Medicare Proposes Prior Authorization Process for Certain DMEPOS Items

by Baker Ober Health Law

On May 28, 2014, CMS issued a proposed rule [PDF] to establish a permanent prior authorization process for certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items that are “frequently subject to unnecessary utilization.” CMS defined unnecessary utilization as “the furnishing of items that do not comply with one or more of Medicare’s clinical documentation, coverage, payment and coding rules, as applicable.” Comments on the proposed rules are due by July 28, 2014.

The items to which the prior authorization process could apply are identified on a Master List being developed by CMS as part of this rulemaking. To be included on the Master List, an item must meet both a payment criteria and a risk of fraud/unnecessary utilization criteria. For the payment criteria, CMS proposes limiting the Master List to items with an average purchase fee of $1,000 or more or an average rental fee of $100 or more. For the risk of fraud/unnecessary utilization criteria, CMS proposes that the item has been identified: (i) as having a high rate of unnecessary utilization or fraud in a national Government Accountability Office (GAO) or HHS OIG report from 2007 or later; or (ii) in one of the Comprehensive Error Rate Testing (CERT) program’s Annual Medicare FFS Improper Payment Rate Report DME Service Specific Overpayment Rate Appendices from 2011 or later. CMS specifically requests comments on both the payment and utilization criteria.

CMS proposes to annually publish additions to or deletions from the Master List in a notification published in the Federal Register and on the CMS Prior Authorization Website. Items would remain on the Master List for 10 years, although they could be removed earlier if they no longer meet the payment criteria. The proposed rule includes a proposed Master List based on the proposed payment and utilization criteria.

At least initially, the prior authorization process would be implemented for a subset of items on the Master List. CMS argues that limiting the prior authorization process is necessary to balance minimizing supplier burden with the need to protect the Medicare Trust Fund. Master List items to which the prior authorization process would apply will be identified on a Required Prior Authorization List. CMS also proposes to retain the authority to limit the prior authorization process by item to particular regions of the country. The Required Prior Authorization List would reflect all geographic limitations. The proposed rule does not include a proposed Required Prior Authorization List. Instead, CMS seeks comment on the number of items that should be selected initially and in the future and the frequency with which CMS selects those items. CMS proposes to provide 60-days notice of the Required Prior Authorization List prior to implementation in the Federal Register and on the CMS Prior Authorization Website.

Under the prior authorization process, a requestor would submit evidence of compliance with all coverage, coding, and payment rules before furnishing the item and submitting the claim. CMS makes a point of noting that the prior authorization process does not create any new clinical documentation requirements. Once the information has been submitted, CMS (or its contractors) would conduct a medical review and communicate a decision that “provisionally affirms” or “non-affirms” the prior authorization request. CMS cautions that provisionally affirmed claims may still be denied on the basis of technical requirements (such as duplicate claims) or information not available at the time of the prior authorization request (such as proof of delivery).

In terms of timing, CMS proposes making “reasonable efforts” to notify the requestor within 10 days of receipt of all applicable information. If the prior authorization process might “seriously jeopardize the life or health of the beneficiary,” CMS proposes to allow for an expedited review with a decision expected within 2 business days of receipt of all applicable information.

CMS asserts in the proposed rule that the decision on a prior authorization request is not an initial determination on a claim for payment, so it is not appealable. CMS will permit unlimited resubmissions of prior authorization requests, although CMS proposes taking up to 20 days to respond to such resubmissions. To pursue an appeal, an item must be furnished by the supplier to the patient, billed to Medicare, and subsequently denied.

CMS also makes clear that the prior authorization process will be mandatory where it applies. CMS will automatically deny claims for items on the Required Prior Authorization List which received a non-affirmative response to a prior authorization request or items for which no prior authorization request was submitted. Claims for items on the Required Prior Authorization List must have an affirmative prior authorization decision to be paid. Absent an Advanced Beneficiary Notice of Noncoverage (ABN), the supplier will be liable for claims for items on the Required Prior Authorization List that are submitted without an affirmative prior authorization decision.

Ober|Kaler Comments

Although patients and suppliers had hoped that a prior authorization process would be a helpful tool for establishing coverage (as it is with many private insurers), it appears that CMS views this prior authorization process as more of an enforcement tool. In introducing the prior authorization process, CMS emphasizes the importance of avoiding improper payments. CMS stops short of calling all improper payments fraud. However, rather than a coverage tool, the proposed prior authorization process seems to be an attempt to mandate the existing ADR process for certain DMEPOS items without providing appeal rights until the item is furnished and the claim is submitted and denied.

Suppliers should carefully review the proposed regulation and consider providing comments on the proposal and its likely burden on the industry. Suppliers should pay particular attention to the discussion of the time to gather and submit the applicable information with the prior authorization request. A comparison of the half-hour estimate with suppliers’ experience with ADRs may be instructive.

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.

© Baker Ober Health Law | Attorney Advertising

Written by:

Baker Ober Health Law

Baker Ober Health Law on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.