Local decision-making on Medicare coverage issues will remain uncompromised by efforts to reform contracting policy, Centers for Medicare & Medicaid Services Administrator Tom Scully assured lawmakers Sept. 25.

"Our goal...is to find the best contractors," Scully testified before the House Ways & Means/Health Subcommittee. "The localized trends will not change.... The local coverage process will continue."

Scully was responding to panel member Jim Ramstad (R-Minn.), who characterized the local coverage process as "absolutely vital" for broader access to breakthrough medical devices.

"Patients can gain access to many innovative technologies that otherwise would have encountered delays on the national or CMS level," Rep. Ramstad observed. He expressed concern that consolidating the number of contractors would prevent "procedures and technologies [from becoming] available."

Scully has said that CMS would like to shrink its number of contractors from 50 to about 20. On Aug. 2, Health Subcommittee Chair Nancy Johnson (R-Conn.) and Ranking Member Pete Stark (D-Calif.) introduced the "Medicare Regulatory and Contracting Reform Act." The bill, HR 2768, would facilitate a performance service-based approach to fee-for-service contracting (¹ Also see "CMS Tech Reform Bills In Search Of Vehicle; Johnson/Stark Go It Alone" - Medtech Insight, 6 August, 2001.).

Scully maintained that the passage of contracting reform in conjunction with administrative changes being undertaken by CMS would help alleviate a number of perceived problems with Medicare contractors, several of which were outlined by the General Accounting Office during the hearing.

In general, GAO found that providers are receiving improper information from Medicare contractors. During roughly 60 calls to contractor information lines for Medicare providers, the congressional audit agency found that about 85% of the information received was either incomplete or inaccurate, GAO official Leslie Aronovitz noted. Almost every panel member commented on the finding.

Scully responded that the types of reforms included in the House bill would allow the government to communicate better with contractors and to choose intermediaries that would operate more efficiently.

During the hearing, Rep. Ramstad cited a recent report by the Lewin Group health policy research firm, which found that roughly 90% of new technologies and services attained coverage through the local decision-making process.

AdvaMed repeatedly has stressed the importance of retaining the current local contractor system, claiming it gives physicians the opportunity and incentive to use breakthrough technologies, which in turn facilitates collection of the necessary data on which to base national coverage decisions.

"AdvaMed appreciates the work of Congress and CMS to examine Medicare contractor operations in areas such as accountability and performance incentives," the association said in testimony submitted for the record. AdvaMed acknowledged "some reforms are warranted," but emphasized that Congress should "avoid steps that would undermine the local coverage process as a route to early patient access to medical technologies.... A process for making coverage decisions locally and for securing input from the local medical community...should be maintained."

For example, contractors might be empowered to grant physicians the authority to make coverage decisions, in consultation with their peers in the local medical community. Furthermore, local carrier advisory committees should be continued within each state to ensure that medical review policy reflects the consensus of the local physician community. In addition, contractors should continue to have the authority to issue and recognize local codes.

AdvaMed also favors requiring medical directors to post on carrier websites their intent to make a coverage decision, the information that will be reviewed and the names of the coverage advisory committee members reviewing the information. The feature would apply to any changes in local coverage policy, including those resulting from a change or consolidation of contractors. Previously, the Medical Device Manufacturers Association has said that CMS should eliminate the lack of transparency in the process for making local coverage decisions (² Also see "Medicare Contractor Reform On Horizon; AdvaMed Opposes Consolidation" - Medtech Insight, 2 July, 2001.).

HR 2768 is supported by the Bush administration and is co-sponsored by every member of the Health Subcommittee, indicating that the measure could pass this session.

Medicare Contractor Reform Will Preserve "Localized Trends," Scully Says

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