Medicare proposes standardized coverage decisions

By MATTHEW HAY

HHBR Washington Correspondent

WASHINGTON – The Health Care Financing Administration (HCFA; Baltimore) last week issued a Federal Register notice proposing to develop national standards to help guide coverage decisions for the country’s more than 39 million Medicare beneficiaries.

Administrator Nancy-Ann DeParle said the process HCFA is launching will help establish "the most open, timely, and dependable system possible" for making national Medicare coverage decisions.

According to DeParle, a coverage criteria rule will mark the latest step in the agency’s ongoing efforts toward a more understandable and predictable process for making Medicare coverage decisions. Last year, the agency adopted a new administrative process for coverage decisions and created a Medicare Coverage Advisory Committee to inject private sector expertise into the process.

The debate over national standards has been going on since 1989 when the agency made a similar proposal that was never implemented. The problem stems from the fact that Medicare has never actually defined "reasonable and necessary," the standard required by law before expenses incurred for an item or service can be covered. By and large, there have never been any guidelines to help make that determination.

HCFA has the authority to make national coverage decisions, which are binding on all contractors and the administrative law judges who hear Medicare appeals in the administrative process. But most coverage decisions are made at the local level by carriers or fiscal intermediaries, and these decisions are binding only in the local area covered by each contractor.

Working within those parameters, Medicare coverage decisions have been made on case-by-case interpretations. But DeParle said that experience has shown that a standardized national definition of these criteria is needed for more consistent and timely decision making and to expand access to appropriate new technologies for Medicare beneficiaries.

There are some providers and manufactures that advocate national coverage criteria and others that do not, according to a HCFA official. "There are some suppliers and manufacturers that would rather approach these questions on a state-by-state basis," said the official. "But this is something that has needed to be addressed for years, and now we are taking another shot at it."

The official said that if implemented, this rule would actually expand coverage by making quality of life a consideration, as well as expediting coverage of breakthrough products and services.

According to HCFA, added value would be measured in several ways, such as substantially improving a health outcome or providing access to a medically beneficial treatment of a different type, such as medication instead of surgery. Items or services that could be substituted for an existing treatment at lower cost to the Medicare population would also qualify.

In general, HCFA said, cost would not be considered in making a coverage decision if a new item or service would be medically beneficial and there is no Medicare-covered alternative available. Cost also would not be a consideration when a new item or service would be medically beneficial and is a different clinical type than a Medicare-covered one. But cost limits could be applied for more expensive items or services that did not have significant added medical benefit to the patient.

According to HCFA, this marks the third step in a four-step process. The first step was creation of a new administrative process for coverage decisions. That was followed by the creation of the Medicare Coverage Advisory Committee to add outside experts and the latest scientific evidence to the process.

The final step will be the creation of service-specific guidance documents to supplement the final criteria rule that explain how the rules apply to specific services such as diagnostic labs, radiology tests, surgical procedures, and durable medical equipment.

The notice of intent is the first step in a rule-making process. Public comments will be considered in the drafting of proposed documents and rules. The public will then have an additional opportunity to comment on the criteria before they are made final.