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David McGill Blogger

Medicare and Prosthetic Prior Authorization: How Would It Work?

Posted by David McGill | June 06, 2014

​Medicare published a draft rule that would require lower limb prosthetic devices to successfully go through a prior authorization process before Medicare would pay for the item(s). While this has provoked strong reactions from the O&P industry, in this post we want to spend our time focusing primarily on the proposed rule itself so that you understand how it might work mechanically if Medicare does ultimately implement it.

What Would It Apply To?

If CMS followed through on the proposal without changes, prior authorization would apply to every prosthetic L code worth more than $1,000. For those of you wondering, that means 49% of the codes would be subject to the pre-auth process. This includes multiple base codes (regardless of functional level) and several knee codes that apply to K1 and K2 users.

Medicare has indicated, however, that it would require prior authorization only for a subset of all lower extremity L codes. The proposed rule contains no information about how Medicare might narrow the list, though given the stated goal of the proposed rule - protecting the Medicare Trust Fund - one might logically expect a particular focus on more expensive L codes. 

Where Would it Apply? 

Medicare has proposed that prior authorization could be implemented either locally or nationally. 

Would Documentation Requirements Change?

No. Medicare states that the documentation requirements and who is responsible for creating it would remain the same.

How Would Prior Authorization Work?

After receiving claim materials from the prosthetist, Medicare would make "reasonable efforts to communicate the decision within 10 days of receipt." The proposed rule contains no language suggesting any type of remedy for prosthetists if they fail to receive a response within that timeframe. 

If the materials meet Medicare's coverage, coding and payment rules, the prosthetist would receive a provisional affirmation. This would not be a guarantee of payment, as Medicare could still deny the claim later. (If, for example, the claim was a duplicate or the prosthetist failed to obtain adequate proof of delivery, both of which couldn't be determined until after prior authorization was complete.)

If the materials failed to meet the stated requirements, then Medicare would issue a non-affirmation. Prosthetists would then have to resubmit the claim. The proposed rule contemplates unlimited opportunities for resubmissions. Medicare would make reasonable efforts to communicate decisions for resubmissions within 20 days of receipt. Again, Medicare does not spell out any kind of remedy for suppliers if it takes longer than 20 days to render an opinion regarding the resubmission.

What does this mean for you?

We want to point out 2 less-than-obvious potential repercussions that could flow from implementation of prior authorization as set forth in the proposed rule.

First, Medicare has focused virtually all of its RAC audit and prepayment claim review activities to date on K3 or higher claims. But under the proposed rule, it's entirely possible that K1 and K2 claims could now be subject to the same intense scrutiny. As noted above, several of the codes potentially requiring prior-auth apply to K1 and K2 functional level amputees, including base codes and certain knee codes. 

Second, if the final subset of codes identified by Medicare for pre-auth ends up focused primarily on the highest-cost L codes, we'll likely see the development of a technology-specific caste system that hasn't ever existed before in Medicare's prosthetic coding system. The system could wind up structured so that the cost-containment goal of prior authorization disproportionately affects only the most sophisticated devices.

Prior authorization is a hot button issue. Our purpose in this post is not to tell you what to think about it, but rather, to hopefully provoke you to consider all of the ramifications so that you can make an informed decision about how it would affect your business if implemented. We will keep you posted about the progress of this proposed rule as additional information becomes available. 

If you are interested in reading AOPA's response to the proposed rule, click here. Also, for another synopsis of the proposed rule and where the O&P industry may be headed in terms of a unified view on the subject, we encourage you to visit NAAOP's home page and watch the video of Peter Thomas discussing the topic. (The 5 minute video discusses both the proposed rule and the recent VA shakeup. For those of you who cannot spare the full 5 minutes, Peter's discussion of prior authorization begins at the 2:40 mark. We encourage you, however, to invest the extra 2:20 to also get an excellent perspective on the current state of the VA and its impact on O&P.)

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