CMS Issues Final Rule on Prior Authorization for Durable Medical Equipment

Agency takes aim at Medicare scams

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule regarding the ordering of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), according to a report from FierceHealthFinance.

Examples of durable medical equipment include hospital beds, oxygen tents, and wheelchairs. Prosthetic devices are defined by the CMS as devices (other than dental) that replace all or part of an internal body organ. Examples of such devices include cochlear implants, electrical continence aids, electrical nerve stimulators, and tracheostomy speaking valves. Orthotics include leg, arm, back, and neck braces; and artificial legs, arms, and eyes.

The goal of the new rule is to reduce the overuse of such items, which can increase the cost of providing care after a patient is discharged. In 2014, as much as $5.1 billion was improperly paid for DMEPOS, representing a 53% improper payment rate, the CMS said. Most of the improper payments (92%) were due to insufficient documentation.

Powered wheelchairs, which can cost $2,500 or more, have been a target of antifraud investigators in several states in recent months, according to FierceHealthFinance.

The CMS first published its plans to move toward prior authorization for some DMEPOS items in the Federal Register on May 28, 2014. At that time, the agency suggested that many Medicare fraud schemes involved DMEPOS marketing and sales.

The new rule establishes a prior authorization process for DMEPOS that are often subject to unnecessary use. It also authorizes the creation of a master list of DMEPOS items potentially subject to prior authorization. To be included on this list, a DMEPOS item must be identified in a General Accountability Office (GAO) or Office of Inspector General (OIG) report published in 2007 or later as having a high rate of fraud or unnecessary utilization, and it must have an average purchase fee of $1,000 or greater or an average monthly rental fee schedule of $100 or greater, among other requirements.

“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 CMS said.

The new regulation goes into effect on February 29, 2016.

Sources: FierceHealthFinance; January 7, 2016; and Federal Register; December 30, 2015.