Coverage Interpretation by the Centers for Medicare and Medicaid Services and Its Contractors

Because there is no statutory list of specific items or services to be covered, CMS and its contractors have discretion to determine whether a specific device meets the definition of a benefit category and, in turn, whether the device and/

or service using the device may be covered under the program. Decisions regarding coverage of specific devices not otherwise specified or expressly excluded by Congress are based on the statutory reasonable and necessary standard. The statutory standard is an exclusionary standard, which precludes coverage for those items and services "not reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body member."78 The authors refer to this standard as the "Medicare mantra" because it is the standard relied on for all coverage decisions rendered by CMS and its contractors.

What does this "Medicare mantra" mean? To date, CMS has not published definitions or criteria, despite a number of attempts to do so. Yet, there is a considerable amount of information available from the coverage decisions that CMS has made over the years. We know that the term is interpreted to exclude preventive services, because they are not designed to "treat or diagnose" and are considered covered only when Congress articulates specific benefit categories. For devices, CMS has historically interpreted reasonable and necessary to mean that the product must, at minimum, be safe and effective (i.e., unless exempt, it must have been approved or cleared for marketing by the FDA and must not be experimental).79 CMS has also looked to authoritative objective evidence from published clinical studies and gives the most weight to those prospective, randomized studies published in peer-reviewed journals, as well as data regarding whether the item or service has been generally accepted in the medical community. More recently, CMS has adopted and employed principles of evidence-based medicine.20 The agency seeks to identify quality data and whether the item or service has been generally accepted both for the condition for which it is used and for Medicare beneficiaries in general. Indeed, showing how the Medicare population would benefit from the technology should be a key feature for any strategy for Medicare coverage.

It has been more than 15 years since CMS first attempted to publish criteria for making coverage decisions.27 It has withdrawn its most recent proposal, a notice of intent published to solicit public comments.22 Much of the controversy surrounding proposed coverage criteria stemmed from the considerations of costs in the face of statutory language that did not require a cost-benefit analysis. Critics have argued that cost considerations should be factored into the payment methodology for a covered benefit. In other words, coverage should be evaluated separately from pricing.

In the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Medicare Modernization Act), Congress directed CMS for the first time to publish the factors considered in making national coverage determinations on whether an item or service is reasonable and necessary. The factors will be published using guidance documents similar to those developed by the FDA.23

Although CMS on several occasions has indicated its intent to issue guidance documents for categories of items and services, it had not developed such documents.

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