United States: CMS Proposes Rule To Expand Authorization Program, Solicits Comments On Implementation

On May 28, the Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS) published a proposed rule to establish a prior authorization process for certain durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) items under the limited authority granted by Social Security Act § 1834(a)(15).  The proposed rule seeks to create an annually self-updating, Master List of items that could require prior authorization.  Master List items include more than 135 HCPCS, including HCPCS for continuous airway pressure devices, power wheelchairs and certain support surfaces.  To be included on the Master List, an item must have a costly purchase or rental fee, as well as a high rate of "unnecessary utilization" or history of "improper payments," as identified under certain government audit programs.  CMS plans to initially implement the program using a subset of items on the Master List to develop a Required Prior Authorization List, which "may be" implemented nationally or locally subject to interpretation of geographic trends in claims data.  The Required Prior Authorization List is not provided within the proposed rule, but will be published in the Federal Register 60 days prior to program implementation.

The proposed prior authorization process does not create new clinical documentation requirements for selected items.  Instead, a prior authorization requires submission of the same information necessary today to support Medicare payment.  Under the proposed program, authorization requests are submitted earlier in the process, prior to furnishing the item and prior to submitting the claim for payment processing.  CMS or its contractors make "reasonable efforts" to communicate a provisionally affirmative or non-affirmative decision within 10 business days of receipt, within 2 days if a delay would "seriously jeopardize the life or health of the beneficiary," or within 20 days for a resubmission.  Unlimited authorization resubmissions are allowed. Citing questionable statutory authority, CMS is taking the position that a denial of prior authorization is not considered an initial determination for a claim of payment and, as a result, will not be appealable, a position that raises fundamental access to care questions for Medicare beneficiaries.  Under the proposed rule, an item on the Required Prior Authorization List that is submitted without an affirmative prior authorization decision will be automatically denied payment.  Therefore, prior authorization is a condition of payment.

CMS has appropriately acknowledged in both the preamble and proposed rule that the basis for denial after an affirmative prior authorization should be limited.  Notably, CMS provided that "claims receiving a provisional affirmation may still be denied based on technical requirements that can only be evaluated after the claim has been submitted for formal processing.  For example, a finding that a claim is a duplicate claim can only be made after the claim has been submitted for formal processing.  Claims receiving a provisional affirmation may also be denied based on information not available at the time of a prior authorization request (that is, proof of delivery)."  Any expenses incurred for the denied item are the responsibility of the supplier, unless liability is transferred to the beneficiary using a valid Advanced Beneficiary Notice of Noncoverage (ABN).

Most notably, limiting appeal rights in prior authorization denial situations has the potential to impact access to care and quality.  It is not clear how providing an appeal directly to the beneficiaries and suppliers jeopardizes the Medicare trust fund, particularly given the protections built into the appeals process.  In addition, the provisions that allow up to 10 days of review, or 2 if the situation is deemed expedited, for CMS and its contractors to review an authorization claim could be problematic for patients that immediately require DMEPOS items for hospital discharge.  For example, the opportunity for suppliers to transfer liability to beneficiaries using an ABN could be particularly detrimental to those individuals without available funds as well as suppliers seeking payment.

While current prior authorization authority is limited, given CMS' comfort with significantly expanding its prior authorization program, providers and suppliers are encouraged to fully understand this potentially trend-setting precedent and its implications on beneficiary access to value-oriented quality care. Providers and suppliers are also encouraged to provide comments to the proposed rule, which must be submitted no later than 5:00 pm EDT on July 28, 2014. 

Shelby Buettner, summer associate in McDermott's Chicago office, also contributed to this article.

CMS Proposes Rule To Expand Authorization Program, Solicits Comments On Implementation

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