The Centers for Medicare & Medicaid Services unveiled a new pre-reimbursement review program, asking doctors to provide up-front justification for certain medical equipment and types of claims.
The program, set to launch in 11 states next month, will flip the reimbursement system from the agency’s existing "pay-and-chase" method of looking for improper payments after they’ve already been made.
The agency will highlight 15 medical procedures, including pacemaker and defibrillator surgeries, spinal fusions and joint replacements, for potential errors and fraud.
Some health care providers in California, Florida, Illinois, Michigan, New York, North Carolina and Texas will have to obtain prior authorization for certain medical devices for Medicare payments if they plan to submit for reimbursement.
During the first 3 to 9 months of the 3-year test program, med-tech claims will be subject to pre-payment review before the system kicks into full gear by requiring advance permission.
Another provision allows Medicare officials to review medical records for certain types of procedures before they’re paid. This type of review will launch in Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Montana.
The initiative includes an appeals system for providers to resubmit claims for partial reimbursement of a denied procedure, according to a CMS announcement.
The news may have had a hand in sending med-tech stock down yesterday, even as the major indices capped off a week of growth. Shares of Medtronic Inc. (NYSE:MDT) dropped 6 percent to $34.61; Boston Scientific Corp. (NYSE:BSX) lost 6.8 percent, landing at $5.50. St. Jude Medical Inc. (NYSE:STJ) fell 7 percent to $35.83.
The measures come as the agency continues to weather charges of excessive waste, most recently from ex-CMS chief Dr. Donald Berwick, who claimed that 20 to 30 percent of health care spending at the agency was wasted on over-treatment, uncoordinated care, an administrative labyrinth, overbearing rules and fraud.