furnished or a claim is submitted, as a condition for payment:

  • Illinois
  • Missouri
  • New York
  • West Virginia

The CMS also announced its intent to expand the prior authorization process for codes K0856 and K0861 nationwide in July 2017.

For information about the prior authorization process specific to these items, stakeholders may access support materials in the download section on the main page here.

BACKGROUND

The CMS has had longstanding concerns about the improper payments related to DMEPOS items.  The Department of Health and Human Services’ Office of the Inspector General and the U.S. Government Accountability Office have published multiple reports indicating questionable billing practices by suppliers, inappropriate Medicare payments, and questionable utilization of DMEPOS items. The CMS has addressed these issues in recent years through the implementation of the DMEPOS Competitive Bidding Program, as well as heightened screening of suppliers, as authorized by the Affordable Care Act.

In addition to those actions, CMS expanded a 3-year prior authorization demonstration program for power mobility devices (PMDs). The demonstration began in 2012 in 7 states with high incidences of fraudulent claims and improper payments. In 2014, the demonstration was expanded to 12 additional states. Based on claims processed from September 1, 2012 through December 31, 2015, monthly expenditures for the PMD codes included in the demonstration decreased from: $12 million to $3 million in December 2015 in the original 7 demonstration states; $10 million in September 2012 to $2 million in December 2015 in the 12 additional expansion states; and $10 million in September 2012 to $3 million in December 2015 in the non-demonstration states. The CMS believes the decrease in spending is due in part to national DMEPOS suppliers adjusting their billing practices nationwide (not just in the demonstration states) to comply with CMS policies based on their experiences with prior authorization in the demonstration states. More information on the PMD demonstration is available here.

This final rule further addresses questionable utilization and improper payments by creating a prior authorization process for certain DMEPOS items beyond PMDs.  Under Section 1834(a)(15) of the Social Security Act, the Secretary has the authority to develop and periodically update a list of DMEPOS items that the Secretary determines, on the basis of prior payment experience, are frequently subject to unnecessary utilization and to develop a prior authorization process for these items. The final rule implements this authority by creating:  a “Master List” of items that meet specific criteria and are potentially subject to prior authorization; a “Required Prior Authorization List,” a subset of items on the Master List; and a prior authorization program for the Required Prior Authorization List items.

THE MASTER LIST

The Master List is the set of 135 DMEPOS items identified as being frequently subject to unnecessary utilization.  Items that meet the following criteria are included on the Master List and thus potentially subject to prior authorization: items on the DMEPOS Fee Schedule with an average purchase fee of $1,000 or greater, or an average rental fee schedule of $100 or greater, (adjusted annually for inflation) and the subject of:

  • HHS Office of the Inspector General (OIG) or U.S. Government Accountability Office (GAO) reports that are national in scope and published since 2007, or 
  • Comprehensive Error Rate Testing Program’s Annual Medicare Fee-for-Service Improper Payment Rate Reports and/or the Supplementary Appendices for the Medicare Fee-for-Service Improper Payment Rate Reports since 2011.

The list is self-updating annually such that items on the DMEPOS Fee Schedule that meet the payment threshold are added to the list when the item is the subject of an OIG or GAO report of a national scope or a future CERT DME Service Specific Report. Items will remain on the list for 10 years, but can be removed sooner if the purchase amount drops below the payment threshold.  After 10 years, items can remain on the list or be added back to the list if a subsequent report identifies the item as frequently subject to unnecessary utilization.

REQUIRED PRIOR AUTHORIZATION LIST

Presence on the Master List does not automatically create a prior authorization requirement for that item. In order to balance minimizing provider and supplier burden with protecting the Medicare Trust Funds and beneficiary access, CMS will initially implement prior authorization for a subset of items on the Master List (referred to as “Required Prior Authorization List”). The CMS will publish the Required Prior Authorization List in the Federal Register with at least 60 days’ notice before implementation of prior authorization for those items.

PRIOR AUTHORIZATION PROCESS

Prior authorization will be required for those DMEPOS items on the Required Prior Authorization List.  The process requires all relevant documentation to be submitted for review prior to furnishing the item to the beneficiary and submitting the claim for processing. The CMS or its contractors will review the prior authorization request and provide a provisional affirmation or non-affirmation decision.  A claim submitted with a provisional affirmation decision will be paid so long as all other requirements are met.  A claim submitted with a non-affirmation decision or without a decision will be denied.  Unlimited resubmissions of prior authorization requests are allowed.

Medicare or its review contractor will make a reasonable effort to render an initial prior authorization determination within 10 business days and will make a reasonable effort to render a resubmission prior authorization determination within 20 business days.  These are maximum timeframes and will be adjusted downward for items that require less time for making a determination.  An expedited review process will be available to address circumstances where applying the standard timeframe for making a prior authorization decision could seriously jeopardize the life or health of the beneficiary. The request for an expedited review must provide rationale supporting the request.

The CMS will issue specific prior authorization guidance in sub-regulatory communications.