Appeals Court Says HHS May Require More than CMN

ATLANTA–A U.S. court of appeals has ruled that a CMN may not
always be enough to prove medical necessity.

The decision is the latest defeat for Clearwater, Fla.-based
Gulfcoast Medical Supply, which has filed a series of appeals
arguing that HHS has no right to request information beyond the
certificate of medical necessity.

“If, as Gulfcoast suggests, the carriers and the secretary have
no discretion to request any evidence of medical necessity apart
from the CMNs already submitted by the suppliers, such audits would
be rendered useless,” the opinion from the U.S. Court of Appeals
for the 11th Circuit stated. “Moreover, were we to adopt
Gulfcoast’s position, the secretary would effectively lack the
discretion to deny any claim so long as a supplier could find a
physician–even a dishonest or incompetent one–to sign a CMN.”

The conflict began in June 2002, when Palmetto GBA found that it
had overpaid Gulfcoast by $280,574 for wheelchairs supplied to
Medicare beneficiaries between 2001 and 2002. An audit by the
DMERC, which examined records of 30 randomly selected
beneficiaries, found that services for 22 of the beneficiaries were
not supported by documents in the medical record. Palmetto’s audit
also found that at least half of the patients did not need a power
wheelchair.

Gulfcoast argued that the physician-signed CMN it submitted with
each claim is sufficient to prove medical necessity under the
Medicare Act.

However, the appeals court said that the Medicare law never
states that the CMN is the only document that may be required of
suppliers.

According to the 11th Circuit, “A CMN is an optional pre-payment
tool designed primarily to reduce paperwork and to streamline the
processing of claims … It would be incoherent to construe [in the
Medicare law], a subsection restricting the use of CMNs and clearly
indicating that they are voluntary, to also make CMNs the exclusive
means for proving medical necessity.”

In a separate ruling in March, a federal district court
similarly ruled against Maryland-based Mackenzie Medical, saying
CMS could request documentation in addition to the CMN (see
HomeCare Monday, April 1).

But in another case, a federal district court came to a
different conclusion. In March 2005, the court ruled in favor of
Redding, Calif.-based provider Maximum Comfort, claiming that CMS
should not have required the provider to repay $600,000 for failing
to provide additional documentation, with its power wheelchair
claims (see HomeCare Monday, March 21, 2005). The
government has appealed the decision, but a court date has not yet
been set.

To view the Gulfcoast decision, click here.