CMS issues final rule on DME prior authorization

The Centers for Medicare & Medicaid Services (CMS) has issued a final rule specific to the ordering of durable medical equipment (DME) such as hospital beds, prosthetics, orthotics and other supplies.

The goal of the new rule is to cut down on overutilization of such equipment, which can drive up the cost of providing care after a patient is discharged. As much as $5.1 billion was improperly paid in 2014 for DME, according to CMS' final rule. "This represents a 53.1 percent improper payment rate for [DME] and represents 10.4 percent of the overall improper payment rate," CMS said.

CMS announced its plans to move toward prior authorization for some DME items back in 2014. At the time, the agency had suggested that many Medicare fraud schemes have a locus in DME marketing and sales.

CMS has been addressing potential abuse of DME for several years. Earlier in the decade, it introduced a competitive bidding program that cut costs significantly in the markets where it was deployed before the program was placed in all U.S. markets, and concluded it could save $35 billion over the next decade. However, many smaller DME vendors complained that they were being put out of business by much larger companies gaming the rules.

Under the new final rule, CMS has created a master list of 135 DMEPOS items that may require prior authorization from the Medicare program because they cost an average of at least $1,000 to purchase or $100 a month to rent. They include items such as powered wheelchairs, and a variety of prosthetic limbs and sockets.

Powered wheelchairs, which can cost $2,500 or more, have been a target of anti-fraud investigators in several states in recent months.

The rule becomes effective on Feb. 29.

To learn more:
- read the CMS final rule (.pdf)