Emergency Justification

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DEPARTMENT OF HEALTH & HUMAN SERVICES

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Centers for Medicare & Medicaid Services

Administrator
Washington, DC 20201

MAR 14 2014
TO:

FROM:

SUBJECT:

Howard Shelanski
Administrator, OIRA
Marilyn Tavenn~./'-'...,._"'K:
Administrator
Request for Emergency Clearance of the Paperwork Reduction Act Package for
Medicare Fee-for-Service Recovery Audit Prepayment Review Demonstration
and Prior Authorization Demonstration

The Centers for Medicare & Medicaid Services (CMS) is requesting that a Paperwork Reduction
Act (PRA) information collection request (ICR) for the Medicare Fee-for-Service Recovery
Audit Prepayment Review Demonstration and Prior Authorization Demonstration be processed
under the emergency clearance process associated with 5CFR 1320.13(a)(2)(i) and 5CFR
1320.13(a)(2)(ii). This request relates only to the Prior Authorization of Power Mobility Device
(PMD) Demonstration. The approval of this data collection process is essential to prevent
improper payments for PMDs that do not meet Medicare coverage requirements. The CMS
believes that this demonstration prevents public harm by protecting the Medicare Trust Fund
from improper payments made for PMDs that do not comply with Medicare policy and by
ensuring that a beneficiary's medical condition warrants the medical equipment ordered.
Reductions in improper payments will help ensure the sustainability of the Medicare Trust Fund
and protect beneficiaries who depend upon the Medicare program. In absence of this expanded
demonstration, a significant number of claims will not be reviewed to ensure compliance with
§ 1862(a)(l )(A) of the Act which provides that Medicare may only make payment for services
which are reasonable and necessary for the diagnosis or treatment of illness or injury or to
improve the functioning of a malf01med body member.
Project Background

On September 1, 2012 the CMS implemented a prior authorization process for PMDs (scooters
and power wheelchairs) in seven states with high populations of fraud- and error-prone providers
(CA, IL, MI, NY, NC, FL and TX). Initial data indicates that the Prior Authorization
Demonstration has had an unanticipated effect and was more successful in reducing spending
and improper payments for PMDs than originally estimated. The CMS believes the recent
decrease in overall spending is due in part to national Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) suppliers adjusting their billing practices and reflects
suppliers complying with CMS policies based on their experiences with prior authorization in the
demonstration states. Prior authorization is driving initial successes, ensuring that only
beneficiaries who meet Medicare requirements receive a PMD. Suppliers have also increased
compliance with CMS policies based on their experiences with prior authorization in the
demonstration states.

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The Durable Medical Equipment industry feedback has been positive thus far. Several suppliers
have suggested prior authorization helps their business operations by providing a more
predictable cash flow and reduced burden. These suppliers have expressed support for the
demonstration and would like it to be expanded to other states and items. Feedback from
beneficiaries has been largely positive.
Based on the demonstration's initial success in reducing spending and improper payments, and
the support received by various stakeholders, CMS seeks to expand the current demonstration to
12 additional states, for a total of 19 states, with all demonstration requirements remaining the
same. Those states include: Pennsylvania, Ohio, Louisiana, Missouri, Maryland, New Jersey,
Indiana, Kentucky, Georgia, Tennessee, Washington, and Arizona.
This expansion would allow CMS the flexibility to further implement prior authorization under
an existing framework that is known to many of the national suppliers of PMDs and to collect
additional data and results under this demonstration. The CMS cannot expand the demonstration
to additional states without the PRA approval. However the standard PRA approval timeframe
would not allow for sufficient data to be collected in the new states as the demonstration is
scheduled to end on August 31, 2015 .
Burden Impact of Expanding the Demonstration

The Office ofManagement and Budget (OMB) approved the ICR entitled the "Medicare Feefor-Service Recovery Audit Prepayment Review Demonstration and Prior Authorization
Demonstration" with the control number 0938 -1169 on July 23 , 2012. The program has been
more efficient than initially expected. The volume of actual submissions and therefore the
burden, are much lower than originally estimated. In our initial ICR we estimated 325,000 prior
authorization requests per year would be submitted. Based on actual results CMS has revised the
estimate associated with the original seven states downward to 130,000 annually. The CMS
anticipates at its height the burden associated with the new states to be 49,000 annually. The
total burden is estimated at 179,000 cases per year for the original and the expanded states. Our
burden estimate for the remainder of the demonstration has been adjusted to reflect the actual
submission data and the burden for the additional states proposed in the expansion.
Expanding the demonstration allows CMS to leverage the resources already used on
provider/supplier/beneficiary education, operational preparations, as well as staffing and training
at the four Durable Medical Equipment Medicare Administrative Contractors (DME MACs).
For the impacted states the use of prior authorization has decreased the amount of pre and post
payment reviews of PMD claims. This has also equated to a decrease in appeals of PMD claims.
The CMS expects this to continue in the expansion, which reduces supplier burden and CMS and
supplier administrative expenses.
Proposed Timeline:

The CMS also submitted the Demonstration Package to expand the existing demonstration to
Office of Management and Budget for approval. It is imperative that the Demonstration Package
and the ICR move closely together so that the approval for ~he expansion of the existing
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demonstration and the PRA approval are received in a manner such that the expansion start date
can be announced. Since CMS will need the approval ofboth the ICR and the Demonstration
Package to operate the demonstration, both approvals must be received for CMS to continue.
March 6, 2014
• Submit ICR to OSORA
March 17, 2014
• Target publication date for the Emergency FR notice
• Start of 14-day public comment period
• ICR submitted to OMB
• Start of informal OMB review period
March 30 2014
• End of 14-day public comment period
March 31, 2014
• Start of formal OMB review period.
June 2, 2014
• Requested OMB approval date.
We request your support in reviewing our amendment to the rate review reporting requirements
under the emergency PRA procedures. If you have any questions, please contact Dan Schwartz,
Division ofMedical Review and Education at (410) 786-4197.

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