Our firm is engaged by many clients to evaluate Medicare Local Coverage determinations (a.k.a. “Medicare LCD”) in specific regulatory compliance matters involving medical coding and medical billing for Medicare and Medicaid. In addition, although commercial insurers do not use LCDs directly and instead create their own coverage determinations, Medicare tends to influence what the entire U.S. health care industry determines is ‘reasonable’ for covering medical services designed to treat insured patients with specific conditions. We have found that in the past:
- Medicare LCDs have been inconsistent, with different policies in different jurisdictions.
- There is guidance in the LCD or accompanying LCD articles used in False Claims Act litigation by the U.S. Department of Justice where the guidance never went through the rigor of a public rulemaking process. DOJ has made abrupt reversals in its policy between 2018 and 2021 as to whether this guidance is binding, coinciding with two different administrations and two U.S. Presidents, as discussed below.
- Third, the LCDs have not kept pace with healthcare technology innovation, particularly in genetic testing as well as in medical devices.
In this article, I discuss some of the efforts underway by the Federal government to remedy these deficiencies.
Medicare LCD Modernization
Medicare LCDs are being updated. One can appreciate the scope of updating Medicare LCDs when considering that each Medicare Administrative Contractor (MAC) maintains its own separate active and inactive set of LCDs and articles. Nationally, as of January 2019, the Medicare Coverage Database (MCD) contained over 10,480 active LCDs and over 15,000 active articles.
Each LCD has procedure and diagnosis codes, and many LCDs have associated articles. In addition, some Current Procedural Terminology (CPT) codes have been retired, and new CPT codes are now active. Each CPT code for each LCD and each associated LCD article must be updated.
In Information Technology, people sometimes speak of ‘legacy systems,’ usually meaning systems that implement essential and complex processes built on aging or outdated technology that are hard to change and hard to retire.
Here we have both legacy systems and legacy policies, both of which are incredibly complex. Consider that much of the Medicare LCD database has nearly twenty (20) years of policies, both active and retired.
Medicare LCD and Companion Article Guidance – Binding the public without a notice-and-comment rulemaking process
Medicare LCD Updates will be an Iterative Process
The LCD update process will be iterative, so impacted parties should watch for significant revisions to the update policies. For example, Medicare LCD changes were first announced in October 2018, but an updated change request 10901 was published on January 11, 2019. The latest update made two crucial changes to the business requests (BR) and related Medicare manual Chapter 13 instructions. These are:
1. MACs have the discretion to host multi-jurisdictional CACs. Why does this matter?
a. The healthcare industry voiced concerns regarding ineffective Medicare Administrative Contractor processes. These included a lack of notices for public feedback in the rulemaking process, a balance of physician and on-physician representation on Contractor Advisory Committees (CACs), and concerns that CAC meetings are not open to the public.
b. In parallel to these events, in January 2018, then-Associate Attorney General Rachel Brand issued the Brand memo, which stated that health care providers could not be held liable under the False Claims Act for sub-regulatory guidance that had no public rulemaking process. This was later rescinded by the U.S. Department of Justice in a July 2021 communication. 
c. In the past, as noted by none other than the U.S. HHS Office of the Inspector General (OIG), inconsistencies in LCDs in different geographic jurisdictions led to inconsistent eligibility for the same care, simply because two Medicare beneficiaries lived in two different jurisdictions.
d. The 21st Century Cures Act requires clarity and consistency, and transparency. We await to see what ‘discretion’ means concerning coordination between the MACs. (According to “Local Coverage Determination (LCD) Process Modernization Qs & A” on the CMS web site, “The 21st Century Cures Act of 2016 added language to section 1862(l)(5)(D) of the Social Security Act (the Act) directing the Secretary of the Department of Health and Human Services (DHHS) to improve the transparency of the LCD process.”)
Medicare LCD Modernization for Devices for Innovative Technology
2. MACs have the option of providing a hyperlink to the FDA clearance to market. Why is this significant?
a. Section 510 (k) of the Food, Drug, and Cosmetic Act requires that medical device manufacturers register and notify the FDA of their intent to market a new device at least 90 days in advance. There is continuous innovation in the medical device market, with new devices coming to market every month.
b. In the past, Medicare National Coverage Determinations (NCDs) and LCDs have not kept up with innovation in the medical device industry.
c. CMS published a final rule in January 2019, creating a new Medicare coverage determination corridor for new medical devices. The Medicare Coverage of Innovative Technology (MCIT) pathway provides national coverage for four years after FDA approval, effective March 1, 2021. MCIT promises to provide coverage as soon as the same day that FDA approves new devices.
Medicare LCD Modernization Genetics
Medicare LCD Modernization Changes the Location of Coding Guidance
LCDs will no longer have coding guidance listed in the document. Instead, the LCDs have accompanying, separate articles associated with the LCDs that include coding guidance.
Healthcare Industry Impact of LCD Revisions to Electronic Health Records, Claim Adjudication Systems, Providers and DME Suppliers, Regulatory Agencies and in Legal Proceedings
1. Certified Electronic Health Record Technology (CEHRT) vendors must also update their systems to match LCD edits, aligning with updated CMS Medicare LCD policies as the Medicare Administrative Contractors update their LCDs.
2. Health plan claim adjudication systems must be updated, such as those maintained by Medicare Part C / Medicare Advantage Plans.
3. Adjacent Federal and State regulators who rely on LCDs must also update their policies and procedures.
4. Health care providers and medical device suppliers rely on LCDs to determine covered services and DME for Medicare beneficiaries.
5. Law firms and Medicare Fraud Expert Witness professionals will need to be aware of the date of service (DOS) of the medical billing in question and whether those dates correlate with the correct, active LCD and related article. Additionally, electronic health record forensics expert witnesses will need to comprehend updates to policies that impact dates of service.
 At first, under the U.S. President at the time, there was a new philosophy that there were too many regulations that created a burden to U.S. businesses, the U.S. Department of Justice explained its policy in a letter to “heads of civil litigating components” dated January 25, 2018. “On November 16, 2017, the Attorney General issued a memorandum (“Guidance Policy”) prohibiting Department components from issuing guidance documents that effectively bind the public without undergoing the notice-and-comment rulemaking process. Under the Guidance Policy, the Department may not issue guidance documents that purport to create rights or obligations binding on persons or entities outside the Executive Branch (including state, local, and tribal governments), or to create binding standards by which the Department will determine compliance with existing statutory or regulatory requirements. The Guidance Policy also prohibits the Department from using its guidance documents to coerce regulated parties into taking any action or refraining from taking any action beyond what is required by the terms of the applicable statute or lawful regulation. And when the Department issues a guidance document setting out voluntary standards, the Guidance Policy requires a clear statement that noncompliance will not in itself result in any enforcement action.”
Under the next U.S. President and a new U.S. Federal Administration, this policy was rescinded. See the U.S. Department of Justice Website, Issuance of Guidance Documents by the Department of Justice at https://www.justice.gov/opa/page/file/1408606/download