Advertisement

Requirements for Medicare Coverage and Reimbursement for Medical Devices

  • Esther R. Scherb
  • Stuart S. Kurlander

Abstract

More device manufacturers are recognizing the importance of considering Medicare coverage and reimbursement principles during the development of their new technologies. By adopting long- and short-term strategies that incorporate these principles, manufacturers can avoid certain foreseeable delays in bringing devices to market. Although the roadmap for demonstrating to the Food and Drug Administration (FDA) the safety and efficacy of a device has been fairly well established, the steps for obtaining third-party payors’ approvals have been less apparent. This chapter highlights Medicare coverage and reimbursement principles and considerations that might be incorporated into a company’s business plan during and after the product development stage.

Keywords

Medicare Payment Coverage Decision Medicare Program Medicare Coverage Payment Amount 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. 1.
    See 42 U.S.C. §§ 1395, et seq. (2005).Google Scholar
  2. 2.
    U.S. Department of Health and Human Services, 2004 CMS Statistics, available at http://www.cms.gov/researchers/pubs/CMSstatistics/2004CMSstat.pdf.
  3. 5.
    42 U.S.C. § 1395x(b) (2005).Google Scholar
  4. 6.
    Id. § 1395x(s)(2)(B).Google Scholar
  5. 7.
    Id. § 1395x(q).Google Scholar
  6. 8.
    Id. § 1395x(s)(3).Google Scholar
  7. 9.
    Id. § 1395x(s)(6).Google Scholar
  8. 10.
    Id. 1395x(s)(9).Google Scholar
  9. 11.
    Id. § 1395 (s)(5).Google Scholar
  10. 12.
    Id. § 1395x(s)(8).Google Scholar
  11. 13.
    Id. § 1395y(a); see also 42 C.F.R. § 411.15 (2004).Google Scholar
  12. 14.
    Dental services may be covered in connection with an inpatient’s underlying medical condition or if hospitalization is required for the procedure. 42 U.S.C. § 1395y(a)(12) (2005).Google Scholar
  13. 15.
    Id. § 1395x(jj).Google Scholar
  14. 16.
    Id. § 1395x(oo).Google Scholar
  15. 17.
    Id. § 1395x(pp).Google Scholar
  16. 18.
    Id. § 1395y(a)(1)(A) (also referred to by the non-codified provision—Section 1862(a)(1)(A) of the Social Security Act) (emphasis added).Google Scholar
  17. 19.
    See, e.g., 54 Fed. Reg. 4302, 4304 (Jan. 30, 1989); 60 Fed. Reg. 48417, 48418 (Sept. 19, 1995).Google Scholar
  18. 20.
    Current literature offers a number of definitions for evidence based medicine. See e.g., D.L. Sackett, et al., Evidenced-Based Medicine: What It Is and What It Isn’t, British Medical Journal, 312: 71–72 (Jan. 13, 1996) (“Evidence-based medicine is the conscientious, explicit and judicious use of current best evidence in making decisions about the care of individual patients. The practice of evidence-based medicine means integrating individual clinical expertise with the best available external clinical evidence from systematic research.”).Google Scholar
  19. 21.
    In 1987 and 1989, CMS (then “HCFA,” the Health Care Financing Administration), first issued proposed regulations on coverage criteria. 52 Fed. Reg. 1557 (April 29, 1987) and 54 Fed. Reg. 5302 (Jan. 30, 1989).Google Scholar
  20. 22.
    See 65 Fed. Reg. 31124 (May 16, 2000).Google Scholar
  21. 23.
    See 42 U.S.C. § 1395y(l)(1) (2005) (added by MMA § 731).Google Scholar
  22. 24.
    Id. § 1395y(l)(5). This provision is effective for local coverage determinations made on or after July 1, 2004.Google Scholar
  23. 25.
    See 68 Fed. Reg. 55634, 55635 (Sept. 26, 2003). The definition for NCD was expanded by Section 522(b) of the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (Pub. L. No. 106-554), which also pro vided for appeal rights to challenge NCDs. See 42 U.S.C. § 1395ff(f)(1)(B) (2005). CMS has interpreted this newly expanded statutory definition to include the decision as to benefit category under which an item or service falls and statutory exclusion determinations. See 67 Fed. Reg. 54534, 54536 (Aug. 22, 2003). The same definition for the development of NCDs has been incorporated under Section 731 of MMA. See 42 U.S.C. § 1395y(l)(6)(A) (2005).Google Scholar
  24. 26.
    68 Fed. Reg. at 55635; 42 C.F.R. §§ 405.732 & 405.860. Under new appeals procedures, NCDs may be challenged by certain beneficiaries who file complaints with the Department of HHS’s Departmental Appeals Board. 68 Fed Reg. 63092 (Nov. 7, 2003). The Board may determine the validity of the NCD under prescribed appeal standards and the Board’s decision is subject to judicial review.Google Scholar
  25. 27.
    See 68 Fed. Reg. at 55636.Google Scholar
  26. 28.
    See id. at 55638.Google Scholar
  27. 29.
  28. 30.
    See 42 U.S.C. § 1395y(l)(4) (2005).Google Scholar
  29. 31.
    See 68 Fed. Reg. at 55640.Google Scholar
  30. 32.
  31. 33.
    42 U.S.C. § 1395y(l)(2) (2005). The nine-month timeframe does not apply to situations where a clinical trial is requested.Google Scholar
  32. 34.
    See id. § 1395y(l)(3)(C)(iv) (2005). The significance of billing codes is discussed below.Google Scholar
  33. 36.
    42 U.S.C. §§ 1395y(l)(6)(B), 1395ff(f)(2)(B) (2005).Google Scholar
  34. 37.
    68 Fed. Reg. 63692, 63693 (Nov. 7, 2003).Google Scholar
  35. 39.
    The decisions are not binding on administrative law judges or the Departmental Appeals Board. In addition, through new appeals procedures, a beneficiary may challenge the facial validity of an LCD by bringing a separate appeal to an administrative law judge. See 68 Fed. Reg. 63692 (Nov. 7, 2003).Google Scholar
  36. 40.
    Also, contractors within the same area are to consult on all new LCDs within the area. See 42 U.S.C. § 1395y(l)(5)(B) (2005); see also supra note 24.Google Scholar
  37. 41.
    Medicare Benefit Policy Manual, Chapter 14 § 10 (2005).Google Scholar
  38. 42.
    60 Fed. Reg. at 48418.Google Scholar
  39. 43.
    42 C.F.R. § 405.203 (2005); see also 60 Fed. Reg. at 48417.Google Scholar
  40. 44.
    Class III refers to devices that cannot be classified into Class I or Class II because insufficient information exists to determine that either special or general controls would provide reasonable assurance of safety and effectiveness. 42 C.F.R. § 405.201(b) (2005). Class III devices require pre-market approval.Google Scholar
  41. 45.
  42. 46.
  43. 47.
    Medicare Benefit Policy Manual, Chapter 14 § 50 (2005).Google Scholar
  44. 48.
    42 C.F.R. § 405.209 (2005).Google Scholar
  45. 49.
    Medicare National Coverage Determination Manual, Chapter 1, § 310.1 (2005).Google Scholar
  46. 50.
    See 42 U.S.C. § 1395y(m) (2004) (added by MMA §731).Google Scholar
  47. 52.
    The current standard for diagnosis codes includes the ICD-9-CM. See, e.g., 45 C.F.R. §162.1002(a)(l) (2004) (code set adopted under the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), Pub. L. No. 104-191). These codes are also discussed further in the text.Google Scholar
  48. 53.
    See, e.g., Medicare Claims Processing Manual, Chapter 23 § 10.1.2 (2005).Google Scholar
  49. 54.
    See 42 C.F.R. § 405.207 (2005).Google Scholar
  50. 55.
  51. 56.
    See, e.g., 42 U.S.C. § 1395w-4(a)(1) (2005) (physician fee-schedule payments).Google Scholar
  52. 57.
    See 42 C.F.R. § 412.23 (2005).Google Scholar
  53. 58.
    42 U.S.C. § 1395x(v)(1)(A) (2005).Google Scholar
  54. 59.
    See id. § 1395x(v); 42 C.F.R. § 413.9(c)(2) (2005).Google Scholar
  55. 60.
    See 42. U.S.C. § 1395g(e) (2005); 42 C.F.R. §§ 413.60, 413.64 (2005).Google Scholar
  56. 62.
    See 42 U.S.C. § 1395ww(a)(4) (2005); 42 C.F.R. § 412.2(c) (2005).Google Scholar
  57. 63.
    See 42 U.S.C. § 1395ww(g) (2005); 42 C.F.R. § 412.300 (2005).Google Scholar
  58. 64.
    See 42 U.S.C. § 1395ww(d)(3) (2005); 42 C.F.R. § 412.60 (2005).Google Scholar
  59. 65.
    See 69 Fed. Reg. 48915, 48925 & 49592–49611 (Aug. 11, 2005).Google Scholar
  60. 66.
    See 42 U.S.C. § 1395ww(d)(4)(C)(i) (2005).Google Scholar
  61. 67.
    See 42 U.S.C. § 1395ww(d)(4)(B) (2005); 42 C.F.R. § 412.60(b) (2005).Google Scholar
  62. 68.
    See 42 U.S.C. § 1395ww(d)(3)(A)(iv) (2005); 42 C.F.R. § 412.63(c) (2005).Google Scholar
  63. 69.
    See 42 U.S.C. § 1395ww(d)(4)(C)(i) (2005).Google Scholar
  64. 70.
    See id. § 1395ww(b)(3)(B).Google Scholar
  65. 71.
    See 42 U.S.C. § 1395ww(d)(5)(A) (2005); 42 C.F.R. §§ 412.80, 412.84 (2005).Google Scholar
  66. 72.
    See 42 U.S.C. § 1395ww(d)(5)(F)(i)(I), (d)(5)(F)(v) (2005); 42 C.F.R. § 412.106 (2005).Google Scholar
  67. 73.
    See 42 U.S.C. § 1395ww(d)(5)(B) (2004); 42 C.F.R. § 412.105 (2005).Google Scholar
  68. 74.
    See 42 U.S.C. § 1395ww(d)(5)(K)-(L) (2005); 42 C.F.R. §§ 412.87, 412.88 (2005).Google Scholar
  69. 75.
    See 42 U.S.C. § 1395ww(d)(5)(K)(vi) (2005); 42 C.F.R. § 412.87(b)(1) (2005).Google Scholar
  70. 76.
    See 42 U.S.C. § 1395ww(d)(5)(K)(viii) (2005).Google Scholar
  71. 77.
    See id. § 1395ww(d)(5)(K)(ii)(III). The change was made under MMA § 503(d).Google Scholar
  72. 78.
    See 42 U.S.C. § 1395ww(d)(5)(K)(ix) (2005).Google Scholar
  73. 79.
    See 42 U.S.C. 1395l(t) (2005); 42 C.F.R. § 419.21 (2005). Critical access hospitals are exempt from outpatient PPS. See 42 U.S.C. § 1395m(g) (2005); 42 C.F.R. § 413.70(b) (2005).Google Scholar
  74. 80.
    See 42 U.S.C. § 1395l(t)(3)(C) (2005); 42 C.F.R. §§ 419.31, 419.32 (2005).Google Scholar
  75. 81.
    See 42 U.S.C. § 1395l(t)(4)(A) (2005); 42 C.F.R. § 419.31(c)(2) (2005).Google Scholar
  76. 82.
    See 42 U.S.C. § 1395l(t)(3)(C)(iv) (2005); 42 C.F.R. § 419.32(b) (2005).Google Scholar
  77. 83.
    See 42 U.S.C. § 1395l(t)(5) (2005); 42 C.F.R. § 419.43(d) (2005).Google Scholar
  78. 84.
    See 42 U.S.C. § 1395l(t)(6) (2005); 42 C.F.R. §§ 419.64, 419.66 (2005). The additional payments were authorized under section 201(b) of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999, Pub. L. No. 106–113.Google Scholar
  79. 85.
    See 42 U.S.C. § 1395l(t)(6)(A)(i)-(iii) (2005); 42 C.F.R. § 419.64(a)(1-3) (2005).Google Scholar
  80. 86.
    See 42 U.S.C. § 1395l(t)(6)(A)(iv) (2005); 42 C.F.R. §§ 419.64(a)(4) & (b), 419.66 (2005).Google Scholar
  81. 87.
    See 42 U.S.C. § 1395l(t)(6)(B)(iii) (2005); 42 C.F.R. § 419.66(g) (2005).Google Scholar
  82. 88.
    See 42 U.S.C. § 1395l(t)(6)(D)(ii) (2005); 42 C.F.R. § 419.66(h) (2005).Google Scholar
  83. 89.
    See 42 C.F.R. § 419.66(b)(1) (2005).Google Scholar
  84. 90.
    See id. at § 419.66(b)(2).Google Scholar
  85. 91.
    See id. at § 419.66(b)(3).Google Scholar
  86. 92.
    See id. at § 419.66(b)(4).Google Scholar
  87. 93.
    See 42 U.S.C. §1395l(t)(6)(B)(i) (2005).Google Scholar
  88. 94.
    These new bands went into effect in 2005. See 68 Fed. Reg. 63398, 63485-86 (Nov. 7, 2003). CMS narrowed cost bands so that a greater number of APC codes were instituted to more precisely reflect costs.Google Scholar
  89. 95.
    See 42 U.S.C. § 1395w-4 (2005).Google Scholar
  90. 96.
    See id. § 1395w-4(j)(3).Google Scholar
  91. 97.
    See id. § 1395w-4(c).Google Scholar
  92. 98.
    See id. § 1395w-4(c)(1).Google Scholar
  93. 99.
    See id. § 1395w-4(b)(1).Google Scholar
  94. 100.
    See id. § 1395m(a)(1)(A)-(B).Google Scholar
  95. 101.
    See id. § 1395m(a)(2)-(9). Fee-schedule amounts for Alaska, Hawaii, and Puerto Rico are not subject to ceilings and floors. See id. § 1395m(a)(10)(A).Google Scholar
  96. 102.
    See id. § 1395m(a)(14)(F).Google Scholar
  97. 103.
    See id. § 1395m(a)(2)-(9).Google Scholar
  98. 104.
  99. 105.
    See id. § 1395u(b)(8)-(9); 42 C.F.R. § 405.502(g)-(h) (2005).Google Scholar
  100. 106.
    See 42 U.S.C. § 1395w-3 (2005).Google Scholar
  101. 108.
    See 45 C.F.R. § 162.1002 (2005).Google Scholar
  102. 109.
    The AMA holds a copyright to the codes. See http://www.ama-assn.org/ama/pub/category/3882.html.
  103. 110.
  104. 111.
    See 42 U.S.C. § 1395y(l)(3)(C)(iv). In addition, revised procedures are required for the issuance of temporary codes under Medicare Part B. See MMA § 731(c).Google Scholar
  105. 113.
    See 42 U.S.C. § 1395ww(d)(5)(K)(vii) (2005). Procedures for requests for new ICD-9-CM procedures are found at http://www.cms.hhs.gov/paymentsystems/icd9/.

Copyright information

© Humana Press Inc., Totowa, NJ 2006

Authors and Affiliations

  • Esther R. Scherb
    • 1
  • Stuart S. Kurlander
    • 1
  1. 1.Health Care & Life SciencesPractice GroupLatham & Watkins, LLPWashington, DC

Personalised recommendations