Fact Sheets

CMS Seeks Input on Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics and Supplies Items

CMS Seeks Input on Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics and Supplies Items

OVERVIEW

The Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule that would build on a successful demonstration program and establish a prior authorization process for certain durable medical equipment, prosthetics, orthotics, and supplies items. Using a prior authorization process will help ensure that certain durable medical equipment, prosthetics, orthotics, and supplies are provided efficiently and consistent with the law.  The proposed rule aims to prevent unnecessary utilization while ensuring beneficiaries’ access to medically necessary items.  

Under the proposed rule, the prior authorization process would not create new clinical documentation requirements.  Instead, it would require the same information necessary to support Medicare payment, just earlier in the process.  This would ensure 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. This helps ensure beneficiaries are not held responsible for the cost of items that are not eligible for Medicare payment. CMS believes prior authorization is an effective way to reduce or prevent fraudulent billings and improper payments for medical equipment and supply items.

CMS is soliciting public comment on establishing a prior authorization process for certain durable medical equipment and supply items that are frequently subject to unnecessary utilization. Additionally, CMS is soliciting public comments on the development of a Master List of items that may be subject to prior authorization based on a history of improper payment, criteria for the Master List, and the process for implementing prior authorization for items on the Master List.

BACKGROUND

For decades, there has been concern of fraudulent activities and improper payments of durable medical equipment, prosthetics, orthotics, and supplies 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 payment, and frequently questionable utilization of durable medical equipment and supply items. CMS has addressed these issues in recent years through implementation of the Competitive Bidding Program for Durable Medical Equipment, Prosthetics, Orthotics and Supplies, as well as heightened screening and provider enrollment restrictions made possible by the Affordable Care Act.

In addition to those actions, CMS launched a 3-year prior authorization demonstration project in 2012 for power mobility devices because of high incidences of fraudulent claims and improper payments associated with them. CMS has observed a decrease in expenditures for power mobility devices since implementing this project without a reduction in access to such device when needed.  Based on claims submitted as of September 30, 2013, monthly expenditures for power mobility devices included in the demonstration project decreased from $12 million in September 2012 to $4 million in August 2013 in participating states. No indications of reduced access to necessary items and services have been observed for areas involved in the demonstration.  

The proposed rule builds upon success of the demonstration project by creating a prior authorization process for durable medical equipment and supply items beyond power mobility devices.  Under Section 1834(a)(15) of the Social Security Act, the Secretary has authority to develop and periodically update a list of durable medical equipment, prosthetic, orthotics, and supplies 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 proposed rule would implement this authority by interpreting “frequently subject to unnecessary utilization,” specifying a “Master List” of items that meet a proposed criteria, and proposing a prior authorization process.

THE MASTER LIST

The Master List is the set of items that may be subject to prior authorization. It refers to a proposed list of durable medical equipment and supply items identified as being frequently subject to unnecessary utilization.  The criteria used to select the 134 items on the Master List are items with an average purchase fee of $1,000 or greater, or an average rental fee schedule of $100 or greater and is the subject of:

• HHS Office of the Inspector General or U.S. Government Accountability Office reports published since 2007, or
• Comprehensive Error Rate Testing Annual Medicare Fee-for-Service Improper Payment Report, Appendix of Durable Medical Equipment Projected Overpayment Rates in 2011 or later.

The rule proposes that items remain on the Master List for 10 years from the date the item was added.  In addition, the rule proposes that the Master List be self-updated annually based on specified criteria.  

PRIOR AUTHORIZATION PROCESS

Under the proposed rule, prior authorization would be required for items included on the Master List. The process would require all relevant documentation to be submitted for review prior to delivery. CMS or its contractors would review the request and provide an affirmative or non-affirmative decision. A claim submitted with an affirmative prior authorization will be paid so long as all other requirements are met. A claim submitted with a non-affirmative decision or without a decision will be denied. Unlimited resubmissions are allowed.  

Decisions on initial requests would be postmarked within 10 business days and subsequent requests would be processed within 20 business days. To address circumstances where applying the standard timeframe for making a prior authorization decision could seriously jeopardize the life or health of the beneficiary, CMS proposes an expedited review process. The request for an expedited review will provide rationale supporting the expedited review request. Such a request must include documentation that shows that applying the standard timeframe for making a decision could seriously jeopardize the life or health of the beneficiary. In these situations, the review entity will make reasonable efforts to communicate the decision within 2 business days of receipt of all applicable Medicare-required documentation.  

ITEM SELECTION PROCESS

Presence on the Master List would not automatically create a prior authorization requirement for the items. The rule proposes to implement a prior authorization process by limiting the number of items from the Master List that are subject to prior authorization. In order to balance minimizing provider and supplier burden with our need to protect the Medicare Trust Funds and ensure beneficiary access, CMS proposes to initially implement prior authorization for a subset of items on the Master List (referred to as “Required Prior Authorization List”). CMS proposes to inform the public of the Required Prior Authorization List by publishing a notice in the Federal Register with a 60-day notice before implementation.

The proposed rule is currently on display at https://www.federalregister.gov/public-inspection and will be published in the Federal Register on May 28, 2014.  The deadline to submit comments is July 28, 2014.  

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