FACT SHEET

Overview: Medicare is committed to having an open, understandable and predictable coverage process for benefits provided by the program. Medicare law provides for broad coverage of many medical and health care services, including care provided by hospitals, skilled-nursing facilities, home-health agencies and physicians. The law does not provide an all-inclusive list of services covered by Medicare and generally does not specify which medical devices, surgical procedures or diagnostic services should be included or excluded from coverage. The Congress gave the Health and Human Services Secretary the authority to decide which specific expenses incurred for items and services within these categories can be covered by Medicare. The law states that Medicare cannot pay for any items or services that are not "reasonable and necessary" for the diagnosis and treatment of illness or injury. For more than 30 years, the Medicare program has exercised this authority to determine whether specific services that meet one of the broadly defined benefit categories are covered under the program. Most Medicare coverage and policy decisions are made locally by HCFA contractors -- the private companies that by law process and pay Medicare claims. HCFA also has authority to make coverage policies that apply nationwide. In the absence of national decisions for particular services, contractors have discretion to issue local coverage policies.

Creating a coverage decision process that is open, accountable, clear and dependable is a priority for HCFA. In 1999 HCFA began a four-step plan to accomplish this goal. The first step was a new administrative process to be used in decision-making. The second was creation of the Medicare Coverage Advisory Committee, whose members are leading private sector experts on health care coverage. Its mission is to advise HCFA, after reviewing scientific evidence, whether Medicare should cover a particular service or item. Third is publication of a Notice of Intent that will lead to a proposed rule on the criteria for making coverage decisions. The final step will be following the final rule on criteria with sector-specific guidance.

HCFA relies on medical and scientific evidence to make national coverage decisions, including medical literature and data, discussions with medical experts and technology assessments. HCFA has chartered a new advisory committee that -- when requested by HCFA -- will advise HCFA on national coverage decisions. A Dec. 14, 1998 Federal Register notice announced the charter of the Medicare Coverage Advisory Committee, which is organized

under the Federal Advisory Committee Act. This new advisory committee replaces the Technology Advisory Committee, established by HCFA in September 1992 and disbanded in January 1998.

On April 27, 1999, HCFA published a Federal Register notice describing the administrative process the Agency will use to make national coverage decisions. Building on current procedures, the notice includes additional steps the agency will take to ensure that the national coverage process is more open, predictable and understandable. It outlines how the public may request national coverage decisions, general time lines for reviewing requests, the roles of HCFA staff, the Medicare Coverage Advisory Committee and technology assessments in national coverage decisions. The notice also outlines how the agency will reconsider coverage decisions based on new scientific and medical information and details methods to keep the public informed about the status of coverage reviews. For example, HCFA publishes a list of coverage issues under review, the stage of review each issue is in and an estimate of when the next action will occur. This list is available on HCFA's web site and enables anyone interested in a coverage issue to determine quickly whether it is under review, the current status, anticipated actions and approximate deadlines, as well as the major scientific questions that need to be resolved prior to a coverage decision. HCFA has developed a record of each coverage decision, including a list of all evidence reviewed, all the major steps taken in the coverage review, and the rationale for the coverage recommendation and decisions that were made. A summary of the record for each decision is available on HCFA's web site at www.hcfa.gov.

The Medicare Coverage Advisory Committee holds open meetings and provides an opportunity for public participation on coverage issues referred to the committee by HCFA. The 120-member committee is divided into small panels focused on particular clinical and scientific issues and consists of nationally recognized experts in a broad range of medical, scientific and professional disciplines, as well as representatives of consumer and industry groups. The committee may review and evaluate medical literature, review technical assessments, and examine data and information on the effectiveness and appropriateness of medical items and services. Based on the medical evidence reviewed, the committee will advise and make recommendations to HCFA. HCFA will then make final coverage decisions.

HCFA published a Notice of Intent of Rule Making in the Federal Register on May 16, 2000 proposing that national standards be developed to help guide coverage decisions on additional items and services for Medicare. This Notice of Intent puts forth HCFA's current views regarding the general criteria used to evaluate medical items and services for national coverage decisions made by HCFA. The process HCFA is following will provide an additional opportunity for public comment. It also will frame the development of a notice of proposed rulemaking that would put forth coverage criteria to establish a standard definition of Areasonable and necessary,@ the standard set by law for expenses incurred for items and services that may be covered by Medicare. This also should expedite the publication of a final rule containing the coverage criteria -- a long-sought goal of HCFA and its partners in Medicare.

Once the regulation is effective, the coverage criteria will serve as a framework to develop guidance documents to further explain how the criteria apply to specific health care services such as diagnostic services, durable medical equipment or biologics. HCFA is publicly committed to involving interested parties in the development of these guidelines. While we expect the coverage criteria would apply to all items and services, HCFA anticipates that additional guidance documents will be need to explain how the rules apply to specific health care services. This is similar to the guidance the Food and Drug Administration provides in connection with its regulations.

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Fact Sheet Listing

Last Updated May 11, 2000