Academy comments to CMS on the proposed rule regarding "Prior Determination for Certain Items and Services"

Mark B. McClellan, M.D.
Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
Attention: CMS-6024-P
P.O. Box 8017
Baltimore, MD 21244-8017

Dear Dr. McClellan:

I am writing on behalf of the American Academy of Family Physicians, which represents more than 94,000 family physicians and medical students nationwide. Specifically, I am writing to offer our comments on the proposed rule on “Prior Determination for Certain Items and Services” under the Medicare program, as published in the Federal Register on August 30, 2005.

As noted in the proposed rule, Medicare beneficiaries can currently find out whether or not items or services are generally covered. However, when there is a question of whether Medicare will cover a specific item or service for a particular beneficiary under specific circumstances, there currently exists no process by which the beneficiary or his or her physician can find out if that item or service would be considered reasonable and necessary for that beneficiary before incurring financial liability.

To address this issue, section 938 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) requires the Secretary to establish a process whereby eligible requesters may submit to the Medicare contractor a request for a determination, before the furnishing of the physician's service, as to whether the physician's service is covered consistent with the applicable requirements of section 1862(a)(1)(A) of the Social Security Act (relating to medical necessity). This MMA section also provides that an eligible requester is either:

Requesting a prior determination under this proposed process is at the discretion of the eligible beneficiary or physician, and prior determination of coverage is not required for submission of a claim. The proposed rule establishes reasonable limits on the physicians' services for which a prior determination of coverage may be requested (as allowed for in MMA section 938) and discusses generally CMS’s plans for establishing the process by which eligible requesters may obtain prior determinations. CMS indicates that the procedures that Medicare contractors would use to make the prior determinations would be established in CMS’s manuals, rather than by regulation.

Section 1869(h)(2) of the Social Security Act, as added by section 938 of the MMA, requires the Secretary to establish by regulation reasonable limits on the physicians' services for which a prior determination may be requested. This section provides that in establishing the reasonable limits, the Secretary may consider “the dollar amount involved with respect to the physician's service, administrative costs and burdens, and other relevant factors.”

In response CMS proposes to establish an initial pool of eligible physicians' services comprised of at least those 50 services with the highest allowed average charges that are performed at least 50 times annually. CMS proposes to exclude from this initial pool any services for which a national or local coverage determination exists that, based on CMS' judgment, has sufficiently specific reasonable and necessary criteria to permit the beneficiary or physician to know whether the service is covered without a prior determination. In addition, CMS proposes to allow prior determination for plastic and covered dental surgeries that may be covered by Medicare and that have an average allowed charge of at least $1,000. CMS proposes to update the list annually.

CMS’s rationale for this proposal is threefold:

We appreciate the need for CMS to consider administrative costs and other factors in setting “reasonable limits” on the physicians’ services for which a prior determination may be requested. However, we believe CMS has erred on the side of being too restrictive in setting the initial pool of eligible services. Evidence of just how restrictive CMS proposes to be is found in both the number of services in the initial pool and in CMS’s estimate of the number of prior determination requests it expects to receive on annual basis. As noted, the initial pool of eligible services would include approximately 50 services. This is less than one percent of the more than 5,000 services in the Medicare physician fee schedule. Furthermore, CMS estimates that 5,000 requests for prior determination will be made annually. Considering the hundreds of millions of physician services provided to Medicare beneficiaries annually, 5,000 is a miniscule amount.

The law allows the Secretary to consider “the dollar amount involved with respect to the physicians’ service” in setting reasonable limits on the number of services eligible for redetermination. Accordingly, we think it would make more sense to include all services above a certain dollar amount (e.g., $100) (corresponding to the Medicare allowed amount) rather than limiting it to the top 50 services based on average allowed charges. We agree that beneficiaries are more likely to be discouraged from obtaining the most expensive physicians' services because they are uncertain whether or not they would have to incur financial liability if Medicare does not pay for the service. However, this does not mean that they will not be discouraged from obtaining other services for the same reason. Many Medicare beneficiaries have limited financial means or are on fixed incomes. As such, we suspect that they are much more price sensitive than CMS’s proposal suggests.

We also think that CMS has erred in excluding those services for which a national or local coverage determination exists that, based on CMS' judgment, has sufficiently specific reasonable and necessary criteria to permit the beneficiary or physician to know whether the service is covered without a prior determination. First, from our perspective, the presumption that beneficiaries will access and understand either national or local coverage determinations is ludicrous. Second, the exclusion of such services on this basis seems contrary to the statute. We note that section 1869(h)(4)(B)(i), as added by MMA section 938 requires Medicare contractors to include “a brief explanation of the basis of the determination, including on what national or local coverage or noncoverage determination (if any) the determination is based,” when issuing notices of noncoverage in response to prior determination requests. If services with national or local coverage determinations were meant to be routinely excluded from prior determination, there would be no need to reference them in notices of noncoverage that respond to prior determination requests.

Along these lines, in the proposed rule, CMS states that it will instruct its contractors that, in cases where a prior determination is requested but a national coverage decision or local coverage decision exists, the contractor will send the beneficiary a copy of that policy along with the explanation of why a prior determination will not be made. Again, this seems contrary to section 1869(h)(4)(B)(i), which clearly seems to anticipate that the beneficiary will receive a decision based on the coverage determination rather than no decision based on the existence of such a national or local coverage decision. From our perspective, CMS should not exclude from its initial pool of services eligible for prior determination those services for which a national or local coverage determination exists, whether CMS judges the coverage determination sufficiently specific or not.

Finally, we would like to comment on the proposed timeframe for responding to prior determination requests. The statute provides that Medicare contractors must respond to prior determination requests within the same time period as the time period applicable to contractor providing notice of initial determinations on a claim for benefits. This translates into 45 days after the request is received under current Medicare rules. CMS indicates that it will instruct its contractors to process the requests as quickly as possible (but no longer than 45 days), taking into consideration the beneficiary's physical condition, the urgency of treatment, and the availability of the necessary documentation. We would hope and expect that Medicare contractors could process such requests in much less than 45 days. Assuming they have all the necessary information when the request is received, we would expect Medicare contractors to be able to respond in a matter of days, rather than weeks. This is a matter of customer service to both beneficiaries and physicians.

In summary, we believe the proposed rule effectively guts what would otherwise be a wonderful benefit to beneficiaries and their physicians by limiting its applicability in the extreme. To add insult to the injury, CMS proposes to allow beneficiaries and physicians to wait up to a month and a half for a decision on the few services it will consider for prior determination. We urge CMS to reconsider its limits on the initial pool of services eligible for prior determination and improve its customer service by requiring contractors to respond more quickly. Otherwise, this proposal will represent just another wasted opportunity as far as the Medicare program is concerned.

Thank you for the opportunity to comment on this aspect of the Medicare program.

Sincerely,

Mary E. Frank, M.D.
Board Chair