Supporting Statement - Part A DMEPOS PA revised YC

Supporting Statement – Part A
Regulation 6050-P: Prior Authorization Process for Certain Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Items
(CMS-10524; OMB-0938-1293)
General Instructions
A. Background
The CMS has had longstanding concerns about the improper payments related to DMEPOS
items. The Department of Health and Human Services’ Office of the Inspector General and
the U.S. Government Accountability Office have published multiple reports indicating
questionable billing practices by suppliers, inappropriate Medicare payments, and
questionable utilization of DMEPOS items. The fiscal year (FY) 2017 Medicare FFS program
improper payment rate for the Durable Medical Equipment, Prosthetics, Orthotics, and
Supplies (DMEPOS) was 44.6%, accounting for over $3.7 billion in projected improper
payments. The CMS has implemented several initiatives in recent years to address these
issues, such as the DMEPOS Competitive Bidding Program, as well as heightened screening
of suppliers, as authorized by the Affordable Care Act.
In addition to those actions, CMS is continuing the use of prior authorization in fee for
service Medicare. Prior authorization is a process through which a request for provisional
affirmation of coverage is submitted for review before an item is rendered to a Medicare
patient and before a claim is submitted for payment. Prior authorization helps make sure that
applicable Medicare coverage, payment, and coding rules are met before item(s) are rendered.
Prior to furnishing the item to the beneficiary and prior to submitting the claim for processing,
a requester must submit a prior authorization request that includes evidence that the item
complies with all applicable Medicare coverage, coding, and payment rules. Consistent with
§ 414.234(d), such evidence must include the order, relevant information from the
beneficiary's medical record, and relevant supplier-produced documentation. After receipt of
all applicable required Medicare documentation, CMS or one of its review contractors will
conduct a medical review and communicate a decision that provisionally affirms or nonaffirms the request. A provisional affirmative decision is a preliminary finding that a future
claim submitted to Medicare for the DMEPOS item likely meets Medicare’s coverage,
coding, and payment requirements. Suppliers who receive a non-affirmative decision have
unlimited resubmission opportunities.
The prior authorization demonstration for power mobility devices (PMDs) began in 2012 in 7
states with high incidences of fraudulent claims and improper payments. In 2014, the
demonstration was expanded to 12 additional states. The demonstration was extended in July
2015 and ended on August 31, 2018 for all 19 states.
Based on claims processed as of March 30, 2017, monthly expenditures for the PMD codes
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included in the demonstration decreased from $12 million in September 2012 to $2.2 million
in September 2016 in the original seven demonstration states, $10 million in September 2012
to $1.7 million in September 2016 in the 12 additional expansion states, and $10 million in
September 2012 to $2.2 million in September 2016 in the non-demonstration states.
In addition, on December 30, 2015, CMS promulgated final rule (80 FR 81674) titled
“Medicare Program; Prior Authorization Process for Certain Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies,” which establishes a Master List of certain DMEPOS
that the Secretary determined, on the basis of prior payment experience, are frequently subject
to unnecessary utilization and by establishing a prior authorization process for these items. On
December 21, 2016 CMS announced the selection of two items of durable medical equipment
to be subject to required prior authorization in 4 states beginning on March 20, 2017. In July
2017 CMS began requiring prior authorization nationwide for those items. CMS added the
addition of 31 Healthcare Common Procedure Coding System (HCPCS) codes to the
Required Prior Authorization List nationwide on September 1, 2018.
B. Justification
1.

Need and Legal Basis
Section 1834(a)(15) of the Social Security Act (the Act) authorizes the Secretary to develop
and periodically update a list of DMEPOS that the Secretary determines, on the basis of prior
payment experience, are frequently subject to unnecessary utilization and to develop a prior
authorization process for these items. Pursuant to this authority, CMS published final rule
6050-F titled “Medicare Program; Prior Authorization Process for Certain Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies.”
The Secretary’s authority to request information supporting the prior authorization request was
created by Section 1833(e) which states, in part, “no payment shall be made to any provider...
unless there has been furnished such information as may be necessary in order to determine the
amounts due such provider."
The Department of Health and Human Services’ Office of the Inspector General and the U.S.
Government Accountability Office have published multiple reports indicating questionable
billing practices by suppliers, inappropriate Medicare payments, and questionable utilization
of DMEPOS items. The fiscal year (FY) 2017 Medicare FFS program improper payment rate
for the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) was
44.6%, accounting for over $3.7 billion in projected improper payments.
Payment made when the item does not meet Medicare policy is an improper payment. It is
important to keep in mind that all fraud is considered to be improper payment, but not all
improper payments are fraud. Prior authorization is a tool utilized by private sector health care
payers to prevent unnecessary utilization. CMS’s prior authorization demonstration for power
mobility devices has shown that prior authorization effectively prevents unnecessary
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utilization for Medicare as well. Consequently, we believe prior authorization for items on the
Required Prior Authorization List, a subset of the Master List, will prevent or reduce improper
payments for those items as well.
2.

Information Users
Information generated by the requirements of 1834(a)(5) is requested of the entity submitting
the prior authorization request and sent to Medicare contractors in advance of the claim
submission for processing. No new information or documentation requirements are created
by this rule. Rather, the point at which the information is requested is earlier in the process.

3.

Use of Information Technology
Automated, electronic, or other forms of information technology may be used at the
discretion of the prior authorization submitter. CMS and its contractors are required to be
compliant with all Electronic Health Record transmissions.
CMS offers electronic submission of medical documents (esMD) to many providers and
suppliers who wish to explore this alternative for sending in medical documents. Additional
information on esMD can be found at www.cms.gov/esMD.

4.

Duplication and Similar Information
CMS published final rule 6050-F that requires prior authorization under the Medicare fee-forservice program for the list of items on the Required Prior Authorization List, a subset of the
Master List. There are no new or duplicative documentation requirements created by this
regulation.

5.

Small Businesses
This collection will impact small businesses or other entities to the extent that those small
businesses order and bill Medicare for DMEPOS items on the Required Prior Authorization
List. The retention and submission of required information by suppliers and physicians are
routine business practices. We do not have the number of small business that will be impacted.
This collection will only impact small business and all respondents in that they must work with
providers to obtain the necessary medical documentation to support their claims.

6.

Less Frequent Collection
Since this information is only collected when potential program vulnerability exists, less
frequent collections of this information would be imprudent. CMS and its agents continue to
refine their tools for identifying improper billing practices.

7.

Special Circumstances

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More often than quarterly - This information is collected on an as-needed basis.
That is, information is requested only when an entity submits a request for prior
authorization for an eligible item. CMS published final rule 6050-F, which created
a prior authorization program for eligible DMEPOS items. The program is
continuous. Improper Medicare payments caused by overutilization may increase if
not mitigated by the requirement for prior authorization.
More than original and two copies - There is no requirement to submit more than
1 copy of the requested documentation.
Retain records more than three years - This estimate does not impose any new or
additional record retention requirements beyond those requirements currently in
place. Providers and suppliers are reminded that Medicare claims can be reopened
for review at any time where fraud or improper payment is suspected, or within 4
years of an initial determination for good cause or within 1 year for any reason.
Conjunction with a statistical survey - This information collection is not
associated with a statistical survey.
Use of statistical data classification - This collection does not require a
statistical data classification.
Pledge of confidentiality - This collection does not require a pledge of
confidentiality.
Confidential Information - The Health Insurance Portability and Accountability
Act (HIPAA) Privacy Rule allows for the disclosure of health records for payment
purposes. Medicare contractors are required to have procedures in place to ensure
the protection of the health information provided.
8.

Federal Register/Outside Consultation
The 60-day Federal Notice was published in
the Federal Register on 10/23/2018.
No comments were received

The 30-day Federal Notice was published in
the Federal Register on XXX.
No additional outside consultation was
sought.
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9.

Payments/Gifts to Respondents
No payments or gifts will be given to respondents to encourage their response to
any request for information under this control number.

10. Confidentiality
Medicare contractors will safeguard all protected health information collected in
accordance with HIPAA and Privacy Act standards as applicable. Medicare
contractors have procedures in
place to ensure the protection of the health information provided. The Health Insurance
Portability and Accountability Act (HIPAA) Privacy Rule allows for the disclosure of
health records for payment purposes.
11. Sensitive Questions
There are no questions of a sensitive nature associated with this information
collection.
12. Burden Estimates (Hours & Wages)
The burden associated with this demonstration is the time and effort necessary for
the submitter to locate and obtain the supporting documentation for prior
authorization request and to forward the materials to the MAC for review. CMS
expects that this information will generally be maintained by providers as a normal
course of business and that this information will be readily available. The
documentation submitted must support medical necessity for the diagnosis or
treatment of illness or injury or to improve the functioning of a malformed body
member, Medicare benefit eligibility, and meet all other applicable Medicare
statutory and regulatory requirements.
The process of submitting a prior authorization request for an expedited review is
the same as for a standard review. The unit cost for CMS performing an expedited
review is the same as for a standard review; however it is possible that a larger
workforce requires to perform reviews within the established timeframes if many
expedited requests are received. We believe most items on the Master List are not
generally used in emergent situations, so we expect the use of expedited reviews to
be relatively rare.
Providers have a number of methods to submit documentation quickly including
fax, electronic portals, and esMD, so provider burden should not be affected by the
method of submission. CMS anticipates clerical staff will collect the information
from the medical record and prepare it to be submitted for review. CMS estimates
that the average time for office clerical activities associated with this task to be 30
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minutes. Average labor costs (including 100 percent fringe benefits) used to
estimate the costs are calculated using data available from the Bureau of Labor
Statistics. Based on Bureau of Labor Statistics here all occupations/Miscellaneous
Health care support occupations, information we estimate an average hourly rate of
$16.00 with a loaded rate of $32.00.
We based the estimated number of responses for Year One on the number of
beneficiaries who were billed for one of the following items on the Master List in
2017: power mobility devices, support surfaces, negative pressure wound therapy
device, or respiratory assist device, which was 276,985. We assume that 95% of
suppliers will submit an initial prior authorization request for these items
(263,135.75). We assume that 20% of this subset (52,627) will receive a nonaffirmative decision and submit a resubmitted request, 10% of this subset (10,525)
will receive a non-affirmative decision and submit a second resubmitted request, and
another 10% of this subset (2,105) will receive a non-affirmative decision and
submit a third resubmitted request. The total number of submissions for year one is
321,551, which includes the total number of initial prior authorization request
submissions plus resubmission(s), as described above.
Suppliers may use electronic submission of medical documentation (esMD) as
an alternative to mail or fax for sending in medical documents. Additional
information on esMD can be found here. The MACs may also offer electronic
portals for suppliers to submit their documentation. The total esMD utilization
rate was 21.5%, with 1% mail, and 77.5% fax submissions. We estimate the
cost of mailing medical records to be $5 per request for prior authorization. The
total mailing cost for year one is estimated to be $16,075. The total estimated
burden for year one was $5,160,896.76, which includes the time associated
with submitting the prior authorization requests plus the cost of mailing.

Prior Authorization Process for Certain Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS) Items – Year One

Activity

DMEPOS
- Fax and
Electronic
Submitted
Requests

Responses Per Year
(number of prior
authorization
requests submitted)

Time Per
Response
(hours) or Dollar
Cost

Total Burden Per
Year (hours)

Total Burden
Costs Per
Year Using
Loaded Rate

Initial Submissions
- 260,504

0.5

130,252

$4,168,064

Resubmissions 57,832

0.5

28,916

$925,312

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DMEPOS
- Mail
Requests

Initial Submissions
– 2,631
Resubmissions 584

Mail Costs Total Submissions 3,215
DMEPOS
Total

321,551

0.5

1,315.68

$42,101.76

0.5

292

$9,344

$5

n/a

$16,075

n/a

160,775.68

$5,160,896.76

We assume that in year two and three we will begin prior authorization on additional
items from the Master List, such as lower limb prosthetics. Using the same
assumptions as above regarding initial submissions and resubmission, we estimate
the total burden in Years Two and Three to be $10,738,698.

Prior Authorization Process for Certain Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS) Items – Year Two
& Three
Activity

Responses Per
Year (number of
prior
authorization
requests)

Time Per
Response (hours)
or Dollar Cost

Total Burden Per
Year (hours)

Total Burden
Costs per year
using loaded
rate

0.5

132,478

$4,239,296

0.5

33,119

$1,059,808

0.5

1,338

$42,816

0.5

334.5

$10,704

$5

n/a

$16,725

n/a

167,270

$5,369,349

DMEPOS - Fax Submissions and Electronic 264,956
Submitted
Requests
Resubmissions 66,239
Submissions DMEPOS 2,676
Mail Requests Resubmissions 669
Total
Mail Costs
Submissions 3,345
DMEPOS Total
per Year

334,540

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Total Response
per Years Two
and Three

669,080

n/a

334,540

$10,738,698

Annual Total
Burden
Year One
$5,160,896.76

Year Two
$5,369,349

Year Three
$5,369,349

13. Capital Costs
There are no capital costs associated with this collection. Providers and suppliers
maintain these medical records and routinely submit them to various healthcare
entities.
14. Cost to Federal Government

Consistent with Sections 1833(e), 1842(a)(2)(B), and 1862(a)(1) of the Social
Security Act, the Centers for Medicare & Medicaid Services (CMS) is required to
protect the Medicare Trust Fund against inappropriate payments and take corrective
actions. To meet this requirement CMS contracts with Part A and Part B Medicare
Administrative Contractors (A/B MACs), Durable Medical Equipment Medicare
Administrative Contractors (DME MACs) and others to perform analysis of fee-forservice (FFS) claim data to identify atypical billing patterns and perform medical
review. These entities are referred to Medicare Contractors. Medical review is the
collection of information and clinical review of medical records by Medicare
Contractors to ensure that payment is made only for services that meet all Medicare
coverage, coding, and medical necessity requirements. MACs also review the prior
authorization requests when making prior authorization determinations.
The cost for DME MAC to review the number of prior authorization requests as
described above, as well as CMS program oversight is $ 16,795,746 for year one
and $17,458,975 per year for years two and three. CMS estimates that the costs
associated with performing review and CMS oversight for DMEPOS under the
revised demonstration would be approximately $51,713,696 over the 3-year
demonstration period.
15. Changes to Burden
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This is a revised collection. The overall average burden has increased from
$1,575,000 to
$5,299,865. The previous FY 2015 estimate was completed as a proposed rule and
the Master List had not been finalized. The average burden estimate was 157,500
cases per year in years one through three. It was projected that the average cost per
year in years one through three was $1,575,000. CMS began prior authorization as a
condition of payment in December 2016. At the conclusion of the Prior
Authorization Demonstration for Power Mobility Devices (PMDs), CMS added the
majority of those codes to the Required Prior Authorization List. These items were
included under a separate information collection approval – OMB # 0938-1169. The
FY 2019 President’s Budget included an administrative proposal for CMS to expand
prior authorization for DMEPOS and we expect to continue adding additional
DMEPOS items to the Required Prior Authorization List in the coming years.
Actual experience with the Prior Authorization process for Certain DMEPOS items,
coupled with the scheduled end of the Prior Authorization Demonstration for PMDs,
and our expectation that we will continue adding items to the Required Prior
Authorization List result in an increased estimated burden under this collection. Our
estimates are based on the number of beneficiaries who were billed for certain items
on the Master List in 2017. The average burden estimate is 330,210 cases per year in
years one through three. The average projected cost per year in years one through
three is $5,299,865.
16. Publication/Tabulation Dates
There are no plans to publish or tabulate the information collected.
17. Expiration Date
There is no collection data instrument used in the collection of this information.
However, upon receiving OMB approval, CMS will publish a notice in the Federal
Register to inform the public of both the approval as well as the expiration date.
18. Certification Statement
There are no exceptions to the certification statements.

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