March 20, 2016

Changes to the Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS)

By Bonny Kohr, Senior Manager, Advisory Services

Changes to the Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS)

The Centers for Medicare and Medicaid Services (CMS) has established a prior authorization program for certain DMEPOS, effective February 29, 2016. The purpose of the prior authorization process is to reduce unnecessary utilization, billing and reimbursement of supplies. CMS defines unnecessary utilization as the furnishing of items that do not comply with one or more of Medicare coverage, coding and payment rules.

CMS has created a Master List of items that meet specific criteria and will contain DMEPOS items potentially subject to prior authorization. The list is a set of 135 items that have been identified by HHS Office of the Inspector General (OIG), the U.S. Government Accountability Office (GAO) or the Comprehensive Error Rate Testing (CERT) reports as frequently subject to unnecessary utilization. Items with an average purchase fee of $1000.00 or greater, or an average rental fee of $100 or greater, are potentially subject to prior authorization. The Master List is self-updating on an annual basis. Items will remain on the list for 10 years but can be removed if the purchase amount drops below the threshold. After 10 years, an item can remain on the list or be added back to the list if identified in subsequent reports as having frequent unnecessary utilization. Items on the Master List will not automatically require prior authorization. CMS will implement a “Required Prior Authorization List” which contains a subset of the items found on the Master List. The Required Prior Authorization list will be published in the Federal Register with 60 days’ notice prior to implementation. The Master List can be found online at Federal / DMEPOS prior authorization final rule.

The prior authorization process will not require new clinical documentation but will ensure coverage, coding and clinical requirements are met before supplies are provided to the beneficiary. The prior authorization program is expected to reduce or prevent improper payments for unnecessary DMEPOS items while preserving beneficiary access to quality care and services. To maximum the potential benefit of the prior approval process and to minimize the negative impact of delayed access to services, CMS is proposing to implement the prior authorization program by selecting items eligible for prior approval either based on regional or national data. For example, if a particular area of the country’s claim data indicates unnecessary utilization of a particular item, prior authorization may be limited to that region only. Specific prior authorization guidance will be issued in future subregulatory communications.

Prior Authorization Process:

  • Provider must submit documentation to support that the medical supplies are compliant with Medicare coverage, coding and payment rules.
  • CMS contractor reviews the documentation to confirm that relevant coverage, coding and documentation requirements are met.
  • The CMS contractor will provide a provisional affirmation or non-affirmation. CMS will make a reasonable effort to render initial prior authorization within 10 business days and resubmission within 20 business days. Suppliers may request expedited review where a delay in prior authorization may jeopardize the life or health of the beneficiary.

CMS will communicate the decision with the provider.

Provisional affirmation decisions are a condition of payment; therefore, claims submitted without a request for prior authorization or with a non-affirmation decision will be denied. A prior authorization decision is not a payment decision and, therefore, is not appealable. However a provider will be notified of the reason for non-affirmation of the prior authorization and may fix the issue and resubmit an unlimited number of prior authorization requests. 

It is important to remember that Medicare will pay for DMEPOS items as long as the medical record supports the reason the items are medically necessary for the beneficiary’s medical condition. The CERT program identified approximately $5.1 billion in improper DMEPOS payments for 2014.  Ninety-two percent (92%) of the DMEPOS improper payments were attributed to insufficient documentation. 

If you have any further questions about the prior approval process, please your Marcum healthcare professional.  Information contained herein is accurate at the time of publication.  We recommend that you consult with your Marcum LLP advisor before implementing any action.

Related Industry