PRACTICE RESOURCES > Regulation/AUA Positions, Letters, and Talking Points > HCFA Regarding Medicare Coverage Decisions

HCFA Regarding Medicare Coverage Decisions

July 17, 2000

Nancy Ann DeParle
Health Care Financing Administration
Attention: HCFA-3432-NOI
PO Box 8016
Baltimore, MD 21244

Re: HCFA-3432-NOI: Medicare Program: Criteria for Making Coverage Decisions

Dear Ms. DeParle:

On behalf of the American Urological Association (AUA), representing 9,200 American urologists, I am pleased to submit comments on HCFA's May 16th Notice of Intent in the Federal Register, regarding Medicare coverage decisions on services and products.

According to the Notice, the main purpose of the proposed rule is to explain how the term "reasonable and necessary" applies in making Medicare coverage decisions.

Under the new rule, HCFA would apply two criteria for national and local coverage decisions.

  1. The item or service must demonstrate medical benefit.
  2. The item or service must demonstrate added value to the Medicare population.

To be covered, the following must be true:

While the AUA applauds HCFA for trying to formulate a definition for "reasonable and necessary," we are very concerned by this proposed rule for three reasons:

  1. Coverage is determined by cost,
  2. The potential limitation on a physician's ability to choose the best therapy for a patient, and
  3. HCFA and manufacturers would determine price.

Coverage determined by cost

Under the Notice of Intent, HCFA would decide-based on cost-which devices, drugs and technologies provide the best value to the Medicare program. However, HCFA lacks statutory authority to make cost-based coverage decisions. The Medicare Act authorizes HCFA to determine whether an "item or service" is reasonable or necessary for diagnosis or treatment purposes, not whether its cost is "reasonable or necessary." According to the Notice, if an item's cost is equal to or less than a Medicare-covered alternative, it is covered. This is nothing more than coverage determined by cost and it is inappropriate.

Limitation of physician's ability to choose the best therapy

The Notice of Intent also impinges on a physician's ability to determine the best treatment for the patient. By limiting the availability of treatments (which most assuredly will occur if HCFA uses cost as a coverage determination), HCFA is in essence dictating the practice of medicine. Physicians, and not HCFA, are best equipped to make treatment decisions.

Furthermore, this notice seems designed to allow HCFA to limit the number of available treatments to one per illness. In doing so, HCFA is erroneously assuming that there is one optimal treatment that benefits all patients equally. HCFA must allow for exceptions to "the best treatment," and should give more consideration to the physician's clinical judgment and to the clinical guidelines put forth by specialty societies. Again, the decision as to which treatment is best for a particular patient is best made by the physician and not HCFA and its contractors.

Discourage new technologies

The Notice also puts the burden on industry to establish that its technology is beneficial. A company would have to invest significant funds into research and development to produce the necessary data. This cost of this research would, of course, be factored into the price of the technology. Once the new technology is covered, what is to prevent other manufactures, who have not had to invest in similar research, from creating copy-cat technologies at a far lower price? Currently, if two items are the same but one costs more, HCFA can institute a least costly alternative policy whereby they merely reimburse both at the lower rate. But, according to this Notice, it suggests that Medicare would begin covering only the cheaper technology. We would strongly recommend that in such cases, HCFA institute a least costly alternative policy, otherwise it would undoubtedly discourage the development of new technologies.

Current technologies at risk

Several products/services are currently covered under Medicare for which there is not a great deal of published clinical data. These products/services are effective, mainstream treatments, which have been used for decades. There is little clinical scientific evidence for these products/services because it is rare that one would generate such evidence after a product/service is considered effective. However, under this Notice, these products/treatments might no longer be covered. As the rule is written, manufacturers of these products/services would be forced to fund lengthy and expensive clinical trials merely to prove what is already known-that these are effective treatments. This preempts the physician's ability to make clinical judgments based on his or her own training and expertise.


In summary, the AUA is against the proposed rule, for the following reason:

Thank you for considering our comments. If you have any questions or comments, please contact John Ridge, Reimbursement Systems Project Manager, at 410-689-3780. Thank you.


Irwin N. Frank, MD, FACS
American Urological Association


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