The Centers for Medicare and Medicaid Services (CMS)
is responsible for administering Medicare and other federally mandated
healthcare programs throughout the United States. Medicare laws prohibit
payment for services and items deemed by local Medicare Carriers as not
medically reasonable and necessary for the diagnosis or treatment of an illness
or injury. In such cases, documentation of "medical necessity" is required
before a claim may be paid. Medicare, with a few excepts, will not pay for
routine checkups or screening tests; defined as "diagnostic procedures performed
in the absence of signs or symptoms."
To comply with these new guidelines, physicians should:
- only order tests that are medically necessary in diagnosing or treating their patients;
- be certain to enter the appropriate and correct ICD-9 code in both their patient files and on the test request forms; and
- always have their patients sign and date an Advance Beneficiary Notice if they believe that the service is likely to be denied.
To ensure that services being paid for by the
Medicare program are medically necessary, CMS directed its Medicare carriers to
establish policies - often referred to as Local Coverage Determinations (LCDs)
or Limited Coverage tests - identifying laboratory tests and procedures that
require additional medical necessity documentation before the laboratory can be
reimbursed. LCDs outline how carriers will review claims to determine if
Medicare coverage requirements have been met. National Coverage
Determinations (NCDs) have been established by CMS to identify 23 laboratory
tests that require additional medical necessity documentation for 66 different
CPT codes and ICD-9 codes that are acceptable for each of these tests.
LCDs are required to be consistent with National Coverage Determinations.
LCDs can be obtained from the local Medicare
Health Enterprises, LLC, website, or from the
CMS Lab NCD page.
NCDs are contained in the
Medicare National Coverage Determinations Manual.
When PCS receives a requisition without an ICD-9
code or diagnosis narrative for a limited coverage test, the lab will contact
that physician's office to obtain the missing information or ask for a copy of a
properly executed ABN. A properly executed ABN or the ICD-9 code will permit the
laboratory to bill and receive payment.
When a physician/provider believes that a test or
procedure may not meet medical necessity guidelines, an ABN notifying the
patient of Medicare's possible denial of payment must be given the patient.
Patients must be notified before the test is ordered, that payment might be
denied by Medicare; the patient can then decide if he or she wants the tests
performed and accepts responsibility for payment. Without a valid ABN, the
laboratory is prohibited from billing the patient for the services provided.
An acceptable ABN must meet the following criteria:
The notice must be given in writing, prior to
testing or procedures being provided.
The notice must include the patient's name, date and
description of test/procedure, and the reason(s) the test/procedure may not be
considered medically reasonable or necessary and therefore, may be denied.
The patient must be asked to sign and date the
ABN each time a service is provided, indicating that he or she accepts financial
responsibility for payment of the services provided should Medicare deny