Observation Deck

Pre-Payment Problem Solving

Understanding the PMD prior authorization demonstration project.

• By Julie Piriano
• Mar 07, 2012

On Nov. 15, 2011 the industry was surprised to learn the Centers for Medicare and Medicaid Services (CMS) was planning to implement a pre-payment review and prior authorization demonstration project in California, Florida, Illinois, Michigan, New York, North Carolina and Texasbeginning Jan. 1.

While CMS gave the impression the project was limited in scope, since it only encompassed seven states, the reality is it included 43 percent of the power mobility marketplace. In addition, it was to require pre-payment review on 100 percent of claims 47 days from when it was announced. On Dec. 29, as a result of the industry’s advocacy efforts and multiple letters from both Congress and consumer groups expressing significant concerns, CMS subsequently announced it would delay the demonstration in order to consider all comments carefully before moving forward with the demonstration.

In response to concerns, CMS announced on Feb. 3 that a significantly modified demonstration, which eliminated the pre-payment review phase, would begin with prior authorization in the seven states on or after June 1.

CMS also stated it would give stakeholders an opportunity to provide comments and make recommendations on how to reduce the paperwork burden associated with the three-year prior authorization demonstration project. Additionally, CMS announced it would be holding several open door forum calls to solicit feedback on the design of the project. This affords the supplier community the opportunity to advocate for a well thought out prior authorization process prior to implementation. In order to prepare you for this task, it is important to understand what CMS has proposed to date.

What PMDs Are Impacted

The demonstration project is slated to include Group 1 POVs but does not include Group 2 POVs. While CMS does not pay for Group 2 POVs, and it does not automatically downcode to a Group 1 POV for payment as a result of the elimination of “least costly alternative” language in the policy, Medicare beneficiaries retain the right to upgrade to a Group 2 POV. If it is important to your business to include Group 2 POVs as part of the prior authorization demonstration, be prepared to articulate to CMS and Congress why there needs to be a mechanism for reviewing these items.

A mechanism already exists for beneficiaries to make an informed financial decision to upgrade to an item with additional features. Therefore, if an Advanced Beneficiary Notice of Noncoverage (ABN) could be included with the prior authorization packet, the DME MAC would be able to render a coverage decision and authorize the item that is medically necessary.

The outline of the demonstration calls for the submitter (ordering physician, treating practitioner or supplier) to submit all relevant documentation to support Medicare coverage for the PMD. The supplier’s success or failure under the prior authorization demonstration will hinge not only on what documentation is deemed to be relevant but also on how that documentation is reviewed. Currently the medical record must support the medical need for the PMD prescribed, but there is no standardized format for the physician to report this information. As a result, review of the documentation, as witnessed in pre-and-post payment audit activity, is a subjective analysis of the medical record.

Needed Standardization

The information CMS submitted to the Office of Management and Budget (OMB) requesting approval for this project states that DME MAC contractors are expected to use their expertise to make clinical judgment decisions when making medical review determinations. Absent a template for physicians to use to document the medical need, the review remains entirely subjective on the part of the reviewer. In addition, the time it takes for a physician to document the medical need for the device in a narrative format, that ensures all of the coverage criteria is met, is lengthy and burdensome. It is also time consuming for a reviewer to read through all of the information, paint the clinical picture, and adjudicate the file appropriately.

If it is important to your business, and most importantly the physicians you work with, to have a standardized format for reporting the medical necessity of the PMD, communicate this to CMS and your legislators. Physicians will also have an opportunity to comment on the prior authorization process, so it will be critical to have them weigh in on this, especially since they, along with you and the beneficiary, will be notified when the medical documentation does not clearly substantiate the need for the device they prescribed for their patient.

While CMS stated it will communicate an affirmative or negative prior authorization decision to the physician, supplier and Medicare beneficiary and it will return an “incomplete” prior authorization request back to the submitter for resubmission, there is no mention of the time frame the DME MACs will be required to adjudicate a prior authorization request. The information about the prior authorization phase in the original CMS proposal indicated it would respond to providers within 10 days of receipt of the prior authorization package. The industry alternative being advocated for is seven days. If a dedicated turnaround time is important to your business, articulate this to CMS and your legislators.

Most, if not all, suppliers who provide power mobility devices to individuals with chronic medical conditions and significant disabilities have experience with prior authorization processes through their state Medicaid programs or commercial payors. This experience will be invaluable in communicating to CMS what works and what does not work as it designs the prior authorization process for Medicare beneficiaries. As you know both Medicaid and commercial payors utilize a standardized format and process for timely submission and response of a prior authorization request. Let’s all work with CMS and Congress to ensure Medicare does the same.

This article originally appeared in the March 2012 issue of HME Business.