Dive Brief:
- CMS has issued a final rule to establish a prior authorization process for certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) that are often subject to unnecessary use.
- The process requires identical information necessary for Medicare payment, but earlier in the process and with new clinical documentation requirements.
- The process assures all coverage, coding, and clinical documentation are met before the item is provided to the beneficiary and before the claim is submitted for payment. CMS said this will help ensure beneficiaries are not responsible to pay for items not eligible for Medicare payment.
Dive Insight:
The final rule changes the approach of how CMS pays for durable medical equipment. CMS has created a master list of 135 products often subject to unnecessary use. This is contrast to what Casey Schwarz, senior counsel for education and federal policy at the Medicare Rights Center, told Modern Healthcare was a "pay and chase" model where CMS paid claims and then found improper payments that need to be recouped.
A prior authorization process will be developed for those listed items and the list will be updated every year. The required prior authorization list will be published in the Federal Register and there will be 60 days notice before the prior authorization is required.
Medicare currently pays for DME using a fee schedule based on supplier fees and services established in the 1980s that have been updated annually. But, according to Modern Healthcare, this led to increasing higher prices and in 2011, the last year for which prices are available, Medicare paid $8.5 billion for DME.
CMS has been working to reduce improper payments of such items. It recently expanded its three-year prior authorization program for power mobility devices, which started in 2012 in seven states and then expanded to 12 more states in 2014. Spending on those devices dropped from $12 million to $3 million in the original seven states and from $10 million to $2 million in the additional 12 states in June 2015.