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APRIL 22, 1999, THURSDAY

SECTION: IN THE NEWS

LENGTH: 3120 words

HEADLINE: PREPARED PRESENT BY
WILLIAM G. PLESTED III MD
MEMBER, BOARD OF TRUSTEES
AMERICAN MEDICAL ASSOCIATION
BEFORE THE HOUSE WAYS AND MEANS COMMITTEE
HEALTH SUBCOMMITTEE
SUBJECT - MEDICARE COVERAGE DECISIONS
AND BENEFICIARY APPEALS

BODY:

Introduction
Mr. Chairman, Mr. Ranking Member, and Members of the Committee, my name is Bill Plested, MD. I practice cardiovascular and thoracic surgery in Santa Monica, California, and am a member of the Board of Trustees of the American Medical Association (AMA). The AMA appreciates the opportunity to testify on these important Medicare issues coverage decisions and beneficiary appeals.
Reform of the Medicare coverage decision process is long overdue, and the AMA commends the Chairman's efforts over the last two years to shed light on the procedures employed by the Health Care Financing Administration (HCFA) to generate national coverage decisions. The AMA also commends the efforts of the Chairman and Ranking Member to enlighten HCFA regarding the difference between coverage policy decisions and "program integrity" concerns.
In fact, the AMA believes that HCFA's reluctance to separate its coverage and quality of care policies from its policies addressing fraud and abuse is the root of the coverage policy problem facing Medicare beneficiaries and their physicians.
There is a saying that, "when your only tool is a hammer, every problem looks like a nail." In its management of the Medicare program, HCFA seems to approach virtually every issue, whether it involves national or local coverage policy, payment, coding, or quality, as an issue of waste, fraud and abuse. This singular focus on fraud has become even more pervasive among the Medicare Part B carriers than it is within the HCFA central office. In addition to operating in an environment that places a premium on recovery of so-called "overpayments," the carriers have also intensified their pursuit of fraudulent and abusive practices to an excessive degree to protect their current functions and budgets from being shifted to the new Program Safeguard Contractors, who are perceived competitors. Accordingly, even when HCFA establishes sound national coverage policies, these policies are sometimes subverted by local or regional carriers that place unwarranted constraints on covered benefits.
The AMA believes that our patients who are insured by Medicare should have access to the same clinically effective innovations in medical practice and technology that we are able to offer our privately insured patients. These innovations will only be available to beneficiaries, however, if Medicare coverage policies--whether national or local--are based on the relative clinical effectiveness of the innovations, not on "program integrity" concerns.AMA Recommendations for Reforming the Coverage and Appeals Process
Provision of high quality medical care to patients must serve as the foundation of efforts to reform the Medicare coverage policy process. Coverage decisions should be based on evidence of clinical effectiveness obtained from medical literature and consultation with practicing physicians, especially the national medical specialty societies. Once developed, the new standards, including standards of openness, timeliness, and evidence-based decision making, must then be applied to all levels of the coverage policy process, whether local, regional, model, or national.
After enactment of the Balanced Budget Act of 1997, representatives from the AMA and selected national medical specialty societies met several times with HCFA staff to discuss development of the national coverage policies that would govern implementation of Medicare's expanded preventive benefits. We viewed the consultative process of HCFA obtaining the most current clinical and scientific information on effective preventive approaches from medical specialty societies as a positive development, and an example of a good approach to coverage policy making. In correspondence with the HCFA Administrator and comments on HCFA's September 25, 1998 Town Hall meeting, we have recommended that HCFA follow a similar approach.
HCFA's Coverage and Analysis Group has been generally receptive to our recommendations. We were pleased that the Charter for the new Medicare Coverage Advisory Committee (MCAC) indicated that MCAC functions will involve reviewing and evaluating medical literature, technical assessments, and information on the effectiveness and appropriateness of medical services. We were also pleased that HCFA's solicitation of MCAC nominations seemed to emphasize the importance of individuals with expertise in medical practice. In addition, HCFA's use of proposed rules with opportunities provided for public comment has allowed for significant medical input into the regulations governing the new preventive benefits. Nonetheless, we continue to have five major concerns about Medicare coverage decision and beneficiary appeals processes.
1. Local coverage policies should follow standards
When the new procedural standards for national coverage decisions are developed, they should apply to all levels of Medicare coverage decision making. Although the physician community has made this point to HCFA consistently over the last two years, the Office of Clinical Standards and Quality continues to state that it has no control over the actions of local and regional carriers because the carriers are accountable to the Office of Program Integrity. This means that the new national standards will not be applied at the local level. We are also not aware of any HCFA plans for oversight of carrier development of local policies.
The combination of a lack of enforced standards for carriers and the single-minded focus on fraud and abuse are a serious concern, especially because the carder policies frequently evolve into de facto national coverage decisions. This is actually the purpose of"model" policies, which are policies developed by a few Medicare carrier medical directors (through a process viewed uniformly as a "black box") that are disseminated to other carriers for their use. With guidance from HCFA's Office of Program Integrity, the durable medical equipment carriers are also making policies that effectively serve as national coverage decisions, even though they were established as regional carriers.
The AMA is not suggesting that all coverage policies be established at the national level.
While some local carriers obtain input on proposed policies from practicing physicians through consultation with their carrier advisory committees, local policies often are simply based on a statistical analysis of claims that indicates a higher frequency of a particular procedure code than the national average. As the following list illustrates, numerous examples are available of local policies that directly conflict with the views of practicing physicians about good standards of medical care: - The April 19 Washington Post (p. 2) indicates that, despite Medicare coverage of preventive services, many beneficiaries are not getting needed preventive care. One example cited is the low percentage of elderly patients with diabetes receiving blood lipid tests. What the article fails to note, however, is that at least one Medicare carrier, which handles the state of Florida, published a local coverage policy for blood lipid tests in its July/August 1997 bulletin indicating that diabetes is not among the covered diagnoses for these tests.

This policy is in direct conflict with published guidelines from the American Diabetes Association and, in 1999, physician claims for lipid tests are still being routinely denied for diabetic patients in Florida. The carrier cites as its rationale that the procedure codes for lipid tests "have been billed substantially more in Florida than at the national level for multiple specialties. Further analysis of the data indicates that these procedure codes ... are being billed with diagnoses that do not support medical necessity."
- The primary focus of the Post article is preventive care exams. HCFA did not accept repeated advisories from the AMA, however, that it was not sufficient for regulations on the new preventive benefits to address only specific screening tests, but that they needed to clarify Medicare coverage for visits where physicians counsel patients about risks and benefits of preventive care. Given HCFA's lack of national guidance on coverage for preventive visits and its overzealous pursuit of fraud, it is not surprising that many carrier policies are developed specifically to reduce the number of covered Medicare claims for physician visits. For example, the New York carder, citing an Office of the Inspector General report that "Medicare should not be paying for 30% of all physician services claims," is routinely denying claims for physician visits to skilled nursing home patients.
Even after obtaining documentation showing that the visits were needed to control heart failure (potentially avoiding hospital admissions) or treat skin rashes, claims for visits are denied as not medically necessary and no more than one nursing home visit per month is covered.
- It is standard clinical practice in urology to give a man who complains of lower urinary tract symptoms a prostate-specific antigen test (PSA). In many localities, patients have no idea if the test will be covered because Medicare's coverage policy depends on the test result. Moreover, nearly half the carriers will not pay for the test if the diagnosis rams out to be enlarged prostate.
- Previously, Medicare covered removal of pre-malignant skin lesions (actinic keratoses) by any method, but in 1996 the Florida carrier instituted a local policy restricting coverage only to certain lesions. Lesion removal was considered medically necessary only if the lesions were symptomatic, on certain parts of face, or if the patient had a particular medical history or condition. The carrier ignored information provided by dermatology specialty societies and implemented a policy totally contrary to the standard of care. The problem was then compounded when a carrier workgroup was formed and the restrictive lesion removal policy became a "model" policy for use throughout the country.
- In some localities, claims for the physical evaluation necessary to clear patients for anesthesia and surgery are being denied as noncovered because "Medicare does not cover screening services."
- Monitored Anesthesia Care (MAC) is a form of anesthesia care that involves close monitoring of sedated patients who may need to either be placed under general anesthesia or revived, and it is intended to be covered just like general or regional anesthesia. A large number of carders adopted a policy limiting MAC coverage to certain diagnoses. Coverage was denied for a number of important services for which anesthesia is clearly a requirement, such as breast biopsies and pacemaker insertions. Although some carriers have subsequently abandoned the policy due to concerted informational campaigns by anesthesiologists, uneven coverage across localities is likely to persist.
- As part of the randomized clinical trial of Lung Volume Reduction Surgery, HCFA decided that all patients, including those chosen for surgery and those receiving only non-surgical care, must receive pulmonary rehabilitation services. For those Medicare beneficiaries who are not in the clinical trial; however, coverage of pulmonary rehabilitation varies widely across localities. If HCFA believes that pulmonary rehabilitation is effective, then it should be a covered service for the other patients that would benefit from it.
- In many localities, carders establish arbitrary limits on psychotherapy services, even though the Congress has not limited the number of Medicare-covered psychotherapy services for psychiatric patients.
2. Program Integrity should be treated as a separate issue from Coverage
In HCFA's outline for a new Medicare coverage process, which was provided prior to September's Town Hall meeting for public review and comment, "program integrity" was cited as one of the reasons for reviewing Medicare coverage policies. A comment letter submitted by the AMA and more than 30 national medical specialty societies stated that program integrity concerns should not be a reason to discontinue or reconsider Medicare coverage for a beneficial patient service. In a service is believed to be subject to fraud or abuse, then HCFA should find a means to target the specific fraudulent or abusive practice.
We also stated objections to the HCFA suggestion that coverage policies be reviewed or reconsidered for services that represent a significant expense to the Medicare program, even if the medical effectiveness of the services was not demonstrated prior to Medicare coverage. In fact, if a service is being frequently provided, the most likely explanation for its high utilization rate is that physicians consider the service to be very beneficial for their patients. Too often, as noted in some of the above examples, local carriers decide to limit Medicare coverage for services solely because the frequency of service provision differs from average, "normal," or "expected" utilization. While HCFA may continue monitoring information about clinical effectiveness as it becomes available and, based on new evidence or research, decide to revisit previous coverage decisions, frequency of use alone is not an appropriate reason to limit or withdraw coverage.
3. There should be no application process
HCFA should engage in an ongoing effort to stay abreast of new developments in medical practice and technology, working to ensure that Medicare's coverage policies provide patients with access to all reasonable and necessary diagnostic, therapeutic, and preventive medical services. Instead, HCFA seems inclined to have the first step in its coverage policy process be the submission of an "application" for coverage, similar to the Food and Drug Administration procedure. The AMA believes that such a process would likely preclude small groups of beneficiaries and physicians, or any entity with limited resources and experience in the coverage process, from bringing forward promising innovations for Medicare review. Even if those with fewer resources manage to complete the application process, HCFA is more likely to devote necessary resources to reviewing applications from large corporate entities than, for example, a new diagnostic or surgical procedure developed by a small medical group.
4. A fair and independent appeals process should be developed
The process of appealing denied or downcoded claims takes far too long, is not geared to address the voluminous and complex regulations governing the Medicare program, can be far more expensive to pursue than the amount that is actually in dispute, and, even if a beneficiary or physician pursues an appeal to the highest level, there is no ability to get an independent judgment. Timelines should be established and enforced. Judges and others involved in the appeals process should be required to have expertise in Medicare, not Social Security, which is the topic with which the current administrative law judges hearing Medicare appeals are most familiar. So-called "fair hearings" are not really fair because the hearing officers are employed by the same carriers that deny the initial claims. Many physicians fear even requesting a fair hearing, out of concern that carders may view physicians who appeal as "troublemakers" and, therefore, that carriers may begin scrutinizing their claims even more closely. Also, the final level in the decision process should not be the Department of Health and Human Services. As with other legal questions that are resolved in U.S. courts, there should be a means for obtaining a judgment on appeal that is independent of the agency involved in the initial claim denial.
Often physicians also have no meaningful opportunity to appeal claims that have been downcoded or denied based on a carrier audit. When claims are subjected to postpayment audits, for example, physicians are given three options for responding to the carrier. In order to accept two of the three options, physicians must waive their appeal fights. The third option preserves the fight to appeal, but physicians choosing this option must subject their practices to a cartier audit of a Statistically Valid Random Sample (SVRS) of claims. An SVRS can cause monumental upheaval and disruption for a practice, even bringing office operations to a complete halt, as well as leading to expensive legal bills.
Essentially, the current appeals process lacks any semblance of fairness and due process.
5. A means should be established for appealing policies, not just individual claims
The coverage policy notices that HCFA has published over the past 18 months provide good avenues for requesting reconsideration of proposed national coverage policies, although the AMA does not believe that it is necessary for HCFA to go through notice and comment rulemaking for every national coverage decision. We anticipate that HCFA will continue to provide vehicles for commenting on and seeking revisions in national coverage policy decisions, and this process should become even more effective with the formation of the MCAC.
No similar vehicles exist, however, for addressing problems with local, regional, or model coverage policies. Under the current system, if a carder establishes a bad coverage policy, beneficiaries have no vehicle for appealing the policy decision, they can only appeal individual denials. Moreover, the outcome of any given appeal sets no precedent for other appeals, so the potential exists for a perpetual cycle of the same issue being questioned on the same basis over and over again. In fact, HCFA does not even consider the policies developed by local and regional carriers as Medicare coverage decisions, but instead HCFA views them as program integrity policies. This conflict between coverage and "program integrity" must be resolved if patients and physicians are to have confidence in the overall integrity of the Medicare program.
Beneficiaries and their physicians should be able to offer input into and appeal all coverage policy decisions, not just national decisions.
Conclusion
The current Medicare coverage and appeals process is not patient- centered, but instead is part of the confusing morass of Medicare regulations that do considerably more harm than good to physicians' efforts to provide high quality medical care to their elderly and disabled patients. The AMA applauds the Committee's interest in reforming this process. On behalf of the AMA, I offer you our services in working further with the Committee and the Congress to effectively address these important matters. Thank you again for the opportunity to testify today.
END

LOAD-DATE: April 24, 1999

Document 7 of 9.


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