On December 30, 2015, the Centers for Medicare and Medicaid Services (CMS) issued a final rule establishing a prior authorization process for certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items that the government maintains are typically subject to unnecessary utilization (i.e. items that do not comply with Medicare’s coverage, coding, and payment rules). CMS intends the prior authorization process to ensure that all Medicare coverage, coding, and payment rules are met before the DMEPOS items are furnished to a beneficiary and submitted for payment.

CMS finalizes the creation of a “Master List” that contains those DMEPOS items potentially subject to the prior authorization process. Inclusion on the Master List, however, does not mean that a particular DMEPOS item requires prior authorization. CMS plans to implement prior authorization only for a subset of those DMEPOS items that appear on the Master List (referred to separately as the “Required Prior Authorization List”).

Importantly, CMS establishes prior authorization as a condition of payment for DMEPOS items that require prior authorization (e.g. those DMEPOS items listed on the Required Prior Authorization List). CMS will automatically deny payment for a claim for any DMEPOS item that requires prior authorization and is submitted without a provisional affirmation prior authorization decision.

When reviewing a request for prior authorization, CMS or any of its review contractors has the option to issue a provisional affirmation prior authorization decision or a non-affirmation decision. The initial determination made by CMS or any of its review contractors is a preliminary finding that the future claim satisfies Medicare coverage, coding, and payment rules. Therefore, provisional affirmation or non-affirmation decisions are not considered initial determinations on a claim, and therefore are not appealable. When a provider receives a non-affirmation decision from CMS or any of its review contractors, CMS provides for unlimited opportunity to resubmit the prior authorization request.

CMS also outlines its process for including certain DMEPOS items on both the Master List and Required Prior Authorization List. To qualify for inclusion on the Master List, the DMEPOS item(s) must meet certain criteria. For example, the DMEPOS item(s) must appear on the DMEPOS Fee Schedule List, be identified in government publications and/or other reports as having a high likelihood of fraud or unnecessary utilization, and have either an average purchase fee of US$ 1,000 or greater or an average rental fee of US$ 100 or greater. The Master List will self-update annually. CMS will annually post notifications to both the Federal Register and the CMS Prior Authorization Website of any additions or deletions to the Master List.

The final rule does not establish a method or criteria for selecting DMEPOS items for inclusion on the Required Prior Authorization List. But, CMS states that it will consider factors such as geographic location, item utilization or cost, system capabilities, administrative burdens, or other data when making its determination. CMS further reserves the right to implement or suspend the program locally, by Medicare Administrative Contractor (MAC) jurisdiction, or nationally.

CMS envisions that additional instructions and clarification surrounding the prior authorization process will be provided in subregulatory guidance.



*Blake Walsh is admitted only in Tennessee. Her practice is supervised by principals of the firm admitted in the District of Columbia.