THE MEDICARE, MEDICAID AND SCHIP BENEFITS IMPROVEMENT
AND PROTECTION ACT OF 2000

ISSUES OF IMPORTANCE TO THE MEDICAL DEVICE INDUSTRY

SECTION 104. MODERNIZATION OF SCREENING MAMMOGRAPHY BENEFIT

Beginning in 2002, Section 104 eliminates the statutorily prescribed payment rate for screening mammography payments and specifies that the services are to be paid under the physician fee schedule. The provision specifies two new payment rates for mammographies that utilize advanced new technology for the period April 1, 2001 to December 31, 2001. Payment for technologies that directly take digital images will equal 150% of what would otherwise be paid for a bilateral diagnostic mammography. For technologies that convert standard film images to digital form, an additional payment of $15 is authorized. The Secretary is required to determine if a new code is required for tests furnished after 2001.

SECTION 223. EXPANSION OF MEDICARE PAYMENT FOR TELEHEALTH SERVICES

Section 223 establishes revised payment provisions, effective no later than October 1, 2001, for services that are provided via a telecommunications system by a physician or practitioner to an eligible beneficiary in a rural area. The Secretary is required to make payments for telehealth services to the physician or practitioner at the distant site in an amount equal to the amount that would have been paid to such a physician or practitioner if the service had been furnished to the beneficiary without the use of a telecommunications system. A facility fee will be paid to the originating site (allowable originating sites include: a physician/practitioner office, a critical access hospital, a rural health clinic, a federally qualified health center or a hospital). Section 223 requires the Secretary of HHS to conduct a study, and submit recommendations to Congress, that identify additional settings, sites, practitioners and geographic areas that would be appropriate for telehealth services. Entities participating in federal demonstration projects approved by, or receiving funding from, the Secretary as of December 31, 2000, would be qualified sites.

SECTION 402. CLARIFYING PROCESS AND STANDARDS FOR DETERMINING ELIGIBILITY OF DEVICES FOR PASS-THROUGH PAYMENTS UNDER HOSPITAL OUTPATIENT PPS

Section 402 requires HCFA to list items eligible for the hospital outpatient "pass-through" payments according to broad types of devices rather than individual brands. The category-based system would be implemented by April 1, 2001 for those devices eligible for pass-through payments by January 1, 2001. The provision would "grandfather" into categories certain devices first paid prior to 12/31/96 if there is a similar device currently on the pass-through list. Criteria for additional categories would be developed by July 1, 2001, after which new categories would be promptly established.

SECTIONS 521-522. REVISIONS TO MEDICARE APPEALS AND COVERAGE PROCESSES

BIPA reforms the Medicare appeals and coverage processes by:

Requests for National Coverage Determinations

Section 522 of BIPA makes several fundamental changes to the coverage process designed to make it more open and timely. In particular, that section allows Medicare beneficiaries (and thus any organization working though a beneficiary) to request that HCFA issue a national coverage determination (NCD) if the agency has not already made a coverage determination for a particular item or service. Following such a request, HCFA has 90 days to take one of the following actions:

  1. issue an NCD with or without limitations;
  2. issue a noncoverage determination;
  3. determine that neither a coverage nor a noncoverage determination is appropriate at the current time;
  4. issue a statement that it has not completed its review, and identify the steps remaining to be completed and a deadline by which the agency will complete its review and take one of the three actions set out above.

In arriving at that decision, BIPA requires that HCFA give the public both notice and an opportunity to comment on NCDs prior to implementation. At the end of the process, HCFA must provide a clear statement of the basis for its determination, including responses to public comments, and make available the data on which its decisions are based. This will provide much greater openness in the process by not only ensuring that stakeholders can offer input into HCFA's decisions, but also by ensuing that stakeholders will be provided an explanation for the decisions the agency makes.

Making the case for more timely coverage decisions has always been difficult because the coverage process did not have a defined beginning and end. Now that the process is formalized, Congress also required that starting in December 2001, HCFA must report on the time periods necessary to complete and implement NCDs for the previous year. In this way, in addition to specifying a 90-day target deadline, the agency will be more directly accountable to Congress for the speed with which it makes decisions.

Addressing the substantial controversy that has surrounded the efforts to interpret the "reasonable and necessary" parameter on Medicare coverage, the law clarifies the standard that HCFA must use in making NCDs. The statute now clearly states that the agency must consider applicable information, "including clinical experience and medical, technical, and scientific evidence." This makes it quite clear that coverage need not be based simply on controlled clinical trials, but rather can be based on clinical experience.

Medicare Coverage Advisory Committee Reforms

BIPA opens up the Medicare Coverage Advisory Committee (MCAC) process in two important ways. First, it ensures full participation of nonvoting advisory committee members (e.g., industry representatives) in committee deliberations. Second, it provides nonvoting members full access to information made available to voting members, except for trade secret information and information that HCFA determines would present a conflict of interest for the nonvoting member. Historically, some nonvoting committee members have not been able to participate fully in the committee activities, but the legislation clarifies their important role.

The law also makes an important change designed to speed up the coverage process. Currently, because of a limit on the number of Federal advisory committees and the need to function as only one committee, coverage issues must first be examined by a panel of the MCAC, and then considered again by the MCAC executive committee. When it becomes effective, the law will allow individual MCAC panels to report directly to HCFA without approval of the executive committee. IF HCFA takes advantage of this feature, the redundancy that has slowed the current process can be reduced, and several months can be shaved off the coverage process.

Appeals of Coverage Determinations

BIPA adds an administrative level to the review of NCDs. When the new legislation becomes effective, beneficiaries aggrieved by a coverage policy and those working through such beneficiaries will first seek review by the Departmental Appeals Board (DAB) of the Department of Health and Human Services. In reviewing the agency's decision, the DAB need only defer to reasonable findings of fact, reasonable interpretations of law, and reasonable applications of fact to law.

A decision by the DAB will be subject to judicial review. BIPA eliminates the requirement that a court reviewing an NCD send a case back to the agency for further proceedings when the record does not support the NCD. Rather, in appropriate instances a court now can immediately determine the propriety of an NCD.

BIPA creates a new process for reviewing local coverage decisions (LCDs), apart from review on a claim-by-claim basis. Under the new law, aggrieved beneficiaries (and those working through them) will first seek review by an administrative law judge (ALJ) of the Social Security Administration. Apart from the additional layer of administrative review, the procedural requirements for review of LCDs are identical to those outlined above for NCDs. The ALJ decision can be reviewed by the DAB.

Individual Beneficiary Appeal Reforms

Section 521 of BIPA reforms the beneficiary appeals process and speeds up that process. To bring the process closer to the appeals process in the private sector, the law requires that "qualified independent contractors" or "QICs" conduct reconsiderations of determinations made by Medicare carriers and fiscal intermediaries. These QICs will make their decisions based upon information that includes clinical experience as well as medical, technical and scientific evidence. QICs must complete their review within 30 days after a beneficiary files an appeal.

The law also provides for expedited review of a beneficiary appeal where a provider informs the beneficiary of its intention to discharge the beneficiary or to terminate services provided to the beneficiary and a physician certifies the termination of services is likely to place the beneficiary's health at significant risk. A QIC must decide an expedited appeal within 72 hours of receiving an appeal request and the necessary medical records.

To address the considerable delay measured in years that beneficiaries presently face, the law imposes 90-day deadlines for decisions at the ALJ and DAB levels. If either an ALJ or the DAB fails to render a decision by the deadline, a beneficiary may proceed to the next level of appeal as a consequence of the delay.

SECTION 531. REIMBURSEMENT IMPROVEMENTS FOR NEW CLINICAL LABORATORY TESTS AND DURABLE MEDICAL EQUIPMENT

For new clinical diagnostic laboratory tests, Section 531 requires that the national limitation amounts, for new tests for which no limitation amounts have previously been established, be based on 100% of the median of the local fee schedule amounts. It also requires the Secretary to establish procedures for coding and payment determinations for the categories of new clinical diagnostic laboratory tests and new durable medical equipment under Part B that permit public consultation in a manner consistent with the procedures established for implementing coding modifications for ICD-9-CM. (The current ICD-9-CM procedures give the public the opportunity to provide input in writing and during open public meetings on requests for modifications of the ICD-9-CM diagnosis and procedure codes; meetings and agendas for ICD-9-CM meetings are announced in the Federal Register.)

Section 531 also requires the Secretary to submit a report to Congress within one year of enactment that identifies the specific procedures currently used by the Secretary to adjust payments for new clinical diagnostic laboratory tests and durable medical equipment. The focus of the report is on new tests and equipment that represent an advance in technology and that are classified to existing codes. The report must include recommendations for any changes in law that may be necessary "to assure fair and appropriate payment levels."

SECTION 532. RETENTION OF HCPCS LEVEL III CODES

Section 532 requires the Secretary to maintain and continue the use of HCPCS Level III (local) codes through December 31, 2003.

SECTION 533. RECOGNITION OF NEW MEDICAL TECHNOLOGIES UNDER MEDICARE INPATIENT HOSPITAL PPS

Section 533 requires the Secretary to submit a report to Congress no later than April 1, 2001 on potential methods for more rapidly incorporating new medical services and technologies used in the inpatient setting in the clinical coding system used with respect to payment for inpatient services. The Secretary is required to identify the preferred methods for expediting these coding modifications in the report, and to implement such method by October 1, 2001.

Additional hospital payments could be made through a new technology group (DRG), an add on payment, payment adjustment or other mechanism. However, separate fee schedules for additional new technology payments would not be permitted. The Secretary must implement the new mechanism on a budget neutral basis, meaning that the total amount of projected additional payments under the mechanism would be limited to an amount not greater than the Secretary's annual estimation of the costs attributable to the introduction of new technology in the hospital sector as a whole (as estimated for purposes of the annual hospital update calculation).