CMS wants prior authorization for many DME orders

The Centers for Medicare & Medicaid Services proposes to create a prior authorization program for durable medical equipment (DME), prosthetics and orthotics, claiming the program makes inappropriate approvals that cost the federal government billions of dollars a year, AHA News Now reported.

Approximately $6.4 billion in payments were made for DME and related equipment authorizations in fiscal 2012 that are inappropriate, according to a document that will be published Wednesday in the Federal Register. The payments were for orders without sufficient or any documentation, were not medically necessary, or were incorrectly coded or duplicative.

CMS wants to create a prior authorization system because "it would ensure beneficiaries receive medically necessary care while minimizing the risk of improper payments and therefore protecting the Medicare Trust Fund," it said in the document. DME-related schemes are also the locus of many instances of Medicare fraud.

Under the terms of its proposed policy, CMS would review all items it believes are subject to overutilization to ensure proper documentation is in place and that it is medically necessary before furnishing items to patients and approving claims for payment. It proposes that it will complete reviews within 10 business days. The agency will gather comments from the public through late July.

The CMS initiated a competitive bidding program for DME about five years ago, which dramatically cut costs, although officials with many smaller home healthcare firms complained that they could not match the prices of larger companies.

It is uncertain how the proposed rules will immediately impact hospitals with large home healthcare operations, such as Johns Hopkins Medicine in Baltimore and BayCare Health System in Florida. Many are also subject to financial penalties for patient readmissions within 30 days of discharge--a situation that can often be avoided by closely coordinating home healthcare and other services for patients before they are released.

In addition to the proposal, CMS plans to expand a demonstration project that allows the agency to provide prior authorization for motorized wheelchairs from its current seven states to 19. There are also plans to create demonstration projects for repetitive non-urgent ambulance care and certain oxygen therapies, according to AHA News Now.

To learn more:
- read the AHA News Now article
- read the proposed rule (.pdf)