CMS Looks to Cut Local Medicare Coverage Bodies by More than 50%

Originally Published MDDI June 2002

NEWS & ANALYSIS

Erik Swain

The Medicare program is unwieldy, and administrators at the Centers for Medicare and Medicaid Services (CMS; Baltimore) are constantly looking for ways to streamline and reform it. One idea that has come to light is to consolidate the number of local coverage bodies from one per state to about 20 across the nation.

This idea did not meet with great enthusiasm at the recent meeting of the Medical Device Manufacturers Association (MDMA; Washington, DC).

"By and large, the Medicare program has so many people paying claims under so many payment systems that true accountability and management is impossible," said Tom Grissom, director of the CMS Center for Medicare Management. "That inconsistency, and the lack of diligent application of our policies, has convinced us it is best to reduce the number of contractors. There are not significantly major differences in medical practices in different areas. We need to make better, more-consistent decisions."

He acknowledged, however, there will always be some form of local coverage decisions because "there is no political will to turn this into a national program where everyone gets paid the same."

But contractor reduction does have plenty of political support. The Medicare Regulatory and Contracting Reform Act of 2001 passed the House of Representatives unanimously on December 4, 2001; it remains under consideration in the Senate.

Most device manufacturers, however, rely on the approval of the local decision-making bodies for coverage of their products. Seeking coverage nationally is seen as a risky, desperate strategy, since a "no" decision precludes coverage in any state and could sound the death knell for the product. But device manufacturers attending a breakout session on Medicare coverage said a favorable coverage decision in one state can lead to other states following suit, and the industry is better off with more chances to get an initial "yes" decision.

"The result of further consolidation may be de facto national decision making," said Maria B. Stewart, executive director of Boston Healthcare Associates Inc. (Boston). "This presents a problem for small companies with limited reach."

Grissom suggested, however, that manufacturers will ultimately care more about results than structure. "Providers like local coverage—when it results in payment," Grissom said. "And providers also like national coverage—when it results in payment."

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