CMS's Focus on DMEPOS Fraud and Abuse Risks Continues

by Foley & Lardner LLP
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The focus by the Centers for Medicare & Medicaid Services (CMS) on Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) as an area rife with unnecessary utilization and a high improper payment rates continues. CMS on May 28, 2014 published in the Federal Register a proposed rule to greatly expand prior authorization reviews for certain DMEPOS items as a safeguard to mitigate these risks.

As some of the DMEPOS suppliers reading this are aware and have experienced, there currently exists a limited CMS pilot project that requires prior authorization reviews of power mobility devices in seven states. CMS now proposes to essentially expand a variation of that program to all states, while at the same time greatly expanding the number and types of DMEPOS implicated. While the documentation required to be prepared and retained by a DMEPOS suppliers has not changed, the supplier will now be required to submit such documentation to the appropriate CMS contractor for authorization prior to delivery of the DMEPOS item to a Medicare beneficiary.

Some of the highlights of the proposed rule are:

• CMS will create a Master List of DMEPOS that have appeared appear in a historical OIG or GAO report addressing DMEPOS with high rates of fraud or unnecessary utilization, or listed in an annual Comprehensive Error Rate Testing report, and which have either an average purchase fee of at least $1,000 or an average monthly rent of at least $100. CMS will select items from this Master List to create a “Required Prior Authorization List” of DMEPOS items.

• The denial of a prior authorization request will not be considered an initial determination of a claim for payment and, consequently, will not be appealable.

• The contractors will have ten days to review and either approve or deny an initial prior authorization request (there is also a proposed two day expedited review process in the event a ten day review will present a risk of “serious jeopardy to life or health”).

• The approval of a prior authorization will be a condition of payment. Don’t obtain it, you don’t get paid.

• A supplier may issue an advanced beneficiary notice (ABN) to a beneficiary, thereby shifting payment liability in the event of the denial of an authorization request, however, the ABN process will follow existing ABN rules and may not be used to bypass the prior authorization process or routinely issued by the supplier.

There are several areas of the proposed rule that I believe could present some challenges to suppliers. The first is the fact that the list of items subject to prior-authorization will not be a uniform national list, but instead will be regionalized based on where CMS sees pockets of abuse specific to certain DMEPOS. When coupled with the fact that the rule follow the state of residence of the beneficiary (and not the location of the DMEPOS supplier itself) one can only expect there to be confusion, challenges and required prior authorizations not requested. The second concern is the length of time permitted for the contractor to review each request. If I am the patient, I will not want to wait ten days (plus however long it takes for the request to be prepared and submitted) to get an item that I might need now, save for the few instance where life or health may be in serious jeopardy allowing for the expedited review. Finally, one also wonders if this review process could result in logistical challenges for hospital discharges where the patient might need the item to safely head home.

As with most proposed rules, CMS solicits stakeholder comments. In particular it seeks comments on the following issues:

• The number of items selected for initial/future implementation and how often the list should be updated?

• How many times a denied prior authorization can be resubmitted?

• The timeframes for review of prior authorization requests (initial, expedited and resubmitted)?

You can review the proposed rule and if you are interested in providing comments to CMS in response to its questions above, or any other matter addressed in the proposed rule, you must do so by July 28, 2014.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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