Local and National Coverage Decisions

The provision of services by the Centers for Medicare and Medicaid Services (CMS) to its beneficiaries is predicated on the determination of medical necessity, once a service has a proven benefit category within the statutorily defined parameters of the program. Title XVIII of the Social Security Act, Section 1862 (a)(1)(A)7 states "No payment may be made under Part A or Part B for any expenses incurred for items or services which are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member." Two pathways exist in which ser-

*Any opinions expressed herein are those of the author and do not necessarily reflect the views of TrailBlazer Health Enterprises, LLCSM or Blue Cross Blue Shield of South Carolina. Further, any statements made concerning an identifiable product are those of the author and are not intended to be construed as either a favorable or an unfavorable recommendation of the product by TrailBlazer Health Enterprises, LLC or Blue Cross Blue Shield of South Carolina.

From: Clinical Evaluation of Medical Devices: Principles and Case Studies, Second Edition Edited by: K. M. Becker and J. J. Whyte © Humana Press Inc., Totowa, NJ

Table 1

Process Comparisons


Breadth of services addressed Role of systematic literature reviews Advisory Committee referral

Key milestones and public comment opportunities

Usually provider-based



Mandatory (Carrier Advisory Committees): relatively broad review responsibilities

Initial draft policy 90-day notice and comment finalize policy

Highly diverse Usually narrow Critically important

Elective (Medicare Coverage

Advisory Committee): Focus on evidence evaluation Tracing sheet "announcement" draft decicion memo 30-day notice and comment final decision memo

LCD, local coveage determination; NCD, national coveage ddetermination.

vices may be granted coverage under the Medicare program: (1) local coverage determinations (LCDs), formerly known as local medical review policies, and (2) national coverage determinations (NCDs). The overwhelming majority of decisions are made at the local level. Emerging, often high-impact technologies typically find themselves in the realm of the NCD evaluation process. Although linked by the overriding need to establish medical necessity before coverage may be granted, these processes differ in some fundamental ways, as summarized in Table 1. First and perhaps most importantly, LCD requests for coverage originate largely with Medicare contractor (that is, either Part A fiscal intermediaries or Part B carriers) interactions with provider stakeholders, whereas NCDs can be generated from a much broader base of requestors, including, but not restricted to, manufacturers, beneficiaries, providers, legislators, and even contractors.2 Because local Medicare contractors tend to partner with local providers, often through local (as well as national) medical societies, requests from manufacturers are often expressed through local providers that have embraced emerging technologies (e.g., drugs, devices) within their practices, and, in turn, contact contractors about coverage.

Second, LCDs are often broad, having been designed to adjudicate claims for a diverse set of services. To illustrate, a physical therapy service's LCD typically might cover multiple restorative modalities, just as an LCD on chemotherapy would address many oncologic indications of salient therapeutic agents. Thus, the core of an LCD is the delineation of medical necessity, which can be translated into Current Procedural Terminology I International Classification of Diseases, 9th Revision, Clinical Modification (CPTIICD-9-CM) code pairings, for the predominately electronic auto-adjudication of claims. Alter-

natively, the scope of an NCD tends to be relatively narrow in that specific diagnostic/therapeutic modalities are thoroughly evaluated through an evaluation of all available peer-reviewed literature, along with other sources (e.g., national specialty society position statements, practice guidelines). Except under limited circumstances, such as the November 2001 rule regarding laboratory NCDs,3 the NCD process defers the actual formulation of code pairings to local contractors.Third, there is a mandated review4 of all proposed LCDs by contractor-based Carrier Advisory Committees (CACs). In contrast, at the national level, there is an elective referral of pending requests for either contract technology assessments, via CMS' partnership with the Agency for Health Research and Quality (AHRQ) and/or deliberations by the Medicare Coverage Advisory Committee (MCAC). Thus, such referrals depend on the need for CMS to obtain additional analytical support on specific issues that is above and beyond what can be feasibly generated via internal systematic literature reviews. Whereas the local CAC is constructed mainly to accumulate provider input of varying types, the MCAC is responsible for technical perspectives on the state of the medical evidence, along with consumer and other advocacy viewpoints. Finally, publication formats differ for the LCDs and NCDs. For an LCD, draft policies are posted on contractor Web sites for 90-day review, during which time both general (public) comments are obtained, in tandem with those from CAC representatives. Following this notice-and-comment period, draft LCDs are finalized and then implemented in accordance with local systems specifications, although the term finalization is a misnomer because policy updates and revisions can occur at any time providing that stakeholders give sufficient justification for coverage expansion. Referrals through the CAC/ comment process are required only under the scenario of possible restricted coverage. In addition, under recent legislative mandates,5,6 the new LCD format requires the publication of companion documentation, including coding guidelines, which must be separate from the expression of medical necessity language in the LCD itself. Both LCD reconsiderations7 and appeals^ may be exercised as additional pathways for policy alteration. During the evaluation period, new NCDs are posted on the CMS Web site via a tracking sheet, and the subsequently published draft Decision Memoranda are subject to a 30-day public comment period. This differs somewhat from the draft LCD counterpart, which is posted at the conclusion of its initial deliberative period. Sixty days after the conclusion of this comment period, a final Decision Memorandum is posted, and implementation instructions are concurrently available. As noted above, certain implementation steps, such as matching payable CPT codes with ICD-9-CM codes are usually reserved for development by local contractors, pursuant to the receipt of such instructions. Any subsequent national policy alterations must occur via a separate formal request for reconsideration9 or an appeal.70

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