DMEPOS Prior Authorization Rule Aims To Tackle Fraud, Unnecessary Use
This article was originally published in The Gray Sheet
Executive Summary
A new CMS rule establishes a process for requiring prior authorization for durable medical equipment, prosthetics, orthotics and supplies to tackle fraud and unnecessary use of such products.
The Centers for Medicare and Medicaid Services published a final rule Dec. 29 that would require some providers of durable medical equipment, prosthetics, orthotics and supplies to submit information to the agency justifying reimbursement for the products before they are sold to a patient. CMS says the rule is aimed at "reducing unnecessary utilization and aberrant billing of certain DMEPOS items."
The new rule requires providers to submit the same information they've normally required to apply for reimbursement for DMEPOS products such as coverage, coding and clinical documentation. However, now certain products will need to receive prior authorization in order to avoid "unnecessary utilization," which CMS defines as one or more instances where the reimbursement request does not comply with Medicare's coverage, coding and payment rules.
"Access is preserved in this rule by having both specified timeframes for review and approval of requests, and an expedited process in cases where delays jeopardize the health of beneficiaries," CMS says.
"We believe a prior authorization process will ensure beneficiaries receive medically necessary care while minimizing the risk of improper payments, and will therefore protect both beneficiaries and the Medicare program," the agency said.
CMS emphasizes that the new rule is not creating new clinical documentation requirements, but instead is meant to ensure documentation requirements are met and that reimbursements are cleared before patients undergo any unnecessary treatments.
"This helps ensure that beneficiaries are not held responsible for the cost of items that are not eligible for Medicare payment," the agency said. "CMS believes prior authorization is an effective way to reduce or prevent questionable billing practices and improper payments for DMEPOS items. Access is preserved in this rule by having both specified timeframes for review and approval of requests, and an expedited process in cases where delays jeopardize the health of beneficiaries."
The rule includes a master list of 135 DMEPOS products that might be subject to prior authorization, including devices that were identified by a Government Accountability Office report and the Department of Health and Human Services Office of Inspector general for high rates of fraud or unnecessary use. The list, which will be updated annually, includes power wheelchairs and various prosthetic devices, among other product categories.
Medicare recently released data on 2013 reimbursement for DMEPOS products, and power wheelchairs were among the most expensive items on the list. (See (Also see "Wheelchair Accessory Tops DMEPOS Medicare Payment List" - Medtech Insight, 12 Oct, 2015.).)
CMS emphasizes that the mere presence of a product on the master list does not automatically create a prior authorization requirement for that item.
"In order to balance minimizing provider and supplier burden with protecting the Medicare Trust Funds and beneficiary access, CMS will initially implement prior authorization for a subset of items on the Master List," also known as the Required Prior Authorization List, the agency said. "CMS will publish the Required Prior Authorization List in the Federal Register with 60-days’ notice before implementation of prior authorization for those items."
DMEPOS Remains In Crosshairs
This is just the latest move by CMS to address fraud and overuse of DMEPOS items. The agency has also built up the DMEPOS Competitive Bidding Program and increased screening of suppliers in recent years. CMS also launched a prior-authorization demonstration program for power mobility devices in 2012 in 7 states, expanding the program to 19 states in 2014.
CMS says that monthly Medicare spending on power mobility device codes dropped markedly between 2012 and 2015 in both the demonstration areas and the non-demonstration states. "CMS believes the decrease in spending is due in part to national DMEPOS suppliers adjusting their billing practices nationwide (not just in the demonstration states) to comply with CMS policies based on their experiences with prior authorization in the demonstration states," the agency noted.
CMS estimates the final rule will cost about $1.3 million in the first year and approximately $212 million over the next decade. However, it also estimates the net savings in 2016 will be approximately $10 million and could increase to $110 million by 2025.