Prior Auth: It's Here! Medicare Prior Authorization Comes to O&P

Medicare has just announced its decision to include 6 prosthetic L-codes in its prior authorization program. Here's what you need to know:

1. The 6 L-codes are all for lower-extremity prosthetic devices.
2. In general, these codes describe higher-end, more expensive devices. 4 of the codes apply to microprocessor-controlled knees and feet and two of them describe higher-activity mechanical feet.
3. The 6 L-codes are: L5856; L5857; L5858; L5973; L5980; and L5987.
4. Prior authorization for these codes will be implemented in 2 phases. Phase one will involve only CA, MI, PA and TX beginning 90 days from February 11, 2020. Phase 2 will take the program national 240 days from February 11, 2020.
5. Medicare has not yet published any information about how quickly the DME MACs will be required to issue provisionally affirmed or non-affirmed prior authorization decisions. It says it will do so in upcoming subregulatory guidance.

Medicare claims that including these codes in the prior-authorization program "will help further our program integrity goals of reducing fraud, waste and abuse, while also protecting access to care."

What does this mean for you?

If you live in CA, MI, PA or TX, any claims you file involving these 6 codes will require prior authorization beginning in 3 months. If you live outside of those states, prior authorization will apply to you for these codes beginning in 8 months.

Prior authorization has both positives and negatives associated with it. The key positive is that it provides you more certainty about the likelihood of payment before you deliver an item. Unlike the historical "deliver and bill" approach, if a claim has received provisional approval, you can proceed with claims submission confident that you have demonstrated medical necessity as required by the Local Coverage Determination.

On the other hand, prior authorization gives the DME MACs greater say in what gets placed on your patients. In the commercial insurance world, some payors serially deny authorization for certain items. This has the effect of discouraging O&P's from submitting claims involving those codes, and some companies choose to instead submit claims for lower-cost items instead.

Thus, a critical factor in Medicare's prior authorization program - and one we won't know about until it goes into effect - is how the DME MACs actually process authorization requests. While not dispositive for these codes, it is our understanding that in the power mobility space, supplier feedback to prior authorization has been largely positive. (PMD's have been subject to prior authorization for several years already.)

We will keep you apprised as further developments occur in this important area.