What are National and Local Coverage Determination Policies?

When the Centers for Medicare & Medicaid Services (CMS) issued its recommendations on National Coverage Determination (NCD) policy 240.4 “Continuous Positive Airway Pressure (CPAP) Therapy for Obstructive Sleep Apnea (OSA)” on December 14, 2007, AASM felt that it would be beneficial to provide our members with additional information on the differences between a National Coverage Determination (NCD) policy and a Local Coverage Determination (LCD) policy.
Currently, the Medicare program provides health coverage for more than 43 million beneficiaries in the United States.  To administer this care to its beneficiaries, CMS has developed a process by which it determines coverage for services provided to beneficiaries by physicians.  CMS has developed two types of coverage to administer benefits for beneficiaries: National Coverage Determination (NCD) Policy and a Local Coverage Determination (LCD) Policy. 
NCD is coverage for all services but is limited to services that are deemed to be reasonable and necessary for the diagnosis and treatment of an illness or injury. CMS developed the NCD on a national basis for all Medicare beneficiaries meeting the criteria for coverage. NCDs are made through an evidence-based process, with opportunities for public participation through an open comment period.  In some cases, CMS’s own research is supplemented by an outside technology assessment and/or consultation with the Medicare Evidence Development & Coverage Advisory Committee (MedCAC). The NCD is then published in the Federal Register.   
However, the reality is that a majority of coverage is determined at the local level through a LCD. In fact, several Regional Medicare Carriers currently have LCD policies in effect that require AASM accreditation for polysomnographic testing. The AASM is planning to meet and work with Regional Medicare Carriers with the objective of requiring AASM accreditation with/or appropriate board certification for in-facility testing and unattended portable monitoring. 
In the absence of a national policy, or as long as they adhere to the parameters set in the Medicare Program Integrity Manual, a Regional Medicare Carrier may issue a LCD policy on coverage of a particular service.  
Since the inception of Medicare, CMS has contracted vital program operational functions to independent companies that provide a variety of services, one of which includes the issuing and implementing of LCD policies.  
Two types of contractors exist that handle these services to CMS: Fiscal Intermediary and Carrier. A Fiscal Intermediary is a contracted company that pays claims for Medicare institutional services or Medicare part “A” claims. A Carrier is a contracted company that pays claims for Medicare professional services or Medicare part “B” claims.  Other major functions of contractors include claims processing, beneficiary and provider customer service, appeals, provider education, financial management, provider enrollment, reimbursement, payment safeguards and information systems security.  
In order to process claims faster, provide prompt customer service and to expedite appeals, CMS divided the country into 10 regions:
Region I         Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, Vermont
Region II        New Jersey, New York
Region III       Delaware, District of Columbia, Maryland, Pennsylvania, Virginia, West Virginia
Region IV       Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee
Region V        Illinois, Indiana, Michigan, Ohio, Minnesota
Region VI       Arkansas, Louisiana, New Mexico, Oklahoma, Texas
Region VII      Iowa, Kansas, Missouri (Eastern), Missouri (Northwest), Nebraska
Region VIII     Colorado, Montana, North Dakota, South Dakota, Utah, Wyoming
Region IX       California, Hawaii, Nevada
Region X        Alaska, Idaho, Oregon, Washington
Though the country is divided into regions by CMS, each state maintained the ability to select its own Medicare contractor. For example, each state in Region I was able to choose its own contractor for part “A” and part “B” claims: For processing of part “B” claims,Massachusetts, Maine, New Hampshire and Vermont have contracts with National Heritage Insurance Co., Connecticut has a contract with First Coast Service Options, Inc., and Rhode Island has a contract with Pinnacle. 
Not every contractor has a LCD policy pertaining to sleep. Contractors that have not promulgated a LCD sleep policy use NCD “Continuous Positive Airway Pressure (CPAP) Therapy for Obstructive Sleep Apnea (OSA) (240.4)” for coverage.
The following contractors do not have a LCD policy for sleep:
National Heritage Insurance Co.     Mass., Maine, N.H., Vt.
First Coast Service Options, Inc.    Conn., Fla.
Cahaba                                                  Ala., Ga., Miss.
Wheatlands                                          Kansas, Neb.
Cigna Healthcare                                Idaho, N.C., Tenn.
In December of 2003, Congress passed the Medicare Modernization Act (MMA), which changes the way CMS contracts for administrative services for Medicare.  The MMA created new contractors referred to as Medicare Administrative Contractors (MACs) that will replace all of the existing carriers and fiscal intermediaries over the next three years. The MACs will process Part A and Part B claims from 15 multistate jurisdictions.
MACs will be responsible for the receipt, processing and payment of Medicare fee-for-service claims. In addition to providing core claims processing operations for both Part A and Part B, the MACs will be the primary contact for physicians and perform functions related to appeals, provider outreach and education, financial management, provider enrollment, reimbursement, payment safeguards, and information systems security.
Currently, MAC Jurisdiction III is the only MAC processing Part A & B claims. Jurisdiction III covers the following states: Ariz., Mont., N.D., S.D., Utah, and Wyo. Claims are processed by Noridian Administrative Services.

As the MACs commence operations in their jurisdictions, each MAC will consolidate all the LCDs for its jurisdiction by selecting the policy with the “best medical practice” language. The reforms to the Medicare contracting system should not affect claims, but instead will affect how CMS contractors administer the fee-for-service program. Medicare claims will still be submitted either electronically or by paper, but they will be sent to the new MAC for the jurisdiction in which a provider practices.