Medicare Coverage Policy ~ Coverage Process
Federal Register Notice
Criteria for Making Coverage
Decisions
[Federal Register: May 16, 2000 (Volume 65, Number 95)]
[Proposed Rules]
[Page 31124-31129]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16my00-26]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 405
[HCFA-3432-NOI]
RIN 0938-AJ31
Medicare Program; Criteria for Making Coverage Decisions
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Notice of intent to publish a proposed rule.
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SUMMARY: On April 27, 1999, we published a notice in the Federal
Register that announced the process we
[[Page 31125]]
use to make national coverage decisions under the Medicare program. We
also announced that we would not be adopting, as final, a 1989 proposed
rule that set forth the criteria we would have used to make coverage
decisions under Medicare. This notice announces our intention to
publish a proposed rule and solicits advance public comments on the
criteria we would use to make certain national coverage decisions and
our contractors would use to make local coverage decisions.
DATES: We will consider comments if we receive them at the appropriate
address, as provided below, no later than 5 p.m. on June 15, 2000.
ADDRESSES: Mail written comments (one original and three copies) to the
following address ONLY: Health Care Financing Administration,
Department of Health and Human Services, Attention: HCFA-3432-NOI, P.O.
Box 8016, Baltimore, MD 21244-8016.
If you prefer, you may deliver, by courier, your written comments
(one original and three copies) to one of the following addresses:
Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
C5-14-03, Central Building, 7500 Security Boulevard, Baltimore, MD
21244-1850.
Comments mailed to those addresses may be delayed and received too
late for us to consider them.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code HCFA-3432-NOI.
Comments received timely will be available for public inspection as
they are received, generally beginning approximately 3 weeks after
publication of a document, in Room 443-G of the Department's offices at
200 Independence Avenue, SW., Washington, DC, on Monday through Friday
of each week from 8:30 a.m. to 5 p.m. (Phone (202) 690-7890).
FOR FURTHER INFORMATION CONTACT: Susan Gleeson, (410) 786-0542.
SUPPLEMENTARY INFORMATION:
Comments, Procedures, Availability of Copies, and Electronic Access
Because of staff and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code HCFA-3432-NOI. Comments received timely will be available
for public inspection as they are received, generally beginning
approximately 3 weeks after publication of a document, in Room 443-G of
the Department's office at 200 Independence Avenue, SW., Washington,
DC, on Monday through Friday of each week from 8:30 to 5 p.m. (phone:
(202) 690-7890).
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Overview
We are issuing this notice to announce our intention to publish a
proposed rule and solicit public comments on the criteria we would use
to make a national coverage decision (NCD) and our contractors would
use to make a local coverage decision (LCD) under section 1862(a)(1) of
the Social Security Act (the Act). These coverage decisions are
prospective, population-based policies that apply to a clinical subset
or class of Medicare beneficiaries and describe the clinical
circumstances and setting under which an item or service is available
(or not available). We are setting out in this notice the information
and approaches we are considering at this time for making coverage
decisions. We are interested in receiving public comments on this
information and we will consider them when we develop the subsequent
proposed rule.
This notice is narrower in scope than the January 30, 1989 proposed
rule announcing the coverage criteria we would have used (54 FR 4302).
We have already announced our process for making an NCD in an April 27,
1999 general notice (64 FR 22619). Also, rulemaking is not necessary
for us to establish or modify the procedures our contractors will use
to make LCDs. This notice only deals with the criteria for making
national and local coverage decisions under the reasonable and
necessary provisions of section 1862(a)(1) of the Act. This notice does
not, and we do not anticipate that the proposed rule will, address
individual medical necessity determinations and claims adjudication by
our contractors and other adjudicators. Finally, this notice does not
address Medicare payment policies and we do not anticipate that the
proposed rule would include changes to our current rules on Medicare
payment.
I. Background
A. Need for Timely and Expanded Medicare Coverage of Items and Services
Given the dynamic nature of the health care system, it is important
that the Medicare program be responsive to the rapid advances in health
care. Regulations describing our criteria for coverage under the
Medicare program would facilitate timely and expanded access for
Medicare beneficiaries to appropriate new technologies. Within the
scope of the statutory benefit categories, these criteria would expand
access for Medicare beneficiaries by covering the following:
1. A breakthrough technology without consideration of cost.
2. A medically beneficial item or service if no other medically
beneficial alternative is available.
3. A medically beneficial item or service if it is a different
clinical modality compared to an existing covered beneficial
alternative, without consideration of cost or magnitude of benefit.
4. A medically beneficial item or service, even if a less expensive
alternative, which is not a Medicare benefit, exists.
We anticipate that these criteria would also make the Medicare
coverage process, both national and local, more transparent, timely,
and predictable to manufacturers or other requestors seeking Medicare
coverage of an item or service.
B. Framework of the Medicare Program
From the beginning of the Medicare program, one of the goals has
been to
[[Page 31126]]
provide a health insurance system that would make ``the best of modern
medicine'' available to Medicare beneficiaries. Over the last 35 years,
there have been significant advances in medical science that have
changed the Medicare program and improved the health of beneficiaries
and others. Some of these changes have been mandated by the Congress in
title XVIII of the Act, which authorizes coverage of, and payment for,
items and services under the Medicare program. Other changes have
occurred as a result of administrative actions. We have adapted the
Medicare program to meet these changes.
While the Congress has demonstrated a strong interest in providing
access to necessary medical care for Medicare beneficiaries, the
Congress has been equally concerned with ensuring that the Medicare
program operates on a sound financial basis. The Congress has
established the specific scope of benefits that are included in the
program and has defined many of the key terms in section 1861 of the
Act. In addition, section 1862(a)(1)(A) of the Act requires that ``no
payment'' may be made under Part A (hospital insurance) or Part B
(supplementary medical insurance) for any expenses incurred for items
or services that ``are not reasonable and necessary for the diagnosis
or treatment of illness or injury or to improve the functioning of a
malformed body member.'' If we do not cover the expenses incurred for a
particular item or service under this provision, either the Medicare
beneficiary or the health care provider or supplier may be financially
liable for all of the incurred costs.
The main purpose of our proposed rule will be to explain how the
term ``reasonable and necessary'' applies in making coverage decisions.
A Medicare coverage decision, whether made nationally or locally, is a
prospective, population-based, policy that applies to a clinical subset
or class of Medicare beneficiaries and describes the clinical
circumstances and setting under which an item or service is available
(or is not available).
We have the authority to determine whether an item or service is
reasonable and necessary by several distinct approaches. One approach
is to make a national coverage decision (NCD). Under 42 CFR 405.732 and
405.860, an NCD either grants, limits, or excludes Medicare coverage
for a specific medical service, procedure, or device. An NCD is binding
on all carriers, fiscal intermediaries, Peer Review Organizations, and
other contractors. Under Sec. 422.256(b), an NCD that expands coverage
is also binding on a Medicare + Choice Organization. Moreover, under
Secs. 405.732(b) and 405.860(b), an NCD made under section 1862(a)(1)
of the Act is binding on an administrative law judge (ALJ) (``An ALJ
may not disregard, set aside, or otherwise review an NCD.''). While an
NCD is subject to judicial review, there are limitations on judicial
review. This framework ensures that an NCD is consistently applied
throughout the nation and enables a beneficiary to make an informed
decision about whether to receive an item or service based on the
knowledge that an item or service will be covered (or not covered) by
the program.
Due to regional, local, or institutional differences in the
practice of medicine, it is not always prudent to issue a prescriptive
NCD. Sometimes there is not sufficient information for us to determine
whether an item or service is an effective treatment on a national
basis. In other circumstances, there are legitimate regional
differences in the practice of medicine that would make a preemptive
national rule inappropriate.
In the absence of an NCD, a decision concerning Medicare coverage
for an individual could be resolved on a case-by-case basis after a
claim is submitted. Our regulations separately provide broad appeal
rights for certain individuals to administratively challenge our
decision to deny payment for a claim before a neutral ALJ and, in some
cases, Federal court (42 CFR part 405, subparts G and H). This case-by-
case approach ensures that a beneficiary can present all relevant
information concerning a particular need for payment for an item or
service. This review only applies to claims that have been denied and
is not a mechanism for attaining prior authorization for a specific
item or service for an individual.
In order to provide some guidance to beneficiaries and health care
providers and suppliers regarding which items and services will (or
will not) be covered in a particular area in the absence of an NCD, our
contractors may make an LCD. An LCD would provide guidance, in the
absence of, or as an adjunct to, an NCD by describing the clinical
circumstances and settings under which an item or service is available
(or is not available) to a beneficiary under section 1862(a)(1)(A) of
the Act. This notice seeks only to define the criteria for how we would
make an NCD and our contractors would make an LCD.
An LCD is not binding on a contractor in another area of the
country or on an ALJ who decides cases at higher stages of the appeal
process. Still, an LCD provides a service to the public by giving some
advance notice about an item or service a contractor is likely to cover
or not cover. If a local contractor makes an affirmative finding
through a published LCD that an item or service is reasonable and
necessary under the statute, beneficiaries and providers could
reasonably expect that the service is available to the beneficiaries in
that jurisdiction for the circumstances described in the LCD.
C. Federal Register Publications
1. 1989 Proposed Rule
On January 30, 1989, we published a proposed rule (54 FR 4302),
that identified four generally applicable criteria that we would use to
make coverage decisions as to whether, and under what circumstances,
specific health care technologies could be considered reasonable and
necessary (and thus, covered under Medicare). The four proposed
criteria were: (1) Safety and effectiveness, (2) experimental or
investigational, (3) appropriateness, and (4) cost-effectiveness. At
the time, we explained that each of the four criteria would not
necessarily apply in all instances because of the complexity and
variety of issues involved in making coverage decisions under Medicare.
As explained earlier, we withdrew this proposed rule.
2. 1999 General Notice
On April 27, 1999, we published a general notice that announced the
process we use to make an NCD (64 FR 22619). This notice formally
withdrew the 1989 proposed rule. This procedural notice has been well-
received by Medicare beneficiaries, the health care industry, and
others who wanted our process to be open, responsive, and
understandable to the public.
II. Intentions of This Notice
We are issuing this notice to announce our intention to publish a
proposed rule and solicit public comments on the criteria we would use
to make an NCD and our contractors would use to make an LCD under
section 1862(a)(1) of the Act. We are setting out in this notice the
information and approaches we are considering at this time. We are
interested in receiving public comments on this information and we will
consider them when we develop the subsequent proposed rule.
Before we can make an NCD or LCD, the item or service must fall
within a statutory Medicare benefit category and not be otherwise
statutorily excluded. Moreover, if regulated by the Food and
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Drug Administration, the item or service must be lawfully marketed.
We would apply an NCD or LCD prospectively to all items and
services furnished under identical circumstances within the respective
jurisdiction after the effective date of the NCD or LCD. We anticipate
the number of criteria we would apply could be reduced and simplified
based on our experience. We intend that the criteria would make the
Medicare coverage process more open, responsive, and understandable to
the public. Finally, as mentioned above, we anticipate that the
criteria would result in covering more items and services under
Medicare. The criteria could also result in us beginning a new NCD to
withdraw coverage of a currently covered item or service. In
particular, if a new item or service is equivalent in benefit, is in
the same clinical modality, is thus substitutable for the existing
service, and is lower in costs, we would consider withdrawing coverage
for the more expensive currently covered alternative service.
A. Criteria for Medicare Coverage Decisions
We anticipate applying two criteria when we make an NCD or one of
our contractors makes an LCD. First, the item or service must
demonstrate medical benefit, and, second, the item or service must
demonstrate added value to the Medicare population. In order to ensure
that we and our contractors consistently interpret and apply these
criteria, we would use the following sequential steps:
Step 1--Medical Benefit: Is there sufficient evidence that
demonstrates that the item or service is medically beneficial for a
defined population?
If no, the item or service is not covered under Medicare.
If yes, proceed to Step 2.
Step 2--Added Value: For the defined patient population, is there a
medically beneficial alternative item or service(s) that is the same
clinical modality and is currently covered by Medicare?
If no, the item or service is covered under Medicare for
the defined population.
If yes, proceed to Step 3.
Step 3--Added Value: Is the item or service substantially more or
substantially less beneficial than the Medicare-covered alternative?
If the item or service is substantially more beneficial
(that is, a breakthrough), it is covered under Medicare for the defined
population.
If the item or service is substantially less beneficial,
it is not covered under Medicare for the defined population.
If the item or service is neither substantially more nor
substantially less beneficial (that is, it is equivalent in benefit),
proceed to Step 4.
Step 4--Added Value: Will the item or service result in equivalent
or lower total costs for the Medicare population than the Medicare-
covered alternative?
If yes, the item or service is covered under Medicare for
the defined population.
If no, the item or service is not covered under Medicare.
When we (or our contractors) compare the medical benefit of two or
more items or services, we would ensure that the comparisons involve
both the same patient population, the same clinical circumstances, and
the same clinical modality. We believe that the sequential steps would
be administratively feasible and would produce results that are
consistent with the statute. We invite public comments on this approach
and suggestions as to feasible alternatives.
A requestor may use the coverage reconsideration process to modify
a request that resulted in a denial of coverage for an item or service.
For example, a requestor could seek a more limited coverage decision
targeting a narrower population for which there is no Medicare-covered
alternative. Alternatively, a requestor could submit new evidence that
demonstrates that the item or service is substantially more beneficial
than the Medicare-covered alternative.
B. Definitions, Discussion, and Questions
1. Medical Benefit
We believe an item or service is medically beneficial if it
produces a health outcome better than the natural course of illness or
disease with customary medical management of symptoms. We would require
the requestor to demonstrate that an item or service is medically
beneficial by objective clinical scientific evidence.
Given the importance of Medicare coverage decisions for our 39
million current beneficiaries (as well as future beneficiaries), we do
not believe we should cover an item or service without adequate
information that shows the item or service improves the diagnosis or
treatment of an injury or illness, or improves the functioning of a
malformed body member. It would be unreasonable and unnecessary to pay
for expenses incurred for an item or service that are not proven to be
effective for a defined population.
Although mortality and life-expectancy are quantifiable and, thus,
``hard'' health outcomes, we believe we should move towards ``quality
of life'' as an acceptable health outcome. To help us (and our
contractors) make coverage decisions, however, especially assessing
comparative benefits, an acceptable health outcome should be
quantifiable along a standard scale or metric. We seek suggestions on a
standard metric system for measuring quality of life outcomes. Examples
of nationally recognized scales are: QALY--Quality Adjusted Life Years,
DALY--Disability Adjusted Life Years, or self-described health status
as measured by the SF-36 (Short Form 36).
We believe a beneficiary's preference, compliance, and well-being
are also meaningful outcomes. Similarly, we invite comments on the
standardized metric systems or methodologies we should employ so that
we can quantify and compare medical benefits that recognize these
outcomes.
Another important consideration is how we would measure the
magnitude of the improved health outcome. Also, if the treatment
includes risks of adverse side-effects, how should we determine that
the benefits outweigh the risks?
2. Added Value
We believe that an item or service adds value to the existing mix
of covered items or services if it substantially improves health
outcomes; provides access to a medically beneficial, different clinical
modality; or if it can ``substitute'' for an existing item or service
and lower costs for the Medicare population. There are several
situations when a new item or service would add value compared to the
current mix of services.
One situation is when a new item or service that falls within a
Medicare benefit category would be medically beneficial for a
beneficiary with a given clinical circumstance and there is no
Medicare-covered medically beneficial alternative. We believe this item
or service would add value to the program and we should cover it
without consideration of costs during the coverage process.
Another situation is when a new item or service would be medically
beneficial and it is a different clinical modality than a Medicare-
covered medically beneficial alternative(s) (for example, a covered
medication versus surgery). Giving Medicare beneficiaries and providers
access to competing items or services of different clinical modalities
adds value to the program and we believe we should also cover the items
or services without consideration of costs during the coverage process.
In particular, this adds value to the program because we recognize that
there
[[Page 31128]]
are legitimate differences between beneficiaries, medical practices by
region, and delivery systems' capabilities. We believe access to
different modalities for a similar medical benefit is warranted.
In making Medicare coverage decisions under these new criteria, we
would not compare an item or service that falls within a statutory
benefit category to an item or service that is outside the scope of the
Medicare program. We do not believe we should compare the effectiveness
of an item or service that falls within a statutory benefit category to
the effectiveness of a medically, beneficial alternative that is not
included in a Medicare benefit category. Due to financial
circumstances, a beneficiary may not have meaningful access to that
alternative. We believe that by only comparing two items or services
that are included in a Medicare benefit category, we increase
beneficiary access and add value to the program.
Value also would be added when the magnitude of the benefit of an
item or service is substantially more than a Medicare-covered
alternative of similar clinical modality. We refer to this item or
service as a ``breakthrough''. Even if two services are of the same
clinical modality, we believe we should cover the substantially
superior service without any consideration of cost during the coverage
process.
We believe value would also be added when a new item or service is
equivalent in benefit, and is in the same clinical modality (that is,
substitutable) for a Medicare-covered alternative, and has equal or
lower total costs for the Medicare population. It is possible that a
beneficiary would not notice any difference in health outcomes, when an
item or service is substituted for a Medicare-covered alternative. We
would cover a substitutable item or service only if the total costs are
equal or lower than the total costs of the Medicare-covered
alternative. For clinically substitutable services, it is not
reasonable or necessary to pay for incurred costs that exceed the cost
of a Medicare-covered alternative that produces the same health
outcome. Thus, only by assuring equal or lower costs for the
substitutable service could we assure adding value to the program. When
a service (that is, it has equivalent health outcomes and the same
clinical modality) is substantially more expensive than a Medicare-
covered alternative would cost considerations lead us to deny coverage
for the service. Since we anticipate limiting the application of costs
to a narrow situation when two services have equivalent health outcomes
and are of the same clinical modality, we need to do only a simple
cost-analysis.
We would like to receive input on the proposed added value criteria
before developing a proposed rule. In particular, we would like
suggestions on how broadly or narrowly we should define ``same clinical
modality.'' Clearly surgery and prescription medications are not the
same. But is an open surgical procedure the same clinical modality as a
closed invasive procedure? What if they both require general
anesthesia? What if they do not? Perhaps another way of defining ``same
clinical modality'' would be to simply use the existing Medicare
statutory benefit categories.
We would like the public's views on the scope of a ``Medicare-
covered alternative.'' Recognizing that most Medicare coverage
decisions have been made locally, and not nationally, we would have to
create a standard for determining which services are currently covered.
One alternative for the purposes of an NCD or an LCD is to define
``Medicare-covered alternative'' when a threshold percentage of the
Medicare population nationally, or in the contractor's jurisdiction,
has access to an item or service. What threshold percentage should we
use for either alternative? Are there other alternative definitions?
Similarly, we encourage suggestions on how to best define
``substantially more beneficial.'' One way to define this term is that
the benefit is so large that most clinicians would believe that the
item or service should be the new standard of care and, thus,
completely replace the Medicare-covered alternative. Another is that
the benefit is so large that the clinical experts in the relevant
clinical discipline believe that the item or service should be the new
standard of care and, thus, we should cover the new item or service and
withdraw coverage of the Medicare-covered alternative. A third way
would be to try to establish a quantifiable statistical ``effect-size''
of the new item or service compared with the Medicare-covered
alternative.
We are soliciting input on the definition of ``equivalent
benefit.'' We anticipate defining ``equivalent benefit'' as neither
substantially more, nor substantially less, beneficial than the
Medicare-covered alternative. This leaves a range of medical benefit
between marginally less beneficial, to equally beneficial, to
marginally more beneficial. Is there an alternative definition of
``equivalent benefit?'' Is there a common metric system that could be
used to measure the medical benefit and capture other meaningful health
outcomes including beneficiary preference, compliance, and well-being?
We are also specifically requesting comments on the alternative of
covering a new item or service that is ``substitutable'' for a
Medicare-covered alternative. At a minimum, a substitutable item or
service would seem to be one that is the same clinical modality and
produces an equivalent health outcome. If the substitutable item or
service has greater total costs to the Medicare program, should we deny
coverage for the item or service and allow the requestor through the
reconsideration process to alter the request to seek a positive
coverage decision? Should we simply cover the new item or service but
reduce the Medicare payment rate for the incurred expenses to the same
rate as the Medicare-covered alternative? This principle has been
called the ``least costly alternative'' adjustment and has been used
for many years primarily for coverage of durable medical equipment.
Coverage of new items and services under new regulatory
requirements may lead to the reexamination of current coverage
policies. For example, if the new item or service is ``substitutable''
for a Medicare-covered alternative and has lower costs for the Medicare
program, should we deny coverage for the Medicare-covered alternative
or lower the payment for the Medicare-covered alternative so that the
total costs for the Medicare program are, at a minimum, equal?
We are interested in suggestions on the type and extent of
information that parties seeking coverage decisions should be required
to provide in relation to the associated costs or savings to the
program in addition to the direct costs of the item or service.
We are soliciting comments on the implications for private sector
insurers of the proposed approach.
3. Demonstration Through Scientific Evidence
As previously mentioned, we would measure both the medical benefit
and the added value criteria by clinical scientific evidence. We are
interested in comments on the proper evidentiary standard. Should there
be one standard for all services or should there be different standards
for different health care sectors (for example, surgical procedures,
diagnostic tests, and biologics)? Finally, recognizing that clinical
evidence and trials are frequently imperfect, what is the best way to
deal with bias and external validity when we consider applying the
findings of clinical trials to coverage
[[Page 31129]]
decisions in the real world. More specifically, under what
circumstances can clinical trial findings be generalized from the study
population to the Medicare population? In addition, under what
circumstances can the controlled delivery setting of the clinical trial
be generalized and reproduced in the current health care delivery
setting or to a different health care delivery setting?
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that agencies assess anticipated costs and benefits before issuing any
rule that may result in an expenditure in any year by State, local, or
tribal governments, in the aggregate, or by the private sector, of $100
million. The notice would not have any unfunded mandates.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a notice that imposes substantial
direct compliance costs on State and local governments, preempts State
law, or otherwise has Federalism implications. The notice would not
impose compliance costs on the governments mentioned.
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: April 5, 2000.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.
Approved: April 20, 2000.
Donna E. Shalala,
Secretary.
[FR Doc. 00-12237 Filed 5-11-00; 12:00 pm]
BILLING CODE 4120-01-P
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