CMS-484_Supporting_Statement_Part_A

Supporting Statement for Paperwork Reduction Act Submission
Certificate of Medical Necessity- CMS 484 Oxygen and Supporting Documentation
Requirements
A.

BACKGROUND

Medicare serves over 43 million beneficiaries and processes over 950 million claims per year. As
of January 2012, Medicare has 11 Medicare Administrative Contractors (MACs) to process Part
A and Part B claims and four (4) durable medical equipment contractors. Using past experience
and listening to the needs of Medicare providers, suppliers, and beneficiaries, Centers for
Medicare & Medicaid Services (CMS) (formerly known as HCFA) identified problems
associated with processing claims for oxygen and oxygen equipment. Those same sources have
helped to provide successful solutions.
In 1991, we began looking at the way we process claims for durable medical equipment,
prosthetics, orthotics and supplies. In consultation with our customers and our partners, we
heard that we needed to focus more on customer service, to establish more uniform requirements
for claims submission and adjudication, and to do a better job of preventing improper payments.
Prior to 1993, suppliers of Durable Medical Equipment Prosthetics, Orthotics and Supplies
(DMEPOS) submitted their claims to one of 33 different carriers for processing and payment.
The biggest portion of these carriers' workload was physician submitted claims and this is where
their efforts were concentrated. DMEPOS suppliers and beneficiaries often complained of slow
claims payment and poor service on their inquiries. Carrier coverage policies for these items
were not consistent and often varied considerably among carriers across the country. National
supplier chains submitted claims to several carriers, often with differing results. In a number of
instances suppliers sought out the carriers with the least restrictive coverage policies (carrier
shopping) and submitted their claims there. Electronic claims submission requirements differed
between carriers, requiring suppliers to submit their claims in different formats. In addition,
CMS had no single focus to accumulate and analyze claims information for program
management.
In partnership with suppliers, providers, and Medicare beneficiaries, CMS sought to design
solutions through consistent administrative actions to utilize current technology while reengineering the processes then in place. For example, to achieve more sophisticated and uniform
coverage policy, to improve claims processing and to help prevent fraud and abuse, we
concluded that we should concentrate all processing for equipment and supplies in a small
number of specialized contractors. We believe that the use of a few administrative contractors
would greatly reduce the variance in coverage policy and utilization parameters among
contactors. Greater efficiency would be achieved because each contractor would have a trained
pool of experienced
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personnel who would be able to handle DMEPOS claims more effectively and process claims
more quickly and accurately.
In March 2008, CMS consolidated processing DMEPOS claims at four MACs. This
consolidation also allowed for standardized submission of electronic claims. All suppliers were
now able to use a single format to submit their claims to Medicare. This was a major redesign of
the previous process that had well over 30 different electronic formats, a major deterrent to
electronic billing.
Through these four Durable Medical Equipment (DME) MACs, we have achieved greater
efficiency not only in the processing of claims but in the development and application of
coverage policy and medical review. Each of the four DME MACs review Certificates of
Medical Necessity (CMNs). Suppliers submit for items that present an increased risk to the
Medicare program. The CMNs are consistent among the DME MACs and suppliers are familiar
with both the forms and the submission process. Currently, CMS form number 484 has a unique
OMB control number (0938-0534).
Through such action, CMS has been able to ensure more appropriate and consistent payment of
DMEPOS claims nationwide. The data has shown savings due to lower administrative costs and
cost-effective pre-screening edits. By consolidating our operations, utilizing knowledgeable
personnel and using cost effective technology we have created a more efficient and manageable
claims processing system that better serves Medicare beneficiaries, providers and suppliers.
We learned that our customers have expectations and are a valuable resource when identifying
areas where an organization needs improvement. By taking actions to meet those expectations
current processes are improved and CMS discovered new and different perspectives on old
systems. We look forward to continuing these newly practiced skills in the future.
The CMS has been involved in a series of continuing meetings with the OMB in regards to the
status of these forms. In addition, CMS contracted to evaluate the overall efficiency and
effectiveness of individual CMNs.

B. JUSTIFICATION
1. Need and Legal Basis
Under Section 1862(a)(1)(A) of the Social Security Act (the Act), 42 U.S.C. §1395y(a), the
Secretary may only pay for items and services that are “reasonable and necessary for the
diagnosis or treatment of illness or injury or to improve the functioning of a malformed body
member.” In order to assure this, CMS and its contractors develop Medical policies that specify
the circumstances under which an item or service can be covered. The CMN provides a
mechanism for suppliers of Durable Medical Equipment, defined in 42 U.S.C. §1395x (n), and
Medical Equipment and Supplies defined in 42 U.S.C. §1395j(5), to demonstrate that the item
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being provided meets the criteria for Medicare coverage.
Section 1833(e), 42 U.S.C. §1395l(e), provides that no payment can be made to any provider of
services, or other person, unless that person has furnished the information necessary for Medicare
or its contractor to determine the amounts due to be paid. Certain individuals can use a CMN to
furnish this information, rather than having to produce large quantities of medical records for
every claim they submit for payment.
Under Section 1834(j)(2) of the Act, 42 U.S.C. §1395m(j)(2), suppliers of DME items are
prohibited from providing medical information to physicians when a CMN is being completed to
document medical necessity. The physician who orders the item is responsible for providing the
information necessary to demonstrate that the item provided is reasonable and necessary and the
supplier shall also list on the CMN the fee schedule amount and the suppliers charge for the
medical equipment or supplies being furnished prior to distribution of such certificate to the
physician. Any supplier of medical equipment who knowingly and willfully distributes a CMN
in violation of this restriction is subject to penalties, including civil money penalties (42 U.S.C.
§1395m(j)(2)(A)(iii)).
Under Section 42 Code of Federal Regulations §410.38 and §424.5, Medicare has the legal
authority to collect sufficient information to determine payment for oxygen, and oxygen
equipment.
Oxygen and oxygen equipment is by far the largest single total charge of all items paid under
durable medical equipment coverage authority. Detailed criteria concerning coverage of home
oxygen therapy are found in Medicare Carriers Manual Chapter II-Coverage Issues Appendix,
Section 60-4.
For Medicare to consider any item for coverage and payment, the information submitted by the
supplier (e.g., claims and CMNs), including documentation in the patient’s medical records must
corroborate that the patient meets Medicare coverage criteria. The patient’s medical records may
include: physician’s office records; hospital records; nursing home records; home health agency
records; records from other healthcare professionals or test reports. This documentation must be
available to the DME MACs upon request.
2.

Information Users

The CMN collects information required to help determine the medical necessity of certain items.
CMS requires CMNs where items may present a vulnerability to the Medicare program. Each
claim for these items must have an associated CMN for the beneficiary. Suppliers (those who
bill for the items) complete the administrative information (e.g., patient's name and address,
items ordered, etc.) on each CMN. The 1994 Amendments to the Social Security Act require that
the supplier also provide a narrative description of the items ordered and all related accessories,
their charge for each of these items, and the Medicare fee schedule allowance (where applicable).
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The supplier then sends the CMN to the treating physician or other clinicians (e.g., physician
assistant, LPN, etc.) who completes questions pertaining to the beneficiary's medical condition
and signs the CMN. The physician or other clinician returns the CMN to the supplier who has
the option to maintain a copy and then submits the CMN (paper or electronic) to CMS, along
with a claim for reimbursement.
In order to determine if a beneficiary needs home oxygen therapy, a qualifying blood gas study
must be performed and it must comply with the DME MACs Oxygen Medical Policy on the
standards for conducting the test and also be covered under Medicare Part B. A beneficiary must
be seen and evaluated by the treating physician within specific timeframes as indicated by the
Oxygen Medical Policy in order to complete an Initial CMN Certification, a Recertification
CMN and a Revised CMN Certification.
3.

Improved Information Techniques

Collection of this information involves the use of automated, electronic, mechanical or other
technology. The use of standard forms facilitates review by CMS. Additionally, the standard
form defines necessary documentation and information clearly -- eliminating the possibility of
submitting unnecessary documentation, such forms make suppliers more efficient. Further, the
suppliers can submit the CMNs to the DME MACs in electronic format.
4.

Duplication and Similar Information

The required medical information is not available outside the individual beneficiary’s medical
chart/file kept by the physician. The CMN collects certain pieces of information regarding the
patient, their condition, and the item of DME without having to individually request and review
medical records for each claim.
The DME MACs use the patient’s name, address and Health Insurance Claim Number, though
collected on the claim, to “match” a claim to a CMN.
Further, the law specifies that suppliers list charge information and the Medicare fee schedule
amount (where applicable) on the CMN “prior to distribution of the CMN to the physician.”

5.

Small Business

These forms will affect small businesses; however, these businesses have created, completed and
processed CMNs DME MACs were created since the. CMS, in order to lessen the burden on
these small businesses, has provided free software to facilitate electronic billing. Further, we
provide training throughout the country on how to file both claims and the associated CMNs.
These standardized forms will only collect pertinent information to make a medical necessity
determination. Without the forms, small businesses would be required to submit more
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individualized documentation to support their claims.
6.

Less Frequent Collections

As discussed in item #1 above, CMNs are used by Medicare and its contractors to help verify that
items and services provided are reasonable and necessary, as required by Section 1862(a)(1)(A)
of the Act, 42 U.S.C. §1395y(a)(1)(A). CMNs have provided suppliers a means of furnishing
information to the DME MACs without having to produce large quantities of medical records.
Without use of these forms, a substantial increased burden would occur for CMS as well as for
certain providers and suppliers.
7.

Special Circumstances

More often than quarterly
Last year, the DME MACs DMERCs processed approximately 21 million claims for oxygen for
approximately 4 million beneficiaries. There were approximately 8,880 unique supplier numbers
with a submitted charge for oxygen. The CMN currently in place has provided protection to the
Trust Fund by ensuring only reasonable and necessary claims are paid. Additionally, the CMNs
actually cut the paper work burden associated with filing a Medicare claim by allowing the
supplier to submit just this one form.
8.

Federal Register Notice/Outside Consultation

The 60-day Federal Register notice published on August 10, 2012.
Since March, 1994, the American Medical Association, Practicing Physicians’ Advisory Council,
National Association of Medical Equipment Suppliers, Health Industry Distributors Association,
and several other national and local supplier organizations (e.g. National Association For
Medical Direction of Respiratory Care) expressed concerns that the existing CMNs were not
user-friendly, and were burdensome. In order to accommodate the suggestions of some of the
national supplier organizations, CMS and its contractors developed a revised CMN that is clearer
and easier to complete. The current version took effect on August, 01, 1996 and all suppliers of
durable medical equipment and supplies continue to use this version.
In 2004, there were several CMN process studies and workgroups that reviewed the oxygen
CMN with the DME MACs and CMS. These studies were aimed to gather information on the
contents of the CMNs and determine if they are consistent with current medical practices,
Medicare, and DMERC guidelines. The CMN process was also looked at to see how it could be
improved. As a result, the DME MACs and CMS collaborated to help revise individual
questions. Comments were considered as we revised this CMN. This new oxygen CMN captures
the current approach to determining coverage, and encourages thoughtful consideration of all
treatments and dialogue between physicians, beneficiaries and suppliers
9. Payment/Gift to Respondents
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No payment or gifts will be provided to respondents.
10. Confidentiality
There is no privacy concerns associated with this request.
11. Sensitive Questions
There are no questions of a sensitive nature associated with this request.
12. Burden Estimate
CMS estimates the total annual hour burden for completing the CMN form is 308,271 hours.
The estimate of annual hour burden is based on the 8,880 respondents as identified on Form 83
Part II. CMS estimated that respondents could complete the form in 12 minutes. We estimate
that suppliers will submit 1,541,359.000 of this CMN form each year. This requirement has and
will continue to be a cost of doing business with Medicare. The DME MAC can receive a CMN
electronically. Billers obtain electronic software free of charge to promote electronic billing.
CMS feels strongly that if the CMNs were not in place, the expense to the government would
increase dramatically through substantial increases in medical review activities both in staffing
and full scale claim development.
The total burden associated with this collection 308,271 hours.
Cost to Respondents
Respondent Cost
Cost to the respondents is as follows: $12.86 per hour times 10 minutes for clerical work (it
should take the clerk no more than 10 minutes per CMN to fill out the information on the form)
and a maximum of 2 minutes for the physician. The clerical cost is $12.86 divided by 6 or $2.14
per CMN. It should take the physician no longer than 1 to 2 minutes to complete, review and
sign the form. If the physician’s time is valued at $85 per hour, 1 to 2 minutes is worth $1.42 to
$2.84. The total cost per CMN is 2.14 + 1.42 = $3.56 or 2.14 + 2.84 = $4.98 at the most.
Adding copying, postage, and other administrative costs, we estimate the total cost per CMN
between $5.25 - $8.75.

13. Capital Costs
There are no capital costs, as the electronic software is provided free.
14. Cost to Federal Government

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Contractor data entry clerks require approximately 1 minute for entry of the CMN information.
Their average annual salary in 2008 is $26,750. Their hourly wage is $12.86 (26,750 divided by
2080 hours). To handle the 1,541,359,000 million CMNs costs approximately $ 330,365
annually. Other than the initial infrastructure and front-end software for electronic claims, the
federal cost for the average electronic claim would be much cheaper than for paper processing.
15. Changes in Burden
The decrease in claims is due to the number of Medicare beneficiaries requiring oxygen and the
implementation of the DMEPOS Competitive Acquisition Program. As a result, the burden to
suppliers will decrease.

16. Publication/Tabulation
There are no plans to publish or tabulate the information collected.

17. Expiration Date
We are seeking approval to not display the expiration date. These forms are used on a continuous
basis; to include an expiration date could result in the needless destruction of many forms.

18. Certification Statement
There are no exceptions to the certification statement. This collection of information complies
with 5 CFR 1220.9

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