On November 3, 2006, the United States Court of Appeals for the Eleventh Circuit, in the case of Gulfcoast Medical Supply v. Secretary, Department of Health and Human Services, issued an opinion that a certificate of medical necessity (“CMN”) does not unequivocally establish that durable medical equipment (“DME”) meets the reimbursement test of “reasonable and necessary”, as required by Medicare Part B. In the first case of its kind in any federal court of appeals, the Eleventh Circuit held that the Secretary of the Department of Health and Human Services (“DHHS”) may require a DME supplier to submit additional evidence beyond the CMN in order to establish the medical necessity of the item for reimbursement.

The Court acknowledged that federal law permits DME suppliers to use a CMN to assist in submitting claims. The supplier may fill in certain portions of the form in advance and have the ordering physician fill in the balance of the form. The physician must supply the medical portion of the form. Factually, Gulfcoast, a Florida-based DME supplier, was apparently the subject of consumer complaints and “suspicious” results from statistical analyses performed by Gulfcoast’s carrier. Based on a random sample and audit, the carrier determined that a number of patients for whom Gulfcoast had submitted claims for DME reimbursement did not meet the medical necessity criteria for power wheelchairs, despite Gulfcoast having CMNs. The carrier ultimately concluded there was an overpayment of more than $280,000. Ultimately, the federal Eleventh Circuit determined that Gulfcoast’s having a CMN for each item of equipment was not necessarily sufficient. Gulfcoast argued that express federal law removed all discretion from the Secretary of DHHS to request additional documentation beyond a CMN. The Eleventh Circuit disagreed. The court cited to the long-established principle that “considerable weight should be accorded to an executive department’s construction of a statutory scheme it is entrusted to administer.” It stated that the CMN is not identified by the law as the only documentation that may be required of suppliers in making a medical necessity determination.  In other words, it is not the exclusive evidence of medical necessity.

Because the Eleventh Circuit has identified this as the first federal appellate decision on this issue, it is possible that a writ to the U.S. Supreme Court for further determination is possible. A party has ninety days from the date the decision of the Court of Appeal is docketed to file a writ with the U.S. Supreme Court.

The citation for this case is Gulfcoast Medical Supply, Inc. v. Secretary, Department of Health and Human Services, ________ F.3d ________, 2006WL 3102315 (11th Cir. 2006).