CMS’ Pre-authorization Program for DMEPOS – The Final Rule

by | Last updated Dec 7, 2023 | Published on Feb 3, 2016 | Insurance Verification and Authorizations

Durable Medical
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In order to prevent the rising DME fraud and to prevent unnecessary utilization, the Centers for Medicare & Medicaid Services (CMS) recently issued a final rule on its pre-authorization program for certain durable medical equipment, prosthetics, orthotics, and supplies. The program which started for seven states in 2012 was expanded to 12 more states in 2014. The agency also recently expanded its three-year prior authorization program for power mobility devices. For the last few years, it has been found that in many cases, the DME equipment was unnecessary or the bill was wrong.

Durable medical equipment or DME, is medical equipment prescribed by the treating doctor that is reusable such as hospital beds, wheelchairs, walkers, home oxygen equipment, prosthetics and scooters. The CMS defines “unnecessary utilization” as the furnishing of items that do not comply with one or more of Medicare’s coverage, medical coding, and payment rules.

The program is an effective way to reduce or prevent questionable medical billing practices and improper payments for DMEPOS items. This new program also ensures that the

  • Applicable coverage, payment, and coding rules are met before supplies are delivered
  • Beneficiaries receive medically necessary care while minimizing the risk of improper payments
  • Beneficiaries are not held responsible for the cost of items that are not eligible for Medicare payment

However, the process does not involve any new clinical documentation requirements. An effort to lessen provider and supplier burden and also to protect beneficiary access, the rule includes a master list of 135 products that are frequently the subject of unnecessary utilization. Any equipment or supply item included on the list was identified as having potentially unnecessary utilization in any one of the reports such as Department of Health and Human Services’ Office of the Inspector General (OIG) report, Government Accountability Office (GAO) report, and Comprehensive Error Rate Testing (CERT) Annual Medicare Fee-for-Service Improper Payment Report. Other criteria to include the item on the Master List is that the items on the DMEPOS Fee Schedule should come with an average purchase fee of $1,000 or greater, or an average rental fee schedule of $100 or greater.

Final Rule Highlights

Prior to providing the item and submitting the claim for processing, the healthcare provider or a supplier must submit evidence that the item complies with all applicable Medicare coverage, medical coding, and payment rules.

  • After receiving all the required documentation, CMS or one of its review contractors will carry out a medical review and decide whether to accept or reject the request.
  • Payment will be automatically denied for a claim that is submitted without a provisional affirmation prior authorization decision
  • Unlimited resubmissions of prior authorization requests are allowed.

The overall economic cost is approximately $1.3million in the first year, $57million in 5years and $212 million in 10 years.

As per the agency’s announcement, the review contractor will strive to provide an initial prior authorization determination within 10 business days; while a resubmission prior authorization determination will take 20 business days.

Meghann Drella

Meghann Drella possesses a profound understanding of ICD-10-CM and CPT requirements and procedures, actively participating in continuing education to stay abreast of any industry changes.

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