For any item to be covered by Medicare, it must 1) be eligible for a defined Medicare benefit category, 2) be reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member, and 3) meet all other applicable Medicare statutory and regulatory requirements.
The purpose of a Local Coverage Determination (LCD) is to provide information regarding “reasonable and necessary” criteria based on Social Security Act § 1862(a)(1)(A) provisions.
In addition to the “reasonable and necessary” criteria contained in this LCD there are other payment rules, which are discussed in the following documents, that must also be met prior to Medicare reimbursement:
- The LCD-related Standard Documentation Requirements Article, located at the bottom of this policy under the Related Local Coverage Documents section.
- The LCD-related Policy Article, located at the bottom of this policy under the Related Local Coverage Documents section.
- Refer to the Supplier Manual for additional information on documentation requirements.
- Refer to the DME MAC web sites for additional bulletin articles and other publications related to this LCD.
For the items addressed in this LCD, the “reasonable and necessary” criteria, based on Social Security Act § 1862(a)(1)(A) provisions, are defined by the following coverage indications, limitations and/or medical necessity.
The statutory coverage criteria for immunosuppressive drugs are specified in the related Policy Article.
For immunosuppressive drugs covered under this policy, the dosage, frequency and route of administration must conform to generally accepted medical practice and must be medically necessary to prevent or treat the rejection of an organ transplant.
Coverage of parenteral azathioprine (J7501) or methylprednisolone (J2920, J2930) is limited to those situations in which the medication cannot be tolerated or absorbed if taken orally and is self-administered by the beneficiary. Claims for parenteral azathioprine or methylprednisolone that do not meet this criterion will be denied as not medically necessary (CMS Benefit Policy Manual, Internet-Only Manual, CMS Pub. 100-02, Chapter 15, Section 50.4.3 [hereinafter bp102c15, §50.4.3]).
Immunosuppressive drugs are covered only for the specific labeled indications and approval for marketing by the FDA (bp 102c15, §50.5.1). Parenteral belatacept (J0485), antithymocyte globulin (J7504, J7511), muromonab-CD3 (J7505), daclizumab (J7513), cyclosporine (J7516), and tacrolimus (J7525) are not proven to be safe when administered in the home setting and therefore will be denied as not medically necessary when provided in that setting.
Drugs may be covered only if dispensed and billed to Medicare by the entity that actually dispenses the drug to the Medicare beneficiary, and that entity must be permitted under all applicable federal, state, and local laws and regulations to dispense drugs. Only entities licensed in the state where they are physically located may bill the DME MAC for immunosuppressive drugs (bp102c15, §110.3). Treating practitioners may bill the DME MAC for drugs if all of the following conditions are met: the treating practitioner is 1) enrolled as a DMEPOS supplier with the National Supplier Clearinghouse, and 2) dispensing the drug(s) to the Medicare beneficiary, and 3) authorized by the State to dispense drugs as part of the treating practitioner’s license. Claims submitted by entities not licensed to dispense drugs will be denied for lack of medical necessity.
The quantity of immunosuppressive drugs dispensed is limited to a 30-day supply. Quantities of immunosuppressive drugs dispensed in excess of a 30-day supply will be denied as not medically necessary. If a drug is denied as not medically necessary, the related supply fee (Q0510, Q0511 and Q0512) will be denied as not medically necessary (bp102c15, §50.4.3 and CMS Claims Processing Manual, Internet-Only Manual, CMS Pub. 100-04, Chapter 17, Section 80.3 [hereinafter clm104c17, §80.3]).
A Standard Written Order (SWO) must be communicated to the supplier before a claim is submitted. If the supplier bills for an item addressed in this policy without first receiving a completed SWO, the claim shall be denied as not reasonable and necessary.
For Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) base items that require a Written Order Prior to Delivery (WOPD), the supplier must have received a signed SWO before the DMEPOS item is delivered to a beneficiary. If a supplier delivers a DMEPOS item without first receiving a WOPD, the claim shall be denied as not reasonable and necessary. Refer to the LCD-related Policy Article, located at the bottom of this policy under the Related Local Coverage Documents section.
For DMEPOS base items that require a WOPD, and also require separately billed associated options, accessories, and/or supplies, the supplier must have received a WOPD which lists the base item and which may list all the associated options, accessories, and/or supplies that are separately billed prior to the delivery of the items. In this scenario, if the supplier separately bills for associated options, accessories, and/or supplies without first receiving a completed and signed WOPD of the base item prior to delivery, the claim(s) shall be denied as not reasonable and necessary.
An item/service is correctly coded when it meets all the coding guidelines listed in CMS HCPCS guidelines, LCDs, LCD-related Policy Articles, or DME MAC articles. Claims that do not meet coding guidelines shall be denied as not reasonable and necessary/incorrectly coded.
Proof of delivery (POD) is a Supplier Standard and DMEPOS suppliers are required to maintain POD documentation in their files. Proof of delivery documentation must be made available to the Medicare contractor upon request. All services that do not have appropriate proof of delivery from the supplier shall be denied as not reasonable and necessary.
For DMEPOS items and supplies provided on a recurring basis, billing must be based on prospective, not retrospective use. For DMEPOS products that are supplied as refills to the original order, suppliers must contact the beneficiary prior to dispensing the refill and not automatically ship on a pre-determined basis, even if authorized by the beneficiary. This shall be done to ensure that the refilled item remains reasonable and necessary, existing supplies are approaching exhaustion, and to confirm any changes or modifications to the order. Contact with the beneficiary or designee regarding refills must take place no sooner than 14 calendar days prior to the delivery/shipping date. For delivery of refills, the supplier must deliver the DMEPOS product no sooner than 10 calendar days prior to the end of usage for the current product. This is regardless of which delivery method is utilized.
For all DMEPOS items that are provided on a recurring basis, suppliers are required to have contact with the beneficiary or caregiver/designee prior to dispensing a new supply of items. Suppliers must not deliver refills without a refill request from a beneficiary. Items delivered without a valid, documented refill request will be denied as not reasonable and necessary.
Suppliers must not dispense a quantity of supplies exceeding a beneficiary's expected utilization. Suppliers must stay attuned to changed or atypical utilization patterns on the part of their clients. Suppliers must verify with the treating practitioner that any changed or atypical utilization is warranted.
Regardless of utilization, a supplier must not dispense more than a one (1) -month quantity at a time.