In a move meant to prevent fraud while protecting access to medically necessary supplies, the CMS on Tuesday issued a final rule (PDF) that mandates prior authorization for some durable medical equipment prosthetics, orthotics and supplies, known as DMEPOS.
The rule states that the documentation to meet authorization for DMEPOS is needed earlier in the process in order to furnish the items, which are often mobility devices like motorized wheelchairs. Medicare will pay up to 80% of their cost if a physician deems the item is necessary; they can can cost $5,000 or more.
The final rule will allow the CMS to move away from a “pay and chase model,” said Casey Schwarz, senior counsel for education and federal policy at the Medicare Rights Center, a beneficiary advocacy group, meaning that the CMS currently makes payments on claims and then identifies improper payments and tries to recoup them.
Traditionally, Medicare pays for durable medical equipment using a fee schedule that is based on what suppliers charged for items and services during the 1980s, and the schedule was increased by annual update factors. However, this method has led to steadily rising prices. In fiscal 2011, the latest year for which prices are available, benefit payments for durable medical equipment were $8.5 billion.
In fact, the final rule includes mention of a 2011 report from HHS' Office of Inspector General that found 61% of power wheelchairs provided in the first six months of 2007 were medically unnecessary or lacked sufficient documentation to determine medical necessity. It also found that 52% of those items had physician documentation that differed from the paperwork submitted by suppliers, meaning providers were “upcoding” prescriptions to sell more expensive chairs.
Several manufacturers contacted for this story did not return calls for comment before deadline.
Schwartz, however, worries about the impact on beneficiaries. Schwarz stressed that the final rule doesn't provide beneficiaries a way to request a higher level of appeal if a product is denied.
Included in Tuesday's final rule is a master list of 135 products that are frequently the subject of unnecessary utilization. The CMS will develop a prior authorization process for those items and annually update the list, according to the rule. But appearing on the master list doesn't automatically trigger a prior authorization requirement. To lessen provider and supplier burden and also protect beneficiary access, the CMS will publish a subset of the master list for products that require prior authorization. The required prior authorization list will be published in the Federal Register with 60 days notice before prior authorization of those items.
The final rule is the latest in a series of moves the CMS has initiated to battle improper payments associated with DMEPOS. The CMS recently expanded its three-year prior authorization program for power mobility devices. That program started in 2012, beginning in seven states where fraudulent claims and improper claims were high. The CMS then expanded the program to 12 more states in 2014.
According to the CMS, expenditures for the power mobility device codes decreased, based on claims from Sept. 1, 2012, to Aug. 14, 2015. Monthly spending on the power mobility device codes included in the demonstration sank, from $12 million to $3 million in June 2015 in the original seven demonstration states, from $10 million in September 2012 to $2 million in June 2015 in the 12 additional expansion states and $10 million in September 2012 to $3 million in June 2015 in the nondemonstration states.
