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Effective February 20, 2016, CMS has created a prior authorization process for certain identified DMEPOS before they can be approved for Medicare payment. Items subject to prior authorization will be identified on a Master List. According to CMS, there will be no new documentation requirements, but prior authorization will help ensure that applicable coverage, payment, and coding rules are met before equipment or supplies are issued. Data released from CMS, however, raises concerns that this rule creates impediments to beneficiary access to reasonable and necessary DMEPOS.

In supporting prior authorization in the new rule, CMS relies on a prior authorization demonstration program in which monthly expenditures decreased over a three-year time period from $12 million to $3 million in the program’s original seven states, and from $10 million to $2 million in the program’s twelve additional expansion states.[1]

Those are payment decreases of 70% to 80%. CMS indicates that those substantial decreases were possible because prior authorization stops payment for equipment and supplies that are “frequently subject to unnecessary utilization.”[2] Is it possible that a 70% to 80% decrease in payments (translate to a decrease in approval for equipment and supplies) correlates to a similar amount of fraud in the program? If so, that would be a win-win for Medicare and for beneficiaries as CMS should address fraud and only pay legitimate claims. Unfortunately, the rate of fraud is closer to 8% than 80%. According to the Federal Register, “for the 2014 reporting period, 92 percent of the DMEPOS improper payment rate is attributed to insufficient documentation.”[3] Insufficient documentation is often a simple mistake in the process of documenting the need for the equipment or supply: a doctor leaves off a date, or a therapist doesn’t complete a field. These are clerical errors, not fraud. This distortion of the facts by CMS, and the reports issued by the Office of the Inspector General (OIG) and the Government Accountability Office (GAO), concern beneficiary advocates when it comes to implementation of the prior authorization program.

Advice to Beneficiaries:

  • Understand which items will be subject to prior authorization. A subset of the Master List will include items that require prior authorization. Other items on the list, “may” be subject to prior authorization. The initial items are yet to be published.
  • Sufficient documentation is key. Legitimate prior authorization requests will only result in obtaining equipment and supplies when the paperwork is error-free, legible, and complete. Whenever possible have the prior authorization reviewed by multiple people before submitting it.
  • Monitor the maximum prior authorization timeframes established by the rule. 10 business days for initial review, 20 business days for re-submissions. There are unlimited re-submissions, but, unfortunately, no appeal rights.
  • Know that there is a process for an expedited request for prior authorization. Documentation must be submitted with the request that indicates how the life or health of the beneficiary will be seriously jeopardized without an expedited review. How CMS will define “seriously jeopardized” remains to be seen.

Possible Pros and Cons of the Prior Authorization Rule



There are specified review timeframes.

Beneficiaries may see delays in access.

A beneficiary may have greater confidence of coverage before the item is ordered.

The time to review may be doubled for re-review – even for a simple clerical error. There is no appeals process.

Questionable billing practices may be prevented.

Beneficiaries may be dependent upon providers and suppliers to ensure the paperwork is correct.

The system may ultimately be made more efficient for all by encouraging careful and correct legitimate requests for coverage.

What exactly is subject to prior authorization, and what is not, is currently unclear.

CMS plans to issue specific Prior Authorization guidance through sub-regulatory communications. The Center for Medicare Advocacy will monitor these communications and the Prior Authorization program’s implementation.

In the event beneficiaries encounter any challenges or difficulties with the Prior Authorization process, the Center for Medicare Advocacy appreciates being apprised. Please email your comments to

An FAQ regarding this rule is available at:

January 6, 2016 – K. Holt


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