The American Journal of Managed Care August 2014
Synchronization of Coverage, Benefits, and Payment to Drive Innovation
CMS focuses most of its attention on developing formal coverage policies for items and services that are likely to have a major impact on quality, safety, and the government budget. Although many items and services do not reach this level of attention, CMS is tasked with meeting the statutory requirement for Medicare services that “[n]o 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.”16 Notably, this language has never been amended, or interpreted through public rulemaking.17,18
CMS determines what is reasonable and necessary based on whether there is “adequate evidence to conclude that the item or service improves health outcomes.”19,20 CMS ranks the quality of clinical studies based on numerous, coherent, and sensible criteria that help assess the reliability of the data generated.21 When there is no specific coverage policy, a local Medicare Administrative Contractor (MAC) may remain silent or may decide to cover the service or item on a case-by-case basis.
Coverage and Benefits Under Medicare Advantage
The MA program, formerly Medicare + Choice, was designed to give CMS an alternative way to provide services for patients who were willing to forgo some flexibility in selecting providers to get, in return, improved benefits and lower costs.22 Commercial payers sponsor MA plans and assume the insurance risk under a capitated payment system for the services offered to their Medicare enrollees.
CMS requires that Medicare Advantage Organizations (MAOs) “provide coverage of...all services that are covered by Part A and Part B of Medicare…and that are available to beneficiaries residing in the plan’s service area.”23 By the same token, if a service or item is explicitly not covered under Medicare Parts A or B, then it is also not covered under MA. For example, in a recent update to the Medicare Managed Care Manual, CMS notes, “An MA plan may not offer home health coverage or home health services beyond that covered by Original Medicare, if the Home Health Agency manual has classified those additional services as not covered by Original Medicare because they are not considered medically necessary.”24 The Home Health Benefit Manual interprets the statutory requirement25 that a Medicare beneficiary must be homebound to qualify for home healthcre.26 Therefore, an MA plan cannot offer home healthcare to patients who are not homebound.
Additionally, MA plans may not add prerequisites to covered services. For example, if an MA plan wants to implement step therapy for a covered Part B drug as an approach to improving quality and saving costs, it would not be allowed to do so if step therapy is not also a requirement under Original Medicare.27 CMS requires enrollees in MA plans to have, at a minimum, equal access to items and services covered by Original Medicare in their service area.28
For services or items on which CMS is silent (ie, where there is no Medicare national or local coverage determination), an MAO may choose to adopt the coverage policy of another MAO in its service area or make its own coverage determination. If an MAO makes its own coverage determination, it must provide its rationale using an objective, evidence-based process based on authoritative evidence.29
When an MAO would like to cover services beyond those covered under Original Medicare, the MAO must meet CMS conditions for “supplemental benefits.”30 Each supplemental benefit must be additional to the benefit covered by Original Medicare, be medically necessary, and must result in the plan incurring medical costs.31 Examples of supplemental benefits include services such as additional inpatient hospital days (acute or psychiatric); waiver of the Medicare payment policy that requires a qualifying hospital stay of 72 hours (the 3-day rule) before skilled nursing coverage is available; availability of Medicare Part B; drugs and nursing services in the home and other Part D drugs as a bundled service.32