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CMS issues final rule on prior determinations of coverage
Ruling offers physicians and beneficiaries the chance to know the financial liability for a service before expenses are incurred.
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On Feb. 22, the Centers for Medicare and Medicaid Services issued the final rule dictating how and for what services physicians and beneficiaries may request prior coverage determinations from Medicare contractors. The rule, set forth in the Code of Federal Regulations and scheduled to take effect March 24, explains: who may request prior coverage determinations (ie, determinations of medical necessity); which physicians’ services will be subject to these requests; what documentation must be submitted to the Medicare contractor as part of a request; and the impact of each type of response, or the decision not to request a prior determination, on patient and physician.
Brief history
 Alan E. Reider |  Allison Weber Shuren |
Statutory guidelines regarding the Medicare program prohibit payments for items and services that are not medically necessary and reasonable unless both the beneficiary and treating physician had no way of knowing that Medicare would not pay. When a physician believes Medicare may not cover a certain item or service (if, for example, published requirements suggest noncoverage or the physician has received payment denials in similar circumstances), the physician may face financial liability if he or she provides the item or service without notifying the beneficiary in advance of potential noncoverage. This notification, known as an Advanced Beneficiary Notice, must be provided in writing before the provision of care and must estimate the costs to the beneficiary should Medicare refuse coverage so that the beneficiary may make an informed decision whether to proceed. Unfortunately, physicians and beneficiaries have traditionally had limited means for determining with certainty which items or services Medicare will deem medically necessary and reasonable and therefore be willing to cover.
To address this concern, as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Congress required CMS to create a system for beneficiaries and physicians to obtain prior determinations that treatments are medically necessary and therefore subject to coverage. In response, CMS issued a proposed rule in August 2005 and incorporated public comments regarding that proposed rule into the final rule issued in February. As noted throughout the final rule, CMS plans to establish more detailed procedural guidance for how Medicare contractors should make these determinations in future CMS manual provisions.
Who may request prior coverage determinations
A Medicare-participating physician (or a physician who has accepted assignment of Medicare reimbursement) may request prior coverage determinations on behalf of his or her patients as long as those patients are Medicare beneficiaries who have consented to the physician making the request. A beneficiary, however, may submit a request only upon receipt of an Advanced Beneficiary Notice. Neither party may request a prior coverage determination after the physicians’ services have already been provided.
The rule also notes that no individual has an affirmative obligation to seek a prior coverage determination whenever possible. In other words, the rule does not negatively impact the appeal rights of a beneficiary who chooses not to request a prior coverage determination and is subsequently denied coverage.
Covered physician services
Each Medicare contractor must post on its Web site a list of the physicians’ services for which eligible physicians and beneficiaries may request prior coverage determinations. The Medicare contractor’s list must consist of: CMS’ national list (updated annually and distributed via manual instructions) of the most expensive physicians’ services included in the physician fee schedule for that year that are performed at least 50 times annually; and CMS’ national list of plastic and dental surgeries that Medicare may cover that have an amount of at least $1,000 on the physician fee schedule for that year (not including location adjustments pursuant to the Geographic Practice Cost Indexes). CMS said in limiting the eligible services in this manner, it took into account for which services (eg, particularly expensive services, plastic and dental surgeries for which the individual’s circumstances can significantly impact coverage) the uncertainty regarding Medicare coverage would most strongly discourage patients from seeking treatment.
Obviously, contractors will be required to update their lists of eligible services on their Web sites as necessary to reflect any updates provided in the CMS manuals. Contractors must also list each physicians’ service by its Healthcare Common Procedure Coding System procedure code and code description.
Documentation required in support of request
As mentioned above, the rule defers some of the procedural details surrounding prior coverage determinations to future CMS manual instructions. However, the rule does state that CMS may require the request to be accompanied by the following documentation: a description of the physicians’ service; documentation supporting the medical necessity of the physicians’ service; and a catch-all category of “any other appropriate documentation.” The rule further specifies that if a beneficiary is requesting the determination, the beneficiary may also have to submit a copy of the Advanced Beneficiary Notice he or she received.
Impact of determination on physician and beneficiary
A Medicare contractor must respond to any request for a prior coverage determination within 45 days of receiving that request. Despite public comments criticizing the 45-day window in the 2005 proposed rule as too long to be beneficial for a patient awaiting treatment, CMS has said only that contractors will be encouraged to process requests as quickly as possible. Further, CMS indicated that it does not intend to allow prior coverage determinations to be submitted electronically, even though this would significantly expedite the process.
A contractor may inform the requester that the service is covered, the service is not covered or the contractor lacks sufficient information to make a coverage determination. For situations in which the contractor says a local coverage determination (LCD) or national coverage determination (NCD) adequately describes whether Medicare covers a given service, the contractor need only provide a copy of that LCD or NCD to the requester with a brief note indicating that the LCD or NCD serves as the prior coverage determination.
Any determination that a service is not covered must include a brief description for the basis of the contractor’s decision (including whether the determination was based in part on any LCD or NCD). Similarly, a notice indicating a lack of sufficient information to issue a coverage decision must include a description of the additional information required.
If the Medicare contractor renders a determination that the service will be covered, the contractor is bound by that determination (assuming the requester accurately represented the facts to the contractor). Further, if the contractor either decides that the service will not be covered or that additional information is needed in order to make a determination, the decision will not be subject to any form of appeal. For instances in which a physician (rather than a beneficiary) has requested the prior coverage determination, CMS promises to establish some procedure for informing the beneficiary of any determination of noncoverage, as well as his or her rights to obtain the service and seek reimbursement regardless.
For more information:
- Rachel E. Lerner, JD, can be reached at Arent Fox LLP, 1050 Connecticut Ave. NW, Washington DC 20036-5339; 202-857-6111; e-mail: lerner.rachel@arentfox.com.