Clarification on Prior Authorization Update

On the same day that Medicare’s Prior Authorization process for products billed with the above mentioned HCPCS codes begins for providers in California, Illinois, New York and Florida, CMS also announced a new exception to the prior authorization requirement. Specifically, items provided under those codes that suppliers must dispense immediately to (a) avoid delaying care and (b) prevent health risks to the patient, do not require prior authorization.

However, braces dispensed in these urgent/emergent situations are subject to different claim standards/processes than those that receive prior authorization. Specifically:

• DMEPOS suppliers must use an “ST” modifier for claims submitted without prior authorization. All such claims will be subject to prepayment review.
• Physicians, treating practitioners, physical therapists, occupational therapists, and hospitals dispensing these braces subject to a competitive bidding exception can do so using the “KV,” “J5,” of “J4” modifiers (as applicable to each type of provider) plus the “ST” modifier. Only 10% of claims submitted by these provider types will be subject to prepayment review.

What Does This Mean for You?

If you dispense a brace described by any of these codes without first getting prior authorization, you must document how delaying delivery would pose an immediate health risk to the patient to justify not using that process. If you fail to do this, prepayment review will result in a denial.

In addition, because prepayment review requires a review of the underlying medical documentation, this process will likely lead to longer payment cycles for claims submitted outside of prior authorization. If these types of claims make up a material percentage of your total revenue today, you should prepare for short-term liquidity issues for this segment of your business.

Finally, the approach taken by CMS – applying different prepayment claim review standards for doctors, treating practitioners, PT’s, OT’s and hospitals on the one hand, and all other supplier types on the other – signals that it is more concerned about potential abuse of the prior-authorization exemption by the latter group than the former.

We will monitor future guidance/clarifications from Medicare as this issue continues to develop. As new information becomes available, we will provide it to you.