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Effective March 1, 1996, HCFA introduced a new payment policy and its stringent medical necessity requirements for ordering automated profiles on Medicare and Medicaid patients. One year later, there is still much confusion throughout the medical community. The purpose of this article is to help you understand the rules that apply to you, your laboratory, and your Medicare and Medicaid patients.
There are two major rules that you need to keep in mind when dealing with Medicare/Medicaid patients:
Rule 1
All laboratory tests that are ordered for any Medicare/Medicaid patient who is not an inpatient in an acute care hospital must be ordered as individual tests supported by an appropriate diagnosis. If Medicare/ Medicaid is to be billed, traditional basic chemistry profiles (CPT series 80002-80019) may no longer be ordered as a single test for Medicare/ Medicaid patients.
Do not confuse true medical appropriateness (necessity) established according to good medical practice and patient care with “medical necessity” according to Medicare/Medicaid. Medicare/Medicaid medical necessity revolves around what the federal program will pay for, not patient care. They are focused on program cost.
Always keep Rule 1 in mind when applying Rule 2.
Rule 2
A. All laboratory testing that is to be billed to Medicare/Medicaid must be strictly limited to that which can be justified by an ICD-9 diagnosis code that obviates its necessity from a standpoint of existing pathological condition or clinical symptom.
Note 1: A single or limited number of diagnoses is absolutely insufficient to support any large groups of laboratory tests ordered with the exception of the nine organ and disease oriented panels as exactly defined in CPT-97. Currently, the CPT Editorial Panel of the AMA is working with HCFA on four additional or replacement panels which, when approved, will be combined with the nine existing panels perhaps as early as May of this year.
Note 2: Certain tests (e.g. PSA) are subject to frequency limitations in which case Paragraph B applies (below).
B. Any test or group of tests that cannot fulfill the criteria of Paragraph A may still be performed, including chemistry profiles, however, the following must happen:
At minimum, the patient, prior to testing being performed, must be notified in writing that it is the judgment of the ordering physician that Medicare is likely to deny payment for the test. A particular reason for the anticipated denial must be given along with the identification of the test. The patient must sign and date the written notice that they have been notified. This notice is called an Advance Beneficiary Notice. (AKA: ABN or Medicare Waiver of Benefits)
Note: Blanket statements about testing not being covered cannot be made. Individual tests must be identified and the notice must be date specific. Each notice should be executed for a particular date of service.
One of Medicare’s aims is to encourage physicians to order fewer tests to obtain adequate diagnostic information. This happens to be in line with the Regional Laboratory Alliance’s efforts to develop clinically relevant testing strategies as defined in the first edition of Strategies for Clinical Laboratory Diagnosis.
QUESTIONS AND ANSWERS:
1. On March 1, 1996 Medicare introduced a new policy wherein tests formerly ordered as an automated profile (CPT code series 80002 through 80019) now have to be ordered individually test by test. How does this affect my ordering tests for my patients?
For your Medicare and Medicaid patients, you must order all tests as individual tests. You may not order tests in groupings (panels) unless they are one of the select few that are enumerated in the most current edition of the AMA CPT book.
2. Won’t ordering tests on an individual test basis result in greater cost to the Medicare/Medicaid program?
No. There is a distinction between how tests are to be ordered (individually) and how they will be paid for. Providers of laboratory testing are required to follow the CPT code criteria. Additionally, where individual tests fall within the CPT code book criteria for automated chemistry tests, the laboratory must collapse all of the codes individually ordered into a single billing code 80002 through 80019 that addresses the number of individual tests ordered. The laboratory is only paid for a single automated test group at a greatly reduced amount from those priced individually.
3. Why can’t I, as a physician, order the testing that is medically appropriate for my patient?
You may order any test on your patient that you deem appropriate. However, you need to recognize that Medicare will not pay for certain testing.
4. Why won’t Medicare pay for some tests?
Medicare will only pay for those tests that, according to its criteria, are medically necessary. All other testing will not be paid for and in order for the laboratory performing the test to be paid directly by the beneficiary, you must get the patient to sign an Advance Beneficiary Notice. Medicare/Medicaid medical necessity revolves around what the federal program will pay for, not necessarily what is good for the patient. The focus is not on complete patient care but rather federal program cost.
Marilyn Hamilton received her Ph.D. in Microbiology and Immunology from the University of Washington in 1976. After 10 years in research in reproductive immunology she returned to school and received her M.D. from the University of Miami in 1989. She completed an internship in Pediatrics, residency in Clinical Pathology and a fellowship in Clinical Chemistry at Jackson Memorial Hospital in Miami. In 1995 she became the Associate Director of the Clinical Laboratories at The Children’s Mercy Hospital in Kansas City.