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Report (OEI-01-11-00500)

Local Coverage Determinations Create Inconsistency in Medicare Coverage

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Medicare administrative contractors (MACs) and CMS sometimes develop policies to limit Medicare coverage of specific items and services. MACs issue local coverage determinations (LCDs) that limit coverage for a particular item or service in their jurisdictions only. This can lead to State-by-State variation in Medicare coverage for similar items and services. Section 731 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) calls for a plan to evaluate new LCDs to determine which should be adopted nationally and to what extent greater consistency can be achieved among LCDs. This study determined the variation in coverage of Part B items and services as a result of LCDs and assessed CMS's efforts to evaluate LCDs for national coverage as required by the MMA.


We analyzed the Medicare Coverage Database to determine the LCD-caused variation in coverage of Part B items and services. We also used data from the National Claims History and the Enrollment Database to test for relationships between cost and utilization of items and services and presence or absence of an LCD. From CMS, we requested documents created by its 731 Advisory Group and LCD Writers' Group. Finally, we interviewed CMS staff and MAC staff to further our understanding of actions CMS has taken in response to Section 731 of the MMA.


In October 2011, over half of Part B procedure codes were subject to an LCD in one or more States. The presence of these LCDs was unrelated to the cost and utilization of items and services. Furthermore, LCDs limited coverage for these items and services differently across States. LCDs also defined similar clinical topics inconsistently. Finally, CMS has taken steps to increase consistency among LCDs, but it lacks a plan to evaluate new LCDs for national coverage as called for by the MMA.


We recommend that CMS establish a plan to evaluate new LCD topics for national coverage consistent with MMA requirements. We also recommend that CMS continue efforts to increase consistency among existing LCDs. Finally, we recommend that CMS consider requiring MACs to jointly develop a single set of coverage policies. CMS concurred with all of our recommendations.

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