A new CMS demonstration project aimed at curbing Medicare fraud is set to begin on Sept. 1, 2012. The initiative is limited to physicians and suppliers of durable medical equipment in seven states where there has been extensive evidence of fraud, abuse and improper payments (Calif., Ill., Mich., N.Y., Conn., Fla., and Texas). The initiative creates a voluntary prior authorization process for scooters and power wheelchairs, and reduces payments to suppliers who do not obtain prior authorization before delivery.
Under the new initiative, a physician, treating physician or supplier is encouraged, but not required, to submit to the Durable Medical Equipment Medicare Administrative Contractor a prior authorization request before a power mobility device is delivered to a beneficiary. A prior authorization request includes the physician's written order and all relevant documentation to establish the medical necessity of the PMD. The DME MAC will then have 10 days to review the request for compliance with all applicable rules, policies and National Coverage Determination/Local Coverage Determinations.
Once the DME MAC makes a determination, it will mail a copy of its decision to the physician, the beneficiary and the supplier. The notice will contain either an approval of the prior authorization request or a denial explaining the contractor's determination. A denial is not an appealable determination; however, providers may submit an unlimited number of subsequent requests that will be reviewed within 20 days.
Providers and suppliers who do not obtain a prior authorization will face significant payment cuts. Three months after the start of the demonstration, a 25-percent reduction in payment will be applied to claims submitted without prior authorization. The 25-percent payment reduction is not an appealable determination and is not transferrable to the beneficiary. The supplier must absorb the loss as a cost of doing business. The 25-percent reduction does not apply to suppliers outside the seven states.
Treating physicians and suppliers should not be surprised by this new initiative. PMDs have historically had very high levels of fraud, abuse and improper payments. For example, the Comprehensive Error Rate Testing Program noted in a 2010 Report that 92.6 percent of claims for motorized wheelchairs did not meet Medicare coverage requirements, resulting in over $822 million dollars in estimated improper payments. CMS hopes the new initiative will help reduce the number of such improper payments.
The coverage requirements for PMDs just got trickier. There are now more opportunities for inadvertent mistakes, which can to lead to a denied claim, a late delivery, and ultimately an unhappy patient. Hospitals should educate their employed or affiliated physicians about the new initiative. Physicians must understand the importance of having their medical records comply with the applicable coverage requirements. For example, physicians must have a face-to-face encounter with the patient and the written order must contain the following seven elements: (1) beneficiary's name; (2) date of face-to-face examination; (3) diagnoses and conditions that support the need for the PMD; (4) description of the specific type of PMD required; (5) expected length of need; (6) physician/practitioner signature; and (7) date of physician practitioner signature. Also, physicians should work with the DME suppliers in the preparation of the prior authorization request package. Physicians are instrumental in the approval of a prior authorization request. Therefore, it is imperative physicians know their obligations under the new initiative, and setup policies and procedures to carry them out.
Aaron Lachant joined Fenton Nelson as an associate in 2008, and he focuses his practice on representing providers in all aspects of healthcare law, including compliance with government-sponsored healthcare programs, Medicare/Medi-Cal recovery audits, administrative hearings and civil litigation. He is a member of the State Bar of California Health Law Section and Health Care Compliance Association and received his juris doctor, as well as a certificate of advanced study in health services management and policy from Syracuse University.
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Under the new initiative, a physician, treating physician or supplier is encouraged, but not required, to submit to the Durable Medical Equipment Medicare Administrative Contractor a prior authorization request before a power mobility device is delivered to a beneficiary. A prior authorization request includes the physician's written order and all relevant documentation to establish the medical necessity of the PMD. The DME MAC will then have 10 days to review the request for compliance with all applicable rules, policies and National Coverage Determination/Local Coverage Determinations.
Once the DME MAC makes a determination, it will mail a copy of its decision to the physician, the beneficiary and the supplier. The notice will contain either an approval of the prior authorization request or a denial explaining the contractor's determination. A denial is not an appealable determination; however, providers may submit an unlimited number of subsequent requests that will be reviewed within 20 days.
Providers and suppliers who do not obtain a prior authorization will face significant payment cuts. Three months after the start of the demonstration, a 25-percent reduction in payment will be applied to claims submitted without prior authorization. The 25-percent payment reduction is not an appealable determination and is not transferrable to the beneficiary. The supplier must absorb the loss as a cost of doing business. The 25-percent reduction does not apply to suppliers outside the seven states.
Treating physicians and suppliers should not be surprised by this new initiative. PMDs have historically had very high levels of fraud, abuse and improper payments. For example, the Comprehensive Error Rate Testing Program noted in a 2010 Report that 92.6 percent of claims for motorized wheelchairs did not meet Medicare coverage requirements, resulting in over $822 million dollars in estimated improper payments. CMS hopes the new initiative will help reduce the number of such improper payments.
The coverage requirements for PMDs just got trickier. There are now more opportunities for inadvertent mistakes, which can to lead to a denied claim, a late delivery, and ultimately an unhappy patient. Hospitals should educate their employed or affiliated physicians about the new initiative. Physicians must understand the importance of having their medical records comply with the applicable coverage requirements. For example, physicians must have a face-to-face encounter with the patient and the written order must contain the following seven elements: (1) beneficiary's name; (2) date of face-to-face examination; (3) diagnoses and conditions that support the need for the PMD; (4) description of the specific type of PMD required; (5) expected length of need; (6) physician/practitioner signature; and (7) date of physician practitioner signature. Also, physicians should work with the DME suppliers in the preparation of the prior authorization request package. Physicians are instrumental in the approval of a prior authorization request. Therefore, it is imperative physicians know their obligations under the new initiative, and setup policies and procedures to carry them out.
Aaron Lachant joined Fenton Nelson as an associate in 2008, and he focuses his practice on representing providers in all aspects of healthcare law, including compliance with government-sponsored healthcare programs, Medicare/Medi-Cal recovery audits, administrative hearings and civil litigation. He is a member of the State Bar of California Health Law Section and Health Care Compliance Association and received his juris doctor, as well as a certificate of advanced study in health services management and policy from Syracuse University.
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