New Federal Rule Targets Medical Equipment

CMS responds to improper billing practices

A new federal rule now requires prior authorization before Medicare will pay for certain wheelchairs, prosthetics, orthotics, and other medical equipment — sources of Medicare fraud and improper payments for years, according to a report in USA Today.

The rule could save Medicare $10 million the first year, $200 million in five years, and $580 million over a decade, Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services (CMS), told the newspaper. He said the expected savings would come from reductions in fraud, waste, abuse, nonfraudulent improper payments, and unnecessary use of durable medical equipment.

The new rule doesn’t create new documentation requirements for doctors, Albright said; it simply means that documents must be submitted earlier in the claims payment process. But some groups argue that prior authorization can be cumbersome for medical providers and can lead to delays for senior citizens and disabled people who need medical equipment quickly.

CMS officials said the new rule grew out of longstanding concerns about improper payments for such equipment. Reports by the U.S. Department of Health and Human Services’ Office of the Inspector General and the U.S. Government Accountability Office questioned billing practices of suppliers, inappropriate payments, and unnecessary use of these items. CMS officials responded to these reports with a competitive bidding program and greater screening of suppliers.

The government also launched large-scale stings. In 2011, federal investigators charged 91 people in eight cities with attempting to bilk Medicare out of $295 million. The cases included two people in Houston charged with $62 million in false billings for home health care and durable medical equipment.

But despite the crackdowns, the problems have persisted, according to the newspaper report. An October 2015 study by the nonprofit Council for Medicare Integrity found that billing for durable medical equipment “has consistently had an incredibly high rate of billing errors, frequently billed incorrectly at a higher rate, causing an overpayment.”

In the 2014 fiscal year, the report said, the error rate among durable medical equipment billing was 53%, which accounted for $5 billion in improper payments that year.

In a letter to the CMS, Don May, executive vice president for health care delivery policy at the Advanced Medical Technology Association, asserted that “prior authorization programs by their very nature question the medical expertise and judgment of the treating physician. They remove the decision-making process about appropriate care from patients and their physicians and turn it over to administrators who have no firsthand experience with the patient’s condition.”

Source: USA Today; December 29, 2015.

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