Medicare Compliance & Reimbursement

The Centers for Medicare and Medicaid Services should strip Medicare contractors of their authority to make local coverage decisions for new devices and procedures, the General Accounting Office said May 12. Asserting that LCDs resulted in inequities among beneficiaries and duplicative efforts among contractors, GAO suggested that CMS should rely solely on a quicker and more transparent process for rendering national coverage determinations.

The report drew vigorous disagreement from the Department of Health and Human Services, CMS' parent agency. However, the legislator that requested the report, House Ways and Means Health Subcommittee Chair Nancy Johnson (R-CT), said she would incorporate some of GAO's findings into the Medicare bill Ways and Means is producing. The legislation will "reform this coverage process to assure greater national consistency of Medicare benefits while retaining some ability for regions to respond rapidly to unique health care needs," she said.

"Seniors' access to the latest medical procedures should not depend on where they live," Johnson added, and GAO said allowing LCDs by Part A fiscal intermediaries and Part B carriers violates Johnson's dictum in spades. For instance, as of July 31, carriers in 30 states covered bilateral deep brain stimulation for Parkinson's disease and essential tremor, 10 states and the District of Columbia did not, and in 9 states carriers said they might provide coverage on a case-by-case basis.

GAO pointed out that coverage can be inconsistent even for beneficiaries in the same area: Since hospitals and other Part A providers can choose their fiscal intermediary, two neighboring hospitals might be served by FIs with differing policies. In addition, since CMS does not require contractors serving the same area to harmonize coverage policies, whether a beneficiary is covered for a given procedure could depend on "whether a procedure is performed in doctor's office and paid by a carrier, or performed in a hospital outpatient department and paid by an FI."

In comments on the report, HHS defended the local-coverage mechanism as a way for contractors to respond quickly to regional utilization variations and changes in the practice of medicine. "Allowing contractors to develop local coverage policies gives Medicare the opportunity to test new, experimental treatments before enough clinical evidence is available to warrant national coverage," HHS added. Moreover, the department said, since CMS only has the resources to make 20-30 NCDs a year, if LCDs were eliminated "we would be making unrestricted payments national for every procedure regardless of whether it is medically reasonable and necessary, or indeed safe for the Medicare population."

GAO found fault with Medicare's national coverage process, but the agency said the cure was to fix the national process, not continue relying on local determinations. GAO recommended that CMS "establish a new process for making national coverage policies that requires public input on draft policies, adheres to time frames, and provides for routine consultation with key HHS and external stakeholders."

To see the report, go to www.gao.gov/new.items/d03175.pdf.