Local Coverage Policies Should End, GAO Says

Washington

Local medical review policies create “inequities” and “inefficiencies,” the U.S. General Accounting Office concluded recently.

In a May 12 report, titled “Divided Authority for Policies on Coverage of Procedures and Devices Results in Inequities,” the GAO recommended that Medicare make all coverage decisions at the national level.

“We are recommending that [the Centers for Medicare and Medicaid Services] eliminate claims-administration contractors’ development of new local coverage policies for procedures and devices that have established codes,” the GAO said. “We are also recommending that CMS establish a new process for making national coverage policy.”

While the report described situations wherein beneficiaries in different Medicare regions received different coverage for the same procedures, it acknowledged the fact that inequities are far less frequent among Medicare’s durable medical equipment regional carriers, or DMERCs.

Unlike Medicare’s other contractors — Part B carriers and Part A fiscal intermediaries — “DMERCs don’t have the same types of inconsistencies in coverage, because our policies are the same, word for word, in each region,” said Robert Hoover, medical director for the Nashville, Tenn.-based Region D DMERC, CIGNA Medicare. “It’s part of our contract [with CMS] that our policies have to be a collaborative effort.”

However, this is not necessarily the case for hospital inpatient claims processed by fiscal intermediaries. “Hospitals are able to choose the fiscal intermediary that processes their claims,” and two different fiscal intermediaries could have two different policies for covering a procedure, he explained.

Another difference between the DMERCs and Medicare’s other claims-processing contractors lies in the development of local coverage policies, Hoover said. Fiscal intermediaries and Part B carriers do not collaborate often on coverage decisions. Unless a contractor has jurisdiction for multiple states, there is no requirement that fiscal intermediaries or Part B local carriers develop consistent policies for the same service. Even if a contractor is responsible for multiple states, policies still may vary.

The DMERCs, on the other hand, collaborate constantly on coverage policies — soliciting clinical input from numerous sources, offering proposed policies for public comment, holding public hearings and publishing final rules before enacting the policies, Hoover explained.

Despite these differences, the GAO’s recommendations could affect home medical equipment providers, if lawmakers write legislation to do away with local medical review policies, or LMRPs. The DMERCs would be included, by definition, Hoover said. Although the process for developing LMRPs may differ from contractor to contractor, the name “LMRP” is the same.

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