The Health Care Financing Administration (HCFA) issued a notice on May 16, 2000, of its intent to issue proposed rules establishing criteria for making Medicare coverage decisions. 65 Federal Register 31124 (May 16, 2000). HCFA's stated goal is to make Medicare "responsive to rapid advances in health care" and to "facilitate timely and expanded access ... to appropriate new technologies." Instead, the approach taken by HCFA will result in added delays, inappropriate reliance on cost and other considerations not authorized in the Medicare statute, and further denial of appropriate health care prescribed by a beneficiary's treating physician.

HCFA proposes to ask two questions in determining whether to cover a service or technology: does the item or service demonstrate medical benefit? and does the item or service demonstrate added value to the Medicare population? The ensuing coverage decision, according to HCFA, will describe the clinical circumstances and settings under which an item or service would or would not be covered for a clinical subset or class of Medicare beneficiaries.

The Federal Register notice raises troubling issues about how the Medicare coverage review process will work and how the criteria will be applied. Issues include:

Placing the burden of proof on the proponent of the item or service: The proposed criteria continue HCFA's approach of requiring proponents of an item or service to show why Medicare should cover the item or service. The Medicare statute, however, places the burden of proof on HCFA if it wishes to deny Medicare coverage. The statute prohibits payment for items or services that HCFA determines "are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body." Medicare Act Section 1862(a)(1)(A).

Adding cost as a criterion: HCFA's use of an "added value" criterion is no different from the cost effectiveness criterion that was included in earlier, withdrawn proposed rules on Medicare coverage criteria. The statutory section upon which coverage decisions are based, Section 1862(a)(1)(A), does not provide for an cost-based analysis in determining whether an item or service is "reasonable and necessary." That section has been in effect without amendment since enactment of the Medicare Act 35 years ago.

Using "medical benefit" to narrow the scope of "reasonable and necessary" services: In explaining the new "medical benefit" criterion, HCFA discusses the need for information about how the item or service "improves" diagnosis or treatment, "improves" functioning, and results in "improved" health outcomes. This approach ignores the fact that Medicare currently covers items and services necessary for beneficiaries to maintain their current health or ability to function. (See, e.g., 42 C.F.R. Section 409.44(c)(2)(iii), coverage of home health therapy services to establish a safe and effective maintenance program.) By looking only at improvement, the proposed coverage criteria will narrow the services available to Medicare beneficiaries and aggressively interferes with the treatment decisions of a beneficiary's attending physician.

Moving towards population-based coverage decisions: HCFA describes both national coverage decisions (NCDs) and local coverage decisions (LCDs) as "population-based policies" that apply to a clinical subset or class of Medicare beneficiaries. This has not been the case with NCDs, which generally apply to the Medicare population as a whole. Limiting all national coverage decisions to certain segments of the Medicare population is a new concept that narrows, rather than expands, access to care.

Under the proposed procedures, a coverage decision may be limited to a subset of Medicare beneficiaries who were included in the clinical trials that supported the determination. Such a limitation discriminates unnecessarily against certain groups of Medicare beneficiaries, such as nursing home residents, who are unlikely to participate in clinical trials.

Limitations based on population subsets allow for limitations based on diagnosis. Such distinctions have been made arbitrarily in the context of LCDs, thereby denying Medicare beneficiaries with diagnoses such as Alzheimer's disease and mental illness access to medically necessary care that is available to all other Medicare beneficiaries.

Interference with the practice of medicine: Medicare is an insurance program designed to cover its beneficiaries' health care costs. The very first section of the Medicare Act, Section 1801 (42 U.S.C. Section 1395), precludes HCFA or its employees from exercising any supervision or control over the practice of medicine. However, the proposed coverage criteria interfere with a physician's ability to decide the best course of treatment for a particular patient by trying to fit every Medicare patient into a predetermined treatment modality.

Under the proposed criteria, HCFA will not cover an item or service that is equally as effective as an item or service already covered unless the new item or service is less costly. HCFA will also have the option of withdrawing coverage of an item or service if it determines a new item or service is more cost effective. As a result, the treating physician loses the ability to determine which equally effective item or service is more efficacious for an individual patient.

HCFA, when considering "medical benefit" of an item or service, will decide whether the benefits of the treatment outweigh the risks of adverse side-effects. Again, the proposed criteria take away the traditional right of the patient, in conjunction with the treating physician, to make an individual risk/benefit analysis based on the patient's own medical needs.

Over-reliance on certain kinds of scientific evidence: All coverage decisions must be supported by some kind of evidence that substantiates the medical efficaciousness of the item or service in question. Nevertheless, HCFA is moving towards a system that relies primarily upon clinical trials, the most time-consuming and costly of scientific data collection. Reliance on clinical trials in virtually all situations will increase the time involved in making a coverage decision, increase the cost involved in getting Medicare approval, dissuade certain innovators from seeking Medicare coverage for their item or service, and delay access to care for Medicare beneficiaries. HCFA should recognize the range of clinical evidence to support coverage of items and services and recognize that for some items and services clinical trials are not appropriate. The proposed procedures also fail to take into consideration whether other insurance providers cover an item or service, resulting in the anomalous situation of certain carriers covering an item or service under their own plan but denying claims for coverage under Medicare.

HCFA will accept comments on its Medicare coverage criteria proposal until mid-July. Advocates and beneficiaries are urged to let HCFA understand that the proposal will reduce, rather than increase, access to medically necessary services authorized by a beneficiary's treating physician. Interested individuals may either submit their own comments or join in comments being prepared by the Center for Medicare Advocacy.

For further information contact Vicki Gottlich, Center for Medicare Advocacy (202-293-5760), Sally Hart, Center for Medicare Advocacy (520-327-9547), and Leslie Fried, ABA Commission on Legal Problems of the Elderly (202-662-8684).