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OIG Report: LCDs Create Inconsistency in Medicare Coverage

Published on 

Tuesday, January 14, 2014

Regular readers of our weekly newsletter are likely aware that we publish a monthly article on updates to Medicare national and local coverage policies – NCDs and LCDs.  So it should be no surprise that I found the OIG report on LCDs very interesting and enlightening.  The OIG found that LCDs have significant influence on Medicare’s coverage of items and services.  They also found that due to inconsistency between the LCDs from various contractor regions, Medicare patients’ access to items and services can depend on geography as much as their clinical indications.

 

The OIG report studied Part B LCDs but Part A LCDs that apply to hospital services have similar characteristics.  Some basic facts concerning Local Coverage Determinations:

1)    they apply only in States within the contractor’s jurisdiction;

2)    they must follow all Medicare statutes, rulings, regulations and national coverage, payment and coding policies; and

3)    they may limit coverage of an item or service to a specific diagnosis or condition, or they may prohibit coverage of an item or service completely.

 

The OIG is not the only government entity that has weighed in on LCDs.  In 2001, the Medicare Payment Advisory Commission (MedPAC) recommended the elimination of LCDs and in 2003, the Government Accounting Office (GAO) reported LCDs resulted in inequitable variations in coverage.  The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) affected LCDs in two ways.  First, it replaced Fiscal Intermediaries (FIs) and Carriers with Medicare Administrative Contractors (MACs).  Medicare Contractor Reform is continuing to refine Medicare jurisdictions as it decreases the number of MACs.  Secondly, the MMA called for a plan to evaluate new LCDs for possible national application and to increase consistency among LCDs.

 

The OIG report looked at LCDs in October 2011 and still found problems with inconsistencies.  The OIG found that the presence of LCDs was unrelated to the cost and utilization of items and services, LCDs limited coverage for items and services differently across States, and they defined similar clinical topics inconsistently.  Due to these types of inconsistencies, coverage for a given service may be restricted in one State where an LCD is in place and completely unrestricted in another State where no LCD is in place.  Forty percent of procedures with no coverage allowed in one or more States had allowed charges in other States where LCDs did not prohibit coverage. This means Medicare patients in some States did not have access to items and services that had significant use among Medicare patients in other States.  The report also noted that the State-by-State differences in coverage created by LCDs are contrary to the growing practice of evidence-based medicine that eschews local variation.

 

Also the volume of affected services varied greatly between States.  LCDs affected coverage for over 50 percent of items and services in some States (California, North Carolina, South Carolina, and Virginia) and as few as 5 percent of items and services in other States (Alabama, Georgia, and Tennessee). Over a fifth of the LCDs in effect during the OIG review restricted coverage for items and services in only 3 States—Florida, Puerto Rico, and the Virgin Islands. Remember these findings were for Part B policies, but likely similar for Part A coverage also.

 

The OIG recommended that CMS:

Ø  Establish a plan to evaluate new LCDs for national coverage consistent with MMA requirements

Ø  Continue efforts to increase consistency among existing LCDs

Ø  Consider requiring MACs to jointly develop a single set of coverage policies

Although CMS agreed with all of the OIG’s recommendation, they believe their current workgroups and other initiatives are addressing these recommendations.  The OIG maintains that pursuing a single set of coverage policies would simplify and strengthen Medicare coverage policy while lessening the administrative burden of LCDs.  So are changes in the LCD process likely – that remains to be seen.  Until then, we trudge along…

 

Most of the LCD updates for this month are related to the CPT/HCPCS coding changes for 2014.  One change of note is the removal of two drugs (Cimzia and Simponi) from Cahaba GBA’s Self-Administered Drug (SAD) list.

 

Polices and articles can be viewed on the Medicare Coverage Database by entering the policy number in the Document ID search.

Article Author: Debbie Rubio, BS MT (ASCP)
Debbie Rubio, BS MT (ASCP), was the Manager of Regulatory Affairs and Compliance at Medical Management Plus, Inc. Debbie has over twenty-seven years of experience in healthcare including nine years as the Clinical Compliance Coordinator at a large multi-facility health system. In her current position, Debbie monitors, interprets and communicates current and upcoming regulatory and compliance issues as they relate to specific entities concerning Medicare and other payers.

This material was compiled to share information.  MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.