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CMS Issues Final Rule on Prior Determination of Medical Necessity

 

Email Alert

February 25, 2008
By Claire Miley*

On February 22, 2008, the Centers for Medicare & Medicaid Services (CMS) issued a Final Rule establishing a process for Medicare contractors to provide physicians and beneficiaries with a prior determination of coverage related to medical necessity for certain physicians' services before the services are furnished. The rule is intended to afford the physician and beneficiary the opportunity to know the financial liability for a service before expenses are incurred. The rule is effective March 24, 2008.

Among other changes, the final rule:

  • Provides for the establishment of procedures in CMS manual instructions to allow requests to Medicare contractors for prior determinations of medical necessity for certain CMS-identified services;
  • Identifies the services for which prior determinations can be made as the following national lists to be provided by CMS (and to be updated annually as part of the Medicare Physician Fee Schedule (MPFS)): (i) the most expensive physicians' services included in the MPFS that are performed at least 50 times annually; and (ii) those plastic and dental surgeries that may be covered by Medicare and that have an amount of at least $1,000 on the MPFS (not including applicable location adjustments);
  • Permits the Medicare contractor to use a local coverage determination or national coverage determination as explanation of the prior determination for medical necessity (without any further determination by the contractor);
  • Requires the Medicare contractor to issue a written determination within 45 days of receipt of the request; and
  • Requires the determination to be binding on the Medicare contractor in the absence of fraud or misrepresentation of facts presented to the contractor.

*We would like to thank Claire Miley (Bass Berry & Sims PLC, Nashville, TN) for providing this email alert.

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