MEDICAL NECESSITY AND REIMBURSEMENT ISSUES

FOR PHYSICIANS• Clinical necessity and

reimbursement issues• Medicare policies• Pre-operative testing• Financial impact• Emergency dept.• ABNs

U.S. Govt. definition of “medical

necessity” for Medicare42 USC section 1395y(a)(1)(A):

“No payment may be made under part A or part B for any expenses incurred for items or services which . . . are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of the malformed body member.”

SCREENING TESTING

• Medicare does NOT pay for screening tests in absence of signs and symptoms except:

Mammography Pap smears/pelvic

exams Prostate cancer

screening

Colorectal cancer screening tests

Bone mass measurements

Colonoscopies

MANY HAVE AGE

AND FREQUENCY

LIMITATIONS

LOCAL MEDICALREVIEW POLICIES

• Each Medicare claims processor establishes policies for coverage

• May differ among geographic areas

• Many practicing physicians disagree with restrictions

• Current policies on Web at www.lmrp.net

23 National coverage policies published November 23, 2001

Cover many widely-used tests

Eliminates differences among geographic areas

Become effective in 90 days to one year

Clinical support

Policies were published in the Federal Register on November 23, 2001

Web address: http://

www.access.gpo.gov/su_docs/fedreg/a011123c.html

Scroll to CMS section

POLICIES DEFINED FOR:1. Urine culture2. HIV testing (prognosis

including monitoring)3. HIV testing (diagnosis)4. CBC5. PTT6. PT7. Serum iron studies8. Collagen crosslinks9. Blood glucose testing10. Glycated hemoglobin/

glycated protein11. Thyroid testing

12. Lipids

13. Digoxin

14. Afp

15. CEA

16. hCG

17. CA 125

18. CA 15-3/CA 27.29

19. CA 19-9

20. PSA

21. GGT

22. Hepatitis panel

23. Fecal occult blood

FORMAT OF NATIONAL COVERAGE DECISIONS

• Official title of policy

• Other names or abbreviations

• Description

• HCPCS (CPT) codes

• Indications

• Limitations

• ICD-9-CM Codes Covered by Medicare

POLICY FORMAT (cont’d.)

• Reasons for denial

• ICD-9-CM codes denied

• ICD-9-CM codes that do not support medical necessity

• Source of information

• Coding guidelines

• Documentation requirements

• Other comments

How were policies developed?

• Negotiated rulemaking process

• Representatives included physicians, hospitals, labs, other interested groups, and CMS

• Review of clinical literature

• Drafts posted on Web in spring, 2000

Physician responsibilities• Physician or qualified

extender must maintain documentation of medical necessity in patient’s medical record

• Order must be specific and signed by person ordering

• Diagnosis may be narrative or in ICD-9-CM format; required by BBA of 1997

PRE-OPERATIVE TESTING

• Prior to use of ICD-9-CM coding in 1989, Medicare didn’t realize they were paying for pre-op testing

• Customary pre-op EKG, CBC, chest x-ray were seen as necessary and usually were paid

• Medicare realized big numbers and big $$ were involved

PRE-OP TESTING CHANGES• May 2001--CMS clarified

testing outside of global surgical period

• Actually made denying tests easier for CMS

• First test is “routine screening”, then medical necessity in light of condition requiring surgery, then underlying conditions and diseases

FINANCIAL IMPACT

• Patient pays for non-covered services out-of-pocket

• Hospital/lab cannot bill patient if they did not obtain a signed Advance Beneficiary Notice (ABN)

• Potential fraud and abuse exposure

• Many private insurers are following Medicare’s lead

RELATIONSHIP IMPACT

• Patients are confused and upset – “My doctor said I needed this test, so why won’t Medicare pay for it?”

• Physicians and hospitals or labs concerned about patients deferring testing due to financial issues

• Time-consuming and expensive process!

Advance Beneficiary Notices (ABNs)

• CMS has redesigned forms and requires use of standard format upon final approval

• Time demands on hospitals and labs are enormous

• In absence of signed ABN, patient may NOT be billed

• Routinely billing Medicare for “medically unnecessary” services can create fraud and abuse exposure

• Diagnoses and tests must be evaluated at registration, not after testing done.

ABNs in the Emergency Dept.

• CMS considers use of ABNs in emergency situations to violate EMTALA regulations

• Seen as creating a financial barrier to patient obtaining care

• Unfunded mandate• Inadequate testing of

emergency patient can create malpractice risks

WCHA FUTURE PLANS• Presently evaluate medical

necessity for lab patients before testing where possible

• Began checking for MRI studies recently

• Plan to expand to all services but ED within 6 months

• Will not defer critical testing ordered by physicians due to patient refusal to sign ABN

PHYSICIAN INTERACTION

• “Non-treating” physicians (i.e. pathologists and radiologists) may not order subsequent testing

• Exception for suspicious screening mammograms

• “Consult and treat” referrals don’t solve the problem

• May use “if . . . then” orders

SUMMARY

• Clinical medical necessity and reimbursement medical necessity are often different

• Become familiar with local and national medical review policies, and provide input

• Patients may be reluctant to bear increased costs• Complete information on orders can minimize

time and cost for all involved• Maintain patient care without creating

investigation risks

QUESTIONS AND DISCUSSION