MEDICAL NECESSITY AND REIMBURSEMENT ISSUES FOR PHYSICIANS

1. MEDICAL NECESSITY AND REIMBURSEMENT ISSUES FOR PHYSICIANS • Clinical necessity and reimbursement issues • Medicare policies • Pre-operative testing • Financial impact • Emergency dept. • ABNs

2. U.S. Govt. definition of “medical necessity” for Medicare 42 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.”

3. 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 SCREENING TESTING

4. 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

5. 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 23 National coverage policies published November 23, 2001

6. Urine culture HIV testing (prognosis including monitoring) HIV testing (diagnosis) CBC PTT PT Serum iron studies Collagen crosslinks Blood glucose testing Glycated hemoglobin/ glycated protein Thyroid testing Lipids Digoxin Afp CEA hCG CA 125 CA 15-3/CA 27.29 CA 19-9 PSA GGT Hepatitis panel Fecal occult blood POLICIES DEFINED FOR:

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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!

15. 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. Advance Beneficiary Notices (ABNs)

16. 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

17. 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

18. 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

19. 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

20. QUESTIONS AND DISCUSSION