Healthcare Reform: Observations on Medicare NCDs

August 7th, 2009 | Healthcare Reform

Among the many debates swirling around Healthcare Reform is how much control the federal government would have if there were a public alternative insurance program, which might be analogous to Medicare.  One point often made and disputed is that the government would determine what is covered and how much is paid for it – which is, in fact, how Medicare works. Take the following example from CMS' website about National Coverage Determinations:

"An NCD sets forth the extent to which Medicare will cover specific services, procedures, or technologies on a national basis. Medicare contractors are required to follow NCDs. If an NCD does not specifically exclude/limit an indication or circumstance, or if the item or service is not mentioned at all in an NCD or in a Medicare manual, it is up to the Medicare contractor to make the coverage decision (see LMRP). Prior to an NCD taking effect, CMS must first issue a Manual Transmittal, CMS ruling, or Federal Register Notice giving specific directions to our claims-processing contractors. That issuance, which includes an effective date and implementation date, is the NCD. If appropriate, the Agency must also change billing and claims processing systems and issue related instructions to allow for payment. The NCD will be published in the Medicare National Coverage Determinations Manual. An NCD becomes effective as of the date listed in the transmittal that announces the manual revision."

In English, that means CMS determines what is and is not covered by Medicare. That, of course, has a dramatic impact on what type of care and services Medicare beneficiaries can receive - and, notably, what services anyone receives, something that is not widely understood. Some classic examples include the rapid approval by CMS (then HCFA) of drug-eluting stents for treatment of coronary artery disease which led to the explosive growth in interventional cardiology back in the 1990s and a dispute that rages today between the cardiac surgery community and the interventional cardiology community about the efficacy of Coronary Artery Bypass Surgery vs. Stents.

Medicare NCDs have significant influence across all insurance and delivery venues. Absent Medicare approval, it is rarely financially feasible to implement a new technology since the elderly receive a large amount of healthcare services. Many insurers peg their coverage and payment rates to Medicare as well.

Another more recent example is the type of procedures for which PET (Positron Emission Tomography) Scanners are approved. PET is used in conjunction with CT and both are very expensive technologies and therefore represent expensive services to provide to beneficiaries. The combination of PET and CT is used for cancer treatment planning and effectiveness evaluation. Not all potential usages have been approved.

Incidentally, there are also Local Coverage Decisions (LCDs) where the Medicare Intermediary for a given area may approve a service that has not been subject to a NCD.

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