Final Rule Establishes Prior Authorization for Orthotics and Prosthetics

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By Peter W. Thomas, JD, and Steven Postal, JD
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Introduction

This issue of The O&P EDGE  focuses on O&P education and outcomes. Good education will lead to high-quality care, and being able to measure outcomes will help demonstrate the evidence base for O&P clinical practice. Both will have a major impact on the viability of the profession, including the ability to be fairly compensated for the care provided. O&P professionals know that to keep their doors open, they must also be able to navigate the claims processing system and not have their reimbursements recouped. In this context, the Centers for Medicare & Medicaid Services' (CMS') recent action on prior authorization is an important new regulatory scheme that is likely to have ramifications in O&P for years to come.

CMS issued a final rule December 30, 2015, titled "Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics, Supplies (DMEPOS) Items." (Editor's note: To read the final rule, visit federalregister.gov/a/2015-32506.) Individuals in the O&P community have responded to the final rule in two ways. Those who strongly oppose the rule believe prior authorization will further commoditize the field and cede unprecedented control of prosthetists' and other medical care professionals' care decisions to CMS. That CMS seems to be taking the results of Medicare's Prior Authorization of Power Mobility Devices (PMDs) Demonstration project and applying the lessons learned to a wide range of prosthetic-limb codes without really understanding how prior authorization will work with these more clinically oriented services supports this argument.

On the other hand, those more accepting of prior authorization believe it is better from a business standpoint to have services authorized before they are rendered than to deliver a prosthesis only to be subsequently denied payment, either through pre- or post-payment review. The current Medicare audit and appeals system is such a disaster for providers that prior authorization may provide some relief in this area, which is supported by changed attitudes toward the PMDs Demonstration project, which began in 2012. Initially opposing prior authorization, the PMD supplier community now embraces it.

However, O&P is clearly different from durable medical equipment (DME), so it remains to be seen if the O&P profession will react the same way over time. Regardless, prior authorization is a Medicare final rule and is here to stay. What has yet to be determined is how expansively CMS applies prior authorization to prosthetics and how the overall program is implemented.

CMS issued this final rule to address items it believes are frequently subject to unnecessary utilization. The final rule defines unnecessary utilization by linking it to government reports that have been issued since 2007 on Medicare-covered services suspected of being overutilized. In light of recent data that shows a significant decrease in Medicare expenditures for O&P care since 2010, there is a strong argument that prior authorization should not be applied to prosthetics at all, but this is unlikely.

The Basics of the Final Rule

The Master List

The final rule creates a Master List that identifies 135 DMEPOS items as being "frequently subject to unnecessary utilization." Items qualify for the Master List if they are listed on the Medicare fee schedule as $1,000 or greater or have an average monthly rental fee schedule of $100 or greater (adjusted annually for inflation) and are the subject of either: 1) a U.S. Department of Health and Human Services Office of Inspector General (OIG) or U.S. Government Accountability Office (GAO) report that is national in scope and published since 2007; or 2) a Comprehensive Error Rate Testing (CERT) DMEPOS report. Not every billing code identified on the Master List will be immediately subject to prior authorization, nor will every code be subject to prior authorization on a nationwide basis.

Mobility Devices and Prosthetics: The Master List focuses on wheeled mobility and prosthetics, but other DME is also included. Currently, 84 L-Codes describing lower-limb prosthetics and components are included. There are no orthotic codes listed to date, but that does not preclude them from being added in the future if they meet the criteria for the Master List.

Updates: The Master List will be automatically updated annually. Items can be added to the list, and remain on the list for ten years, if they meet the criteria noted above. CMS can remove items whose purchase amount drops below the payment threshold. After the ten-year period, items can remain on the list or be added back to the list if a subsequent report identifies the item as frequently subject to unnecessary utilization. Prior authorization can be suspended for any code at any time.

Required Prior Authorization List

The Required Prior Authorization List is defined as the initial subset of items on the Master List for which CMS requires prior authorization. Again, not every item identified on the Master List will be subject to prior authorization. CMS will publish the Required Prior Authorization List in the Federal Register 60 days before its implementation.

Prior Authorization Process

The final rule also details the prior authorization process, in which providers submit all relevant documentation to CMS or its contractors for review prior to furnishing the item to the beneficiary and submitting the claim. (In reality, prosthetists will not begin significant work on a new prosthesis until a prior authorization request has been approved.) CMS or its contractors will then provide a provisional affirmation or non-affirmation decision. CMS will pay a claim with a provisional affirmation decision as long as all other requirements are met, and will deny claims submitted with a non-affirmation decision or without a prior authorization decision. Providers can submit unlimited resubmissions of prior authorization requests but a denial of a prior authorization request does not constitute an initial determination, meaning it cannot be appealed.

Initial prior authorization determination and timelines: The final rule states that CMS or its contractors will make a reasonable effort to render an initial determination within ten business days and will make a reasonable effort to render a resubmission determination within 20 business days. (These timelines are consistent with the proposed rule; CMS rejected the O&P Alliance's request to use shorter timelines for these decisions.) However, CMS' contractors are not subject to penalties if they fail to meet these deadlines. CMS did not finalize the proposed prior authorization timeframes in the final rule, but rather will publish prior authorization timeframe requirements in subregulatory guidance.

Expedited review process: Expedited review is available if applying the standard timeframe for making a prior authorization decision could seriously jeopardize the life or health of the beneficiary or the beneficiary's ability to regain maximum function. Supporting rationale must be provided when requesting an expedited review. This expedited review provision is positive and may offer prosthetists the ability to obtain quick decisions when the patient requires immediate prosthetic care.

Protection from audits: The final rule states that prior authorized claims "will be afforded some protection from future audits, both pre- and post-payment." However, prior authorization is not a guarantee of payment, nor will it protect against suspected fraud or CERT audits, which are required by statute. It is unclear what this protection means, but protection from future audits was not included in the proposed rule and should be viewed as a victory from an O&P provider perspective.

Future guidance and regulation: CMS will issue specific prior authorization guidance in future communications. CMS has indicated that it may pilot prior authorization in a region before fully implementing the program, which was also a major thrust of the comments submitted by the O&P Alliance.

Advance Beneficiary Notice of Non-Coverage

According to the final rule, any expenses incurred for an item or service that is denied by Medicare is the responsibility of the supplier unless the beneficiary was given an Advance Beneficiary Notice (ABN). In these instances, the beneficiary knows or could be expected to know that Medicare would not make the payment. For example, if the supplier believes an item may not be considered medically reasonable and necessary, the supplier may shift financial liability to the beneficiary by delivering a valid ABN to the beneficiary, assuming that the beneficiary accepts this liability.

O&P Alliance's Comment Letter and CMS' Response

Removal of L-Codes From the Master List

The O&P Alliance asserted in its comments to the proposed rule that L-5705 and L-5964 should be removed from the Master List because they did not meet the prior authorization criteria. CMS retained L-5964 on the final list but removed L-5705 and four other L-Codes, as follows:

  • L-5705 Custom shaped protective cover, above knee
  • L-5706 Custom shaped protective cover, knee disarticulation
  • L-5718 Addition, exoskeletal knee-shin system, polycentric, friction swing and stance phase control
  • L-5722 Addition, exoskeletal knee-shin system, single axis, pneumatic swing, friction stance phase control
  • L-5816 Addition, endoskeletal knee-shin system, polycentric, mechanical stance phase lock

Prosthetists' Clinical Notes

Stating that the prosthetists' clinical notes are critical to the medical necessity determination, the Alliance advocated that these notes should be explicitly considered part of the medical record. CMS stated in the final rule: "In response to commenters that requested that the prosthetists' notes and records stand alone in fulfilling medical necessity documentation requirements for a beneficiary's prostheses, we note that the expertise of prosthetists is very important and contributes to beneficiaries' recovery. However, a prosthetist's records alone do not illustrate the comprehensive clinical picture of the beneficiary. For example, a physician order alone does not satisfy Medicare's medical necessity criteria. Rather, it is the documentation of multiple healthcare team members working on behalf of the beneficiary that conveys the complete picture of the beneficiary's medical need and appropriate delivery of care. As a principle, when reviewing any claim for medical necessity, we look for corroboration between all entries (including physician's orders) in a beneficiary's medical record."

This response shows that CMS continues to misinterpret and misstate the Alliance's position on the issue of recognizing prosthetists' clinical notes. CMS stated that the Alliance asserted that the prosthetists' notes and records alone should be sufficient to demonstrate medical necessity, which has never been its position. The Alliance's position is that the prosthetist's notes must be recognized as part of the patient's medical record and not dismissed as irrelevant because they are "supplier-generated," as stated in the current Local Coverage Determination (LCD) for Lower Limb Prostheses. If there is any silver lining in the final rule, it is that CMS appears to not only recognize the importance of prosthetists in delivering prosthetic care, but also seems to be moving in the direction of recognizing all members of the rehabilitation and care team, which includes prosthetists.

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Prior Authorization Claims Should be Exempt From Medical Necessity Audits

CMS stated in the final rule: "We note claims for which there is a provisional affirmation prior authorization decision will be afforded some protection from future audits, both pre- and post-payment. However, review contractors may audit claims if potential fraud, inappropriate utilization, or changes in billing patterns are identified.... The CMS CERT program reviews a stratified, random sample of claims annually to identify and ensure improper payments. It is possible for a DMEPOS claim subject to prior authorization to fall within the sample. In this situation, the subject claim would not be protected from the CERT audit.... We believe that some assurance of payment and some protection from future audits may ultimately reduce burdens associated with denied claims and appeals."

This is favorable language that was not included in the proposed rule. While the language is not as strong as the Alliance recommended, it does acknowledge its main point. It is clear that additional details will have to be issued through subregulatory guidance to determine how effective this protection will be from future audits of preauthorized claims.

The Importance of Future Guidance

There are many unknowns with the final rule that CMS will have to determine in the future as the prior authorization program is fully implemented. The National Association for the Advancement of Orthotics and Prosthetics (NAAOP) and the O&P Alliance will be meeting with CMS officials soon to further discuss this rule and attempt to lessen the potential negative impact it may have on beneficiaries with limb loss and the providers who serve them.

Peter W. Thomas, JD, is general counsel for NAAOP and counsel for the O&P Alliance.

Steven Postal, JD, is the director of health policy at Powers, Pyles, Sutter & Verville, Washington, focusing on post-acute care, habilitation, rehabilitation, Medicare, and Medicaid.