News Feature | January 4, 2016

CMS Issues Final Rule On Prior Authorization For Durable Medical Equipment

By Jof Enriquez,
Follow me on Twitter @jofenriq

CMS Back Off Medicare Changes

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule that requires prior authorization for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), in an effort to curb improper and fraudulent payments for such items.

The final rule will require the usual documentation from providers to obtain Medicare payments, but they need to submit information earlier in the process. This consists of submitting evidence that the item requested complies with all applicable Medicare coverage, coding, and payment rules, prior to furnishing the item, and prior to submitting the claim for processing. CMS or its contractors will conduct a medical review based on medical necessity guidelines and other coverage criteria, including conducting an expedited review process for beneficiaries whose lives can be threatened if standard time frames are followed.

Included in the final rule is a 135-item "Master List" of DMEPOS supplies and equipment that are subject to unnecessary utilization. Not all items on this list need to be subjected to preauthorization automatically, but items listed in the sub-set "Required Prior Authorization List" of items need to undergo the review process.

According to USA Today, an October report by the non-profit Council for Medicare Integrity found that billing for durable medical equipment "has consistently had an incredibly high rate of billing errors, frequently billed incorrectly at a higher rate, causing an overpayment.” For 2014 alone, the report states that improper billing cost Medicare $5 billion.

The new preauthorization program for DMEPOS items will save $10 million in 2016, and potentially between $10 million and $110 million in 2025, according to CMS.

"This prior authorization process will help ensure that certain DMEPOS items are provided consistent with Medicare coverage, coding, and payment rules. CMS believes the final rule will prevent unnecessary utilization while safeguarding beneficiaries’ access to medically necessary care," CMS states in a separate announcement. The agency also stated that it has been working to reduce improper utilization of DME supplies in recent years through a competitive bidding program and greater screening of suppliers.

In a letter to CMS, AdvaMed (Advanced Medical Technology Association) indicated that while it supports use of prior authorization to reduce improper Medicare payments, it has concerns that prior authorization might limit or slow access to DME items for people who need them. AdvaMed made a number of recommendations for improving the proposed prior authorization process, including shortening the time frames for prior authorization decisions by CMS and its contractors, which CMS partially addressed in the final rule.

"Prior authorization programs by their very nature question the medical expertise and judgment of the treating physician,” Don May, AdvaMed's executive VP for health care delivery policy, wrote in the letter, reports USA Today. "They remove the decision-making process about appropriate care from patients and their physicians and turn it over to administrators who have no firsthand experience with the patient’s condition.”

In the same report, AdvaMed spokesperson Wanda Moebius says AdvaMed plans to monitor how CMS implements its new rule over the coming months "to ensure that Medicare beneficiary access to needed care is not compromised …"

The group has been pushing for CMS to relax its rules on DME equipment, supporting last year a bill that would allow CMS to reimburse disposable products that are not considered as “durable” as presently defined in the Medicare law.