HCFA looks at standardizing rules among local carrier networks
One goal: Eliminate differences in reimbursements
There is movement within the Health Care Financing Administration (HCFA) to address two issues that have been causing providers payment heartaches for some time: inconsistent definitions of what are "reasonable and necessary" medical services, and differences between national Medicare and local carrier reimbursement rules.
In fact, agency officials say HCFA probably will publish a notice of intent to create a proposed rule clarifying "reasonable and necessary" this summer. Meanwhile, HCFA is holding internal talks to see if — and how — it could limit the discretion local carriers now have when making coverage decisions. Instead, that local discretion would be replaced with stronger national reimbursement standards. Local carriers now make about 80% to 90% of all Medicare coverage decisions, according to HCFA.
By law, carriers can only approve Medicare payments for services that are medically "reasonable and necessary" for treatment or diagnosis. Carriers are not supposed to make decisions that would expand coverage beyond Medicare’s current benefits or interfere with national coverage decisions.
Local carriers do "pretty good" when making payment calls, says Jeffrey Kang, MD, MPH, HCFA’s chief clinical officer. Even so, he admits it might be "desirable to have criteria that apply at the national and local levels. The trick is to make them have enough flexibility so that legitimate and desirable variations in practice can be recognized."
Before any action is taken to change the present system, the possible consequences must be evaluated carefully, says Gail Wilensky, PhD, chairwoman of the Medicare Payment Advisory Commission.
For instance, because local carriers often approve new procedures and technologies more quickly than the federal government, strict national standards might slow down this process, she says. Plus, she adds, "You have to make sure you don’t just create more bureaucracy," which can create even more problems.
The American Medical Association (AMA), however, complains that carriers sometimes use their authority to deny payments arbitrarily while secretly developing coverage policy without explaining the reasoning behind their actions.
Even though carriers use advisory panels comprising physicians and consumers, many providers feel they are not independent enough. "We want a more public process, not a bunch of people using a dartboard to make decisions," says AMA trustee William G. Plested, MD.
The AMA is pushing for something like the open national coverage decision-making process HCFA established last year with the Medicare Coverage Advisory Committee. It comprises six medical specialty panels organized roughly parallel to Medicare’s benefit categories.
The Medicare Rights Center, a New York City-based beneficiary advocacy group, also supports a more uniform carrier decision-making policy. "The process should be transparent, with carrier guidelines available to consumers and physicians and published on the Internet," says Joe Baker, the center’s executive vice president.
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