[Federal Register Volume 84, Number 77 (Monday, April 22, 2019)]
[Rules and Regulations]
[Pages 16617-16619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08032]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 414

[CMS-6078-N2]


Medicare Program; Prior Authorization Process for Certain Durable 
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Items; 
Update to the Master List of Items Frequently Subject to Unnecessary 
Utilization

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Master list additions.

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SUMMARY: This document announces the addition of four Healthcare Common 
Procedure Coding System (HCPCS) codes to the Master List of Items 
Frequently Subject to Unnecessary Utilization that could be potentially 
subject to Prior Authorization as a condition of payment.

DATES: This action is effective on May 22, 2019.

FOR FURTHER INFORMATION CONTACT: Erica Ross, (410) 786-7480, Emily 
Calvert, (410) 786-4277.

SUPPLEMENTARY INFORMATION: 

I. Background

    In the December 30, 2015 final rule (80 FR 81674) titled ``Medicare 
Program; Prior Authorization Process for Certain Durable Medical 
Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS),'' we 
implemented section 1834(a)(15) of the Social Security Act (the Act) by 
establishing an initial Master List (called the Master List of Items 
Frequently Subject to Unnecessary Utilization) of certain DMEPOS that 
the Secretary determined, on the basis of prior payment experience, are 
frequently subject to unnecessary utilization and by establishing a 
prior authorization process for these items. The Master List

[[Page 16618]]

includes items that meet the following criteria:
     Appear on the DMEPOS Fee Schedule list.
     Have an average purchase fee of $1,000 or greater 
(adjusted annually for inflation) or an average monthly rental fee of 
$100 or greater (adjusted annually for inflation). (These dollar 
amounts are referred to as the ``Payment Threshold'').
     Meet either of the following criteria:
    ++ Identified in a Government Accountability Office (GAO) or 
Department of Health and Human Services Office of Inspector General 
(OIG) report that is national in scope and published in 2007 or later 
as having a high rate of fraud or unnecessary utilization.
    ++ Listed in the 2011 or later Comprehensive Error Rate Testing 
(CERT) program's Annual Medicare Fee-For-Service (FFS) Improper Payment 
Rate Report DME and/or DMEPOS Service Specific Report(s).
    The rule described the maintenance process of the Master List as 
follows:
     The Master List is self-updating annually. That is, items 
on the DMEPOS Fee Schedule that meet the Payment Threshold are added to 
the list when the item is listed in a future OIG or GAO report of a 
national scope or listed in a future CERT DME and/or DMEPOS Service 
Specific Report(s).
     Items remain on the Master List for 10 years from the date 
the item was added to the Master List.
     Items are updated on the Master List when the Healthcare 
Common Procedure Coding System (HCPCS) codes representing an item have 
been discontinued and cross-walked to an equivalent item.
     Items are removed from the list sooner than 10 years if 
the purchase amount drops below the Payment Threshold.
     Items that age off the Master List because they have been 
on the list for 10 years can remain on or be added back to the Master 
List if a subsequent GAO/OIG, or CERT DME and/or DMEPOS Service 
Specific Report(s) identifies the item to be frequently subject to 
unnecessary utilization.
     Items already on the Master List that are identified by a 
GAO/OIG, or CERT DME and/or DMEPOS Service Specific Report(s) will 
remain on the list for 10 years from the publication date of the new 
report(s).
     We will notify the public annually of any additions and 
deletions from the Master List by posting the notification in the 
Federal Register and on the CMS Prior Authorization website.

II. Provisions of the Document

    In the December 30, 2015 final rule (80 FR 81674), we stated that 
we would notify the public annually of any additions and deletions from 
the Master List by posting the notification in the Federal Register and 
on the CMS Prior Authorization website. This document is to provide the 
annual update to the Master List of Items Frequently Subject to 
Unnecessary Utilization.
    As noted previously, we adjust the Payment Threshold each year for 
inflation. More specifically, we stated in the preamble to the December 
2015 final rule (80 FR 81679) that we will apply the same percentage 
adjustment to the Payment Threshold as we do to the DMEPOS fee 
schedule. In accordance with section 1834(a)(14) of the Act, certain 
DMEPOS fee schedule amounts are updated annually by the percentage 
increase in the consumer price index for all urban consumers (CPI-U), 
United States city average, for the 12-month period ending June 30 of 
the previous year. The CPI-U is then adjusted by the change in the 
economy-wide productivity equal to the 10-year moving average of 
changes in annual economy-wide private non-farm business multi-factor 
productivity (MFP). We use this same methodology to adjust the Master 
List Payment Threshold for inflation.
    For calendar year (CY) 2018, the adjusted Payment Threshold was 
$1,018 and the adjusted monthly rental threshold was $102. For more 
information about how we arrived at these figures, see the March 30, 
2018 Federal Register notification (83 FR 13677).
    For CY 2019, the MFP adjustment is 0.6 percent and the CPI-U 
percentage increase is 2.9 percent. Thus, the 2.9 percentage increase 
in the CPI-U is reduced by the 0.6 percentage increase in the MFP 
resulting in a net increase of 2.3 percent to be used as the update 
factor. We applied the 2.3 percent update factor to the CY 2018 average 
purchase fee of $1,018, resulting in a CY 2019 adjusted payment 
threshold of $1,041.41 ($1,018 x 1.023). Rounding this figure to the 
nearest whole dollar amount resulted in a CY 2019 adjusted payment 
threshold amount of $1,041. We also applied the update factor of 2.3 
percent to the CY 2018 average monthly rental fee of $102, resulting in 
an adjusted payment threshold of $104.35 ($102 x 1.023). Rounding this 
figure to the nearest whole dollar amount resulted in a CY 2019 
adjusted monthly rental fee threshold of $104.
    This update reflects the addition of four new items that meet the 
updated Payment Threshold that are listed in an OIG or GAO report of a 
national scope or a CERT DME and/or DMEPOS Service Specific Report(s). 
The following four HCPCS codes are included on the Master List of Items 
Frequently Subject to Unnecessary Utilization because they have a 
DMEPOS fee schedule amount of $1,041 or greater or an average monthly 
rental fee of $104 or greater, and are listed in the 2018 Medicare FFS 
Supplemental Improper Payment Report \1\:
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    \1\ The 2018 Medicare FFS Supplemental Improper Payment Report 
can be found at https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/Downloads/2018MedicareFFSSuplementalImproperPaymentData.pdf.

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            HCPCS                             Description
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E1390........................  Oxygen concentrator, single delivery
                                port, capable of delivering 85 percent
                                or greater oxygen concentration at the
                                prescribed flow rate.
E0466........................  Home ventilator, any type, used with non-
                                invasive interface, (e.g., mask, chest
                                shell).
E0784........................  External Ambulatory infusion pump,
                                insulin.
L0650........................  Lumbar-sacral orthosis, sagittal-coronal
                                control, with rigid anterior and
                                posterior frame/panel(s), posterior
                                extends from sacrococcygeal junction to
                                t-9 vertebra, lateral strength provided
                                by rigid lateral frame/panel(s),
                                produces intracavitary pressure to
                                reduce load on intervertebral discs,
                                includes straps, closures, may include
                                padding, shoulder straps, pendulous
                                abdomen design, prefabricated, off-the-
                                shelf.
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    The full updated list is also available in the download section of 
the following CMS website: https://www.cms.gov/Research-Statistics-
Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/
DMEPOS/Prior-

[[Page 16619]]

Authorization-Process-for-Certain-Durable-Medical-Equipment-Prosthetic-
Orthotics-Supplies-Items.html.

III. Collection of Information Requirements

    This document does not impose information collection requirements, 
that is, reporting, recordkeeping or third-party disclosure 
requirements. Consequently, there is no need for review by the Office 
of Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.).

IV. Regulatory Impact Statement

    We have examined the impact of this action as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), 
Executive Order 13132 on Federalism (August 4, 1999), the Congressional 
Review Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing 
Regulation and Controlling Regulatory Costs (January 30, 2017).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year). 
This document does not reach the economic threshold and thus is not 
considered a major rule.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
less than $7.5 million to $38.5 million in any 1 year. Individuals and 
states are not included in the definition of a small entity. We are not 
preparing an analysis for the RFA because we have determined, and the 
Secretary certifies, that this document will not have a significant 
economic impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare an 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 604 of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a Metropolitan Statistical Area for Medicare 
payment regulations and has fewer than 100 beds. We are not preparing 
an analysis for section 1102(b) of the Act because we have determined, 
and the Secretary certifies, that this action will not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2019, that 
threshold is approximately $154 million. This action will have no 
consequential effect on state, local, or tribal governments or on the 
private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on state 
and local governments, preempts state law, or otherwise has Federalism 
implications. Since this action does not impose any costs on state or 
local governments, the requirements of Executive Order 13132 are not 
applicable.
    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017 and requires that the 
costs associated with significant new regulations ``shall, to the 
extent permitted by law, be offset by the elimination of existing costs 
associated with at least two prior regulations.'' OMB's interim 
guidance, issued on April 5, 2017, https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2017/M-17-21-OMB.pdf, explains that 
for Fiscal Year 2017 the above requirements only apply to each new 
``significant regulatory action that imposes costs.'' It has been 
determined that this document is not a ``significant regulatory 
action'' and thus does not trigger the aforementioned requirements of 
Executive Order 13771.
    In accordance with the provisions of Executive Order 12866, this 
document was reviewed by the Office of Management and Budget.

    Dated: March 19, 2019.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 2019-08032 Filed 4-18-19; 4:15 pm]
 BILLING CODE 4120-01-P