Funding Focus

LCDs: How and When They Affect You

• By Kelly Riley
• May 01, 2008

On March 14, the much-anticipated decision memo on a revised National Coverage Determination (NCD) for CPAP coverage for obstructive sleep apnea arrived from the Centers for Medicare & Medicaid Services (CMS). Unfortunately, with it came the same questions that have been posed by many in the industry for several months. These questions relate to a clear definition of beneficiary improvement; the role the HME can take in home sleep testing; how titration is to be accomplished; and reimbursement.

Commonly heard in discussions is the advice, “We just have to wait now for the LCDs.” Many thought the decision memo would have the answers. After all, we have waited a year since CMS first agreed to review the NCD, and three months since the proposed rule was released.

In reality, CMS is right on time. The timeline is actually established per the Medicare Modernization Act, which mandates deadlines at every step in the process. For example, the proposed decision memo came out Dec. 14, 2007 — nine months from when CMS accepted the request for the review. This was followed by the required 30-day comment period and then another 60 days for CMS to issue the final rule. Given the continued questions and confusion, it might be good to review the role of the NCD vs. the LCD (Local Coverage Determination).

NCDs are developed by CMS to describe the circumstances for Medicare coverage nationwide for a specific medical service, procedure or device. NCDs generally outline the conditions for which a service is considered to be covered (or not covered). NCDs are usually issued as a program instruction. Once published, an NCD is binding on all Medicare carriers, Medicare Administrative Contractors (MACs), Fiscal Intermediaries (FIs) and Program Safeguard Contractors (PSCs). NCDs also are binding on Administrative Law Judges (ALJs) during a claim appeal process, though ALJs are not bound by LCDs.

When a new NCD is published, the MAC is required to notify the provider community as soon as possible of the change and corresponding effective date. Within 30 calendar days after an NCD is issued by CMS, contractors must either publish the NCD on the contractor Web site or link to the NCD from the contractor Web site.

Since ALJs are bound by NCDs and not LCDs, simply repeating an NCD as an LCD will cause confusion as to the standing of the policy. Therefore, this procedure is not allowed. If a contractor is clarifying a national policy, the contractor must reference that national policy in the CMS National Coverage Policy section of the LCD. When making individual claim determinations, contractors have no authority to deviate from the NCD if absolute words such as “never” or “only if” are used in the policy.

Section 522 of the Benefits Improvement and Protection Act (BIPA) defines an LCD as a decision by an FI or carrier on whether to cover a particular service on an intermediary-wide or carrier-wide basis in accordance with Section 1862(a)(1)(A) of the Social Security Act (e.g., a determination as to whether the service or item is reasonable and necessary). FIs, carriers, PSCs and MACs are Medicare contractors that develop and/or adopt LCDs. Medicare contractors develop LCDs when there is no NCD or when there is a need to further define an NCD. The coverage decision memo regarding the NCD on CPAP certainly appears to meet that requirement!

Local policies consist of two separate, though usually closely related, documents: the LCD and the policy article. The LCD contains only the reasonable and necessary language. Any additional language a Medicare contractor wishes to communicate to providers is in the policy article.

LCDs specify the clinical circumstances under which a service is considered to be reasonable and necessary, and are administrative and educational tools to assist providers in submitting correct claims for payment. LCDs provide guidance to the public and medical community within contractors’ jurisdictions. Contractors develop LCDs by considering medical literature, the advice of local medical societies and medical consultants, public comments, and comments from the provider community. Program contractors must review and appropriately revise affected LCDs within 90 days of the publication of a program memo for a new or revised NCD.

Looks like we are all looking forward to May 14, or thereabouts.

Author’s Note: Data for this article was pulled from the CMS Web site and the Program Integrity Manual.

This article originally appeared in the Respiratory Management May 2008 issue of HME Business.