CMS’s New “Reasonable and Necessary” Rule Defined

CMS Finalized its decision about what is considered “reasonable and necessary” coverage for Medicare beneficiaries.

This update affects Medicare parts A and B through the National Coverage Determinations. The update to the definition comes with the hopes for consistent and universal application across the agency. 

The new definition of “reasonable” and “necessary” are defined by the following when CMS considers covering an item or service:

1. Be safe and effective

2. Not experimental or investigational

3. Appropriate for Medicare patients

“Appropriate for Medicare patients” means: 

• Furnished in accordance with accepted standards of medical practice for the diagnosis or treatment of the patient's condition or to improve the function of a malformed body member;

• Furnished in a setting appropriate to the patient's medical needs and condition;

• Ordered and furnished by qualified personnel;

• One that meets, but does not exceed, the patient's medical need; and

• At least as beneficial as an existing and available medically appropriate alternative.

How were things done before? Previously requests were considered on a case-by-case basis, leaving it up to the discretion of the CMS official due to information they received from local and Federal policies in determining coverage. 

Now, we have a clear definition (or at least an improvement) with the Federal Agency erring on the side of coverage for items that are somewhat ambiguous to these standards. CMS is also codifying guidelines for covering things that might not meet the evidence above, by saying they will cover it “to the extent the items or services are covered by a majority of commercial insurers.” (healthpayerintelligence.com) Further, CMS will need to create guidelines for insurers on what they will cover, basing their decision on the best interest for the greatest number of insured people. 

Another breakthrough in this rule to go into effect on March 15th, is a CMS-funded pathway for breakthrough medical devices created by the Food and Drug Administration. This means that Medicare agrees to cover breakthrough devices as soon as the first day they pass regulatory approval. 

How this works: The Food and Drug Administration is the top regulatory body for Medical devices. Device manufacturers will need to notify the FDA if they would like to qualify for the coverage under Medicare. If the device fits within Medicare’s guidelines, meaning that it’s covered by a Medicare Benefit Category, Medicare will agree to cover the device. The new rule aims to bring Medicare beneficiaries cutting edge medical technology that can improve their lives. 

“Breakthrough Devices” in the FDA program must meet the following criteria as according to the Federal Register:

1. The first criterion is that the device provides for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions.

2. The second criterion is that the device must satisfy one of the following elements:

   1. It represents a breakthrough technology;

   2. no approved or cleared alternatives exist;

   3. it offers significant advantages over existing approved

   4. or cleared alternatives, including additional considerations outlined in the statute;

   5. or device availability is in the best interest of patients

You can read the Federal Register on these new Rules here. 

The new CMS regulations are in an attempt to increase coverage, reduce out-of-pocket costs to the individual and to stay on the forefront of medical technology that has the potential to improve health outcomes. The new Rules go into effect on March 15th, 2021.

Source of article: https://revcycleintelligence.com/news/cms-defines-reasonable-and-necessary-medicare-coverage