ATLANTA--A U.S. court of appeals has ruled that a CMN may not always be enough to prove medical necessity.

The decision is the latest defeat for Clearwater, Fla.-based Gulfcoast Medical Supply, which has filed a series of appeals arguing that HHS has no right to request information beyond the certificate of medical necessity.

"If, as Gulfcoast suggests, the carriers and the secretary have no discretion to request any evidence of medical necessity apart from the CMNs already submitted by the suppliers, such audits would be rendered useless," the opinion from the U.S. Court of Appeals for the 11th Circuit stated. "Moreover, were we to adopt Gulfcoast's position, the secretary would effectively lack the discretion to deny any claim so long as a supplier could find a physician--even a dishonest or incompetent one--to sign a CMN."

The conflict began in June 2002, when Palmetto GBA found that it had overpaid Gulfcoast by $280,574 for wheelchairs supplied to Medicare beneficiaries between 2001 and 2002. An audit by the DMERC, which examined records of 30 randomly selected beneficiaries, found that services for 22 of the beneficiaries were not supported by documents in the medical record. Palmetto's audit also found that at least half of the patients did not need a power wheelchair.

Gulfcoast argued that the physician-signed CMN it submitted with each claim is sufficient to prove medical necessity under the Medicare Act.

However, the appeals court said that the Medicare law never states that the CMN is the only document that may be required of suppliers.

According to the 11th Circuit, "A CMN is an optional pre-payment tool designed primarily to reduce paperwork and to streamline the processing of claims ... It would be incoherent to construe [in the Medicare law], a subsection restricting the use of CMNs and clearly indicating that they are voluntary, to also make CMNs the exclusive means for proving medical necessity."

In a separate ruling in March, a federal district court similarly ruled against Maryland-based Mackenzie Medical, saying CMS could request documentation in addition to the CMN (see HomeCare Monday, April 1).

But in another case, a federal district court came to a different conclusion. In March 2005, the court ruled in favor of Redding, Calif.-based provider Maximum Comfort, claiming that CMS should not have required the provider to repay $600,000 for failing to provide additional documentation, with its power wheelchair claims (see HomeCare Monday, March 21, 2005). The government has appealed the decision, but a court date has not yet been set.

To view the Gulfcoast decision, click here.