High Drama for HME

Four days before the Jan. 1, 2012, “go-live” date for the pre-payment review and prior authorization demonstration project for power mobility devices, the Centers for Medicare & Medicaid Services unexpectedly announced an unspecified delay of the project.

Maybe it was no “Law and Order” episode, but for Washington, D.C., and the HME community, this was high drama.

Just six weeks prior, on Nov. 15, 2011, CMS announced the unprecedented three-year demonstration project that would impact a significant portion of all Medicare power mobility device (PMD) claims starting Jan. 1, 2012.

The project was set for seven states where CMS claimed there were high rates of fraud: California, Texas, Florida, Michigan, Illinois, North Carolina and New York. These states account for 43 percent of the $606 million total Medicare PMD expenditures in 2010.

In what appeared to be an incredible rush, CMS in December 2011 asked the Office of Management and Budget (OMB) to approve in seven days its request for emergency clearance of the paperwork necessary to move forward Jan. 1, 2012. Once OMB rejected the request on a technicality, CMS re-filed its request asking for OMB’s approval within four hours.

Meanwhile, national consumer and clinical organizations cried out to CMS and Congress, expressing grave concerns about such an expedited request with no input from any stakeholders. Notably, the American Medical Association weighed in, expressing “serious concern” and stating that public harm would result from an expedited approval.

Many members of Congress also wrote CMS, asking the agency to halt the demonstration project. Instead, CMS was asked to implement a formal notice in the rulemaking process to ensure that stakeholders could provide input, and avoid any unintended consequences such as massive layoffs and halted operations that would unduly harm people with disabilities who rely on power mobility devices.

HME industry advocates said the project would significantly delay payments to providers. It would also put providers in the difficult, if not impossible, position of delivering expensive products and then waiting and hoping they would eventually be paid by Medicare.

CMS touted the PMD demonstration project as a critical part of the Obama Administration’s goals for cutting improper payments by 2012. CMS stated that the goals include reducing overall payment errors by $50 billion and recovering $2 billion in improper payments to recipients of federal dollars.

In Phase 1 of the planned demonstration, up to 100 percent of PMD claims would be subject to pre-payment review. CMS indicated that suppliers could send in medical necessity documentation with the claim, or wait for the contractor to send the supplier a request for the medical documentation. The contractor would have 20 days to make its initial decision. Phase 1 of the demonstration was scheduled to last three to nine months, depending upon the state.

California would move to Phase 2 on or after April 1, 2012; Illinois, Michigan and New York would move to Phase 2 on or after June 1, 2012; and Florida, North Carolina and Texas would move to Phase 2 on or after Aug. 1, 2012.  CMS indicated that if the demonstration project was “successful,” it would expand it to other states, and possibly other DME items.

CMS estimated that it would be conducting prepayment review on about 79,500 claims and would be receiving 23,500 initial prior authorization requests in the first year. Based on CMS’ historical data, prepayment review and prior authorization combined would affect about 325,000 PMD claims over the course of the three-year demonstration. CMS explained the demonstration as follows: