CMS Publishes Final Rule on Prior Determinations of Coverage

On February 22, 2008, the Centers for Medicare & Medicaid Services (CMS) published a Final Rule establishing a process for Medicare contractors to provide physicians and beneficiaries with a determination of coverage (related to medical necessity) before physicians' services are furnished.   

In the Final Rule, CMS establishes limits on the physicians' services for which a prior determination of coverage may be requested. In fact, the Final Rule outlines the services that will be subject to a prior determination of coverage request by providing for a national list of:

• the most expensive physicians' services in the Medicare Physician Fee Schedule (MPFS) that are performed at least 50 times annually.
• plastic and dental surgeries that may be covered and have an amount of at least $1,000 on the MPFS (not including the adjustment for location by the geographic practice cost index).

The Final Rule also allows a Medicare contractor to send a copy of a local coverage determination (LCD) or national coverage determination (NCD) to a requester, with an explanation that the LCD or NCD serves as the prior determination, if the LCD or NCD has sufficiently specific reasonable and necessary criteria addressing the clinical indication for the procedure for which the prior determination is requested.  Medicare contractors will determine whether a LCD or NCD has "sufficiently specific reasonable and necessary criteria."

Among the limitations, the Final Rule also discusses CMS' plan for establishing procedures for obtaining a determination. Further, CMS reports that it intends to issue detailed instructions on the determination of coverage process to Medicare contractors through the CMS manuals.

The effective date of the Final Rule is March 24, 2008.  The Final Rule implements provisions of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 and is intended to provide physicians and beneficiaries with an opportunity to know the financial liability for a service before expenses are incurred.  On August 30, 2005, CMS published a Proposed Rule for public comment.  CMS responds to the public comments in the Final Rule.