Explore the Facts and Benefits of Medicare’s Suggested Prior Authorization System

In late May, the Centers for Medicare and Medicaid Service (CMS) announced a proposal to implement a prior authorization (PA) program for certain DMEPOS items. Published in the May 28 issue of Federal Register, CMS’s proposed rule, Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Items, suggests a new prior authorization (PA) system that appears to be largely based upon the current seven-state PA demonstration project for power mobility devices that began September 2012. ?HME providers have been positive about the PMD PA demonstration because it provides up-front assurance that the medical necessity requirements have been met. The comment period ends July 28, and I’d expect CMS to issue a final rule late this year, with implementation early in 2015. CMS’s proposal is based upon a section of the Social Security Act added in the 1990s but was never implemented by CMS via regulation. This section of the law provides CMS with the authority to determine medical necessity in advance of delivery for DMEPOS items that the Secretary determines are subject to “unnecessary utilization.” CMS explains that it will develop a Master List of items that potentially could be subject to prior authorization based upon reports since 2007 from the Office of Inspector General, the General Accountability Office and its own CERT reports. To be included on the Master List, the item must meet one of the following two proposed criteria: 1) The item has been identified in a GAO or HHS OIG report that is national in scope and published in 2007 or later as having a high rate of fraud or unnecessary utilization; the item is listed in the 2011 or later Comprehensive Error Rate Testing (CERT) program’s Annual Medicare FFS Improper Payment Rate Report DME Service Specific Overpayment Rate Appendix; or 2) The item has an average purchase fee of $1,000 or more or an average rental fee schedule of $100 or more. Once CMS compiles the Master List, a subset of that list, called the Required Prior Authorization List, will be the list of items subject to prior authorization. The final rule will include the final Master List and CMS will publish 60-day advance notice in the Federal Register of the Required PA List. CMS did not publish the Required List in this proposed rule, rather it is seeking comments on 1) the number of items CMS should include in the initial implementation; 2) the number of items CMS should select for future implementation and 3) the frequency ?with which it should update selected items for the PA program. CMS’s proposed Master List includes all power mobility devices (Groups 1, 2 and 3) and the following DME items: E0193 Powered air flotation bed (low air loss therapy); E0260 Hospital bed semi-electric with mattress; E0277 Powered pressure-reducing air mattress; E0371 Non-powered advanced pressure reducing overlay for mattress, standard; E0372 Powered air overlay for mattress, standard; E0373 Non-powered advanced pressure reducing mattress; E0470 Respiratory assist device, bi-level pressure capability, without backup rate feature, used with noninvasive interface, e. g., nasal or facial mask (intermittent assist device with continuous positive airway pressure device); E0601 Continuous Airway Pressure (CPAP) Device; E2402 Negative pressure wound therapy electrical pump, stationary or portable and K0004 High strength, lightweight wheelchair. The proposed Master List also includes a large number of L codes. CMS explains that it may conduct PA programs on a national or regional basis, depending upon the basis for the item determined to be subject to unnecessary utilization. The PA program would apply in and out of competitive bid areas, and this PA program would not affect the current power mobility device demonstration, at least until that demonstration is complete. (Several months ago, CMS sought approval from the Office of Management and Budget to expand the seven-state demonstration program to an additional 12 states; that start date has not yet been announced.) The proposed PA process seems substantially similar to the current PMD demonstration. The proposed PA process seems substantially similar to the current PMD demonstration. Before submitting a claim and before providing the item, the supplier would submit all documentation required for coding, coverage and payment rules. CMS’ contractors would then conduct a medical review and within ten days tell the supplier that it is provisionally affirming or non-affirming the request. A provisional affirmation is a preliminary finding that a future claim meets the Medicare coding, coverage and payment rules. These claims could still later be denied on technical requirements that can only be evaluated after the claim has been submitted for formal processing (e.g., duplicate claim, proof of delivery). Claims receiving a non-affirmative decision, as well as claims for items subject to prior authorization but for which no prior authorization was requested would be denied if submitted for processing. A supplier who submits a claim for which there was a non-affirmative decision or for which no prior authorization request was obtained is afforded appeal rights. CMS states that it would make reasonable efforts to make determinations within 10 days, and it would allow unlimited resubmissions (20 day response time for resubmission requests). Expedited two-business day reviews would be available if necessary to avoid serious jeopardy to the life or health of a beneficiary. CMS will further define the expedited review process on a dedicated section of its web site, but it will be up to the DME supplier to submit documentation demonstrating that expedited review is necessary. If the supplier’s PA request is denied, the supplier could use an advance beneficiary notice (ABN) to shift financial liability to the beneficiary if the supplier provides the item, but CMS states that the supplier cannot use the ABN to bypass the PA process. It’s easy to provide CMS with your comments, directly on line by the July 28 deadline. Visit regulations.gov, click on “Submitting Your Comments” and following the instructions. You can also use the search box, and type in the proposed rule’s identification number: “CMS-6050-P.”