Mixed Bag in Final Prior Authorization Regulations for DMEPOS

CMS issued final regulations on prior authorization of certain durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) as 2015 came to a close. These regulations permit CMS to impose prior authorization requirements on a wide variety of DMEPOS that are “frequently subject to unnecessary utilization.” NAAOP participated with the O&P Alliance in submitting extensive comments to the proposed rule in July 2014 and met with CMS officials on this issue. Some of our comments were adopted in the final regulations and some were not, but in the end, prior authorization will be another tool that CMS and its contractors can use in the future to help control Medicare spending.

Not everyone in the O&P profession opposed prior authorization when it was proposed. Some see benefits to obtaining approval to provide an orthosis or prosthesis up front, before delivering care to a Medicare beneficiary and being denied for that claim. With the appeals process taking years to resolve disputes, there is an argument that prior authorization may bring additional certainty to the provision of orthoses and prostheses. But there are many drawbacks to prior authorization as well, and this is why NAAOP and the O&P Alliance raised serious objections to prior authorization during the comment period. There were some genuine victories in the final rule, namely:

  1. Prior authorization may be implemented gradually, with a select number of items identified on the “Master List” being exposed to prior authorization in the near term. It can also be implemented in certain regions of the country, rather than nationally for all billing codes.
  2. Once a billing code is subject to prior authorization, it need not be imposed for a full 10-year period, as the proposed rule stated. If certain conditions are met, it can be discontinued at any time; and,
  3. CMS recognizes that claims that have received prior authorization are subject to some protection from future auditing activity. There are exceptions for cases of suspected fraud and for CERT audits, which are mandated by federal law. While prior authorization is not a guarantee of Medicare payment, this is a significant concession by the government which was not included in the proposed rule.

Nonetheless, prior authorization will be permitted for the 135 DMEPOS items on the initial Master List, 84 of which are prosthetic codes. No orthotic codes appear on the list in 2016, but this may change in future years. If prior authorization is imposed on a code, all claims that do not have an affirmed prior authorization will be denied payment. The Master List will be automatically updated annually based on whether new billing codes have been identified in government reports (i.e., GAO, OIG and CERT reports) as being overutilized, and if these items exceed a payment threshold of $1,000. Denial of prior authorization is not appealable, but the provider can submit as many prior authorization requests as necessary to gain approval. Initial requests should be processed within 10 business days while resubmissions can take up to 20 days for a decision. CMS and its contractors will issue sub-regulatory guidance in the future to provide additional detail as to filing requests for prior authorization.