[Federal Register: November 23, 2001 (Volume 66, Number 226)]
[Rules and Regulations]               
[Page 58787-58836]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23no01-8]                         
 

[[Page 58787]]

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Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Part 410



Medicare Program; Negotiated Rulemaking: Coverage and Administrative 
Policies for Clinical Diagnostic Laboratory Services; Final Rule


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 410

[CMS-3250-F]
RIN 0938-AL03

 
Medicare Program; Negotiated Rulemaking: Coverage and 
Administrative Policies for Clinical Diagnostic Laboratory Services

AGENCY: Center for Medicare & Medicaid Services, (CMS) HHS.

ACTION: Final rule.

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SUMMARY: This final rule establishes national coverage and 
administrative policies for clinical diagnostic laboratory services 
payable under Medicare Part B to promote Medicare program integrity and 
national uniformity, and simplify administrative requirements for 
clinical diagnostic laboratory services. This rule addresses public 
comments received on the proposed rule that was published March 10, 
2000. A Negotiated Rulemaking Committee (the Committee) developed the 
policies as directed by section 4554(b)(1) of the Balanced Budget Act 
of 1997 (the BBA).

DATES: Effective November 25, 2002, except for sections 410.28(f), 
410.32(d) redesignations, (d)(1) heading, (d)(4) and (e), which are 
effective February 21, 2002. See the effective date section of the 
preamble for a discussion of the effective dates for provisions that 
were discussed in the preamble but not codified in the rule.

FOR FURTHER INFORMATION CONTACT: Jackie Sheridan, (410) 786-4635 (for 
issues related to coverage policies). Brigid Davison, (410) 786-8794 
(for issues related to documentation requirements). Dan Layne, (410) 
786-3320 (for issues related to claims processing).

SUPPLEMENTARY INFORMATION: The sections contained within this document 
have been constructed according to the framework outlined in the table 
of contents that follows. We summarized pertinent material from our 
proposed rule that was published on March 10, 2000 (65 FR 13082) 
followed by public comments and our responses.

Table of Contents

I. Background
    A. Current Statutory Authority and Medicare Policies
    B. Recent Legislation
II. Provisions of the March 10, 2000 Proposed Rule
III. Comments and Responses
IV. Summary of Changes Based on the March 10, 2000 Proposed Rule
V. Collection of Information Requirements
VI. Regulatory Impact Analysis

I. Background

A. Current Statutory Authority and Medicare Policies

    Section 1833 and 1861 of the Social Security Act (the Act) provides 
for payment of, among other things, clinical diagnostic laboratory 
services under Medicare Part B. Tests must be ordered either by a 
physician, as described in Sec. 410.32(a), or by a qualified 
nonphysician practitioner, as described in Sec. 410.32(a)(3). Tests may 
be furnished by any of the entities listed in Sec. 410.32(d)(1). A 
laboratory furnishing tests on human specimens must meet all applicable 
requirements of the Clinical Laboratory Improvement Amendments of 1988 
(CLIA) (Public Law 100-578), as set forth at 42 CFR part 493. Part 493 
applies to laboratories seeking payment under the Medicare and Medicaid 
programs.
    Section 1862(a)(1)(A) of the Act, to which there are certain 
explicit statutory exceptions, provides that no Medicare payment may be 
made for expenses incurred for items or services that are not 
reasonable and necessary for the diagnosis or treatment of illness or 
injury or to improve the functioning of a malformed body member. 
Moreover, section 1862(a)(7) of the Act excludes coverage ``where such 
expenses are for routine physical checkups, eye examinations for the 
purpose of prescribing, fitting, or changing eyeglasses, procedures 
performed (during the course of any eye examination) to determine the 
refractive state of the eyes, hearing aids or examination therefore, or 
immunizations (except as otherwise allowed under section 1861(s)(10) 
and paragraph (1)(B) or under paragraph (1)(F).
    Under the above statutory authority, we have issued national 
coverage decisions and policies in a variety of documents, such as 
Centers for Medicare & Medicaid Services manual instructions, Federal 
Register notices, and Centers for Medicare & Medicaid Services Rulings. 
We have issued approximately 20 national coverage decisions pertaining 
to clinical diagnostic laboratory services in the Medicare Coverage 
Issues Manual (CMS Pub. 6). Medicare program manuals are posted on the 
Internet at http://www.cms.gov/pubforms/progman.htm. Program 
transmittals and program memoranda are posted at http://www.cms.gov/
pubforms/transmit/transmit.htm.
    Under section 1842(a) of the Act, we contract with organizations to 
perform bill processing and benefit payment functions for Medicare Part 
B (Supplementary Medical Insurance). These Medicare contractors, who 
process Part B claims from noninstitutional entities, are called 
carriers. Under section 1816(a) of the Act, we contract with fiscal 
intermediaries to perform claims processing and benefit payment 
functions for Medicare Part (Hospital Insurance). Fiscal intermediaries 
also process claims payable from the Medicare Part B trust fund that 
are submitted by providers that participate in Medicare Part A, such as 
hospitals and skilled nursing facilities. We use the term 
``contractor(s)'' to mean carriers and fiscal intermediaries.
    Medicare contractors review and adjudicate claims for services to 
ensure that Medicare payments are made only for services that are 
covered under Medicare Part A or Part B. In the absence of a specific 
national coverage decision, coverage decisions are made at the 
discretion of the local contractors. Frequently, local contractors 
publish local medical review policies (LMRPs) to provide guidance to 
the public and medical community that they service.
    Contractors develop these local medical review policies by 
considering medical literature, the advice of local medical societies 
and medical consultants, and public comments. Our instructions 
regarding the development of local medical review policies appear in 
section 2.3 of the Program Integrity Manual (CMS Pub. 83).
    These LMRPs explain when an item or service will (or will not) be 
considered ``reasonable and necessary'' and thus eligible (or 
ineligible) for coverage under the Medicare statute. If a contractor 
develops an LMRP, its LMRP applies only within the area it serves. 
While another contractor may come to a similar decision, we do not 
require it to do so. An LMRP may not conflict with a national coverage 
decision once the national coverage decision is effective. If a 
national coverage decision conflicts with a previously established 
LMRP, the contractor must change its LMRP to conform to the national 
coverage decision. A contractor may, however, make an LMRP that 
supplements a national coverage decision where the national coverage 
decision is silent on an issue. The LMRP may not alter the national 
coverage decision.

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B. Recent Legislation

    Section 4554(b)(1) of the Balanced Budget Act of 1997 (BBA), Public 
Law 105-33, mandates use of a negotiated rulemaking committee to 
develop national coverage and administrative policies for clinical 
diagnostic laboratory services payable under Medicare Part B by January 
1, 1999. Section 4554(b)(2) of the BBA requires that these national 
coverage policies be designed to promote program integrity and national 
uniformity and simplify administrative requirements with respect to 
clinical diagnostic laboratory services payable under Medicare Part B 
in connection with the following:
     Beneficiary information required to be submitted with each 
claim or order for laboratory services.
     The medical condition for which a laboratory tests is 
reasonable and necessary (within the meaning of section 1862(a)(1)(A) 
of the Act).
     The appropriate use of procedure codes in billing for a 
laboratory test, including the unbundling of laboratory services.
     The medical documentation that is required by a Medicare 
contractor at the time a claim is submitted for a laboratory test (in 
accordance with section 1833(e) of the Act).
     Recordkeeping requirements in addition to any information 
required to be submitted with a claim, including physicians' 
obligations regarding these requirements.
     Procedures for filing claims and for providing remittances 
by electronic media.
     Limitations on frequency of coverage for the same services 
performed on the same individual.

II. Provisions of the March 10, 2000 Proposed Rule

    In the March 10, 2000 proposed rule, we set forth uniform national 
coverage and administrative policies for clinical diagnostic laboratory 
services payable under Medicare Part B. These proposed policies were 
designed to promote Medicare program integrity and national uniformity 
and simplify administrative requirements for clinical diagnostic 
laboratory services. These regulations do not provide, or purport to 
provide, any immunities or safe harbors. Additionally, these 
regulations do not limit any criminal, civil, or administrative law 
enforcement and overpayment actions. These Medicare policies apply to 
all Medicare contractors processing Part B laboratory claims, including 
fiscal intermediaries.
    The preamble to the March 10, 2000 proposed rule discussed the 
composition of the Committee, the guidelines the Committee followed in 
making recommendations, and the consensus of the negotiating Committee. 
Most of the provisions of the rule will be implemented through our 
instructional issuance system rather than codified in regulations, but 
were discussed in the preamble to the March 10, 2000 proposed rule 
nonetheless. A summary of the preamble of the March 10, 2000 proposed 
rule is as follows:
     Information required with each claim.

--Claims processing requirements change regularly; therefore, we 
encourage readers to refer to the claims processing sections of the 
Medicare Carriers Manual (sections 3005 and 3999, exhibit 10) and 
Medicare Fiscal Intermediary Manual (section 3605 and Addendum L) in 
order to keep current regarding the specific policies related to data 
elements. These manuals are posted on the Internet at http://
www.cms.gov/pubforms/progman.htm.
--We proposed not to require that diagnostic information be submitted 
with every claim at this time. However, we encourage physicians to 
voluntarily provide diagnosis information (either the reason for the 
visit or the reason for the test) with the order, and we encourage 
laboratories to submit information that they receive with the claim.
--In order to promote uniformity, we proposed that the date of service 
for laboratory tests that is reported on the claim be the date the 
tested specimen was collected. The person obtaining the specimen must 
furnish the date of collection of the specimen to the entity billing 
Medicare.

     Medical conditions for which a test may be reasonable and 
necessary.

--The March 10, 2000 proposed rule discussed the uniform process that 
the Committee used in developing 23 national coverage decisions. We are 
not codifying the national coverage decisions (NCDs) so that they could 
be updated in a timely manner as appropriate to accommodate changes in 
technology, coding, or national practice standards. We used the 
following process to develop the NCDs:
    ++ Seeking input from relevant national medical specialty societies 
and voluntary health agencies through the American Medical Association 
representative.
    ++ Reviewing relevant scientific literature and practice 
guidelines.
    ++ Reviewing existing local medical review policies, as well as any 
existing relevant templates for local policies developed by a task 
force of carrier medical directors.
    ++ Soliciting comments on the draft policies through an Internet 
posting from November 4 through 11, 1998.

--The policies followed a uniform format that Included a narrative 
description of the test, panel of tests, or group of tests addressed in 
the NCD; clinical indications for which the test(s) may be considered 
reasonable and necessary and not screening for Medicare purposes; 
limitations on use of the test(s); and diagnosis codes from the 
International Classification of Diseases, Ninth Revision, Clinical 
Modification (ICD-9-CM codes); reasons for denial (the content of which 
was not negotiated by the Committee); sources of information on which 
the decision is based; and coding guidelines.
    The ICD-9-CM codes were displayed in one of three sections. The 
first section lists covered codes--those for which there is a 
presumption of medical necessity but the claim may be subject to 
review. The second section lists diagnosis codes that are never 
covered. The third section lists codes that generally are not 
considered to support a decision that the test is reasonable and 
necessary, but for which there are limited exceptions. Additional 
documentation could support a decision of medical necessity and must be 
submitted by the ordering provider and accompany the claim.
    The national coverage decisions apply nationwide and are binding on 
all Medicare carriers, fiscal intermediaries, peer review 
organizations, health maintenance organizations, competitive medical 
plans, and health care prepayment plans for purposes of Medicare 
coverage. In accordance with section 522 of the Medicare, Medicaid and 
SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), 
Beneficiaries who file for review of NCDs on or after October 1, 2001 
may appeal to the Department of Health and Human Services Appeals Board 
for review.

--The policies may be updated and new laboratory policies developed 
under the Medicare national coverage process that was published April 
27, 1999 (see 64 FR 22619). A copy of this general notice is posted on 
the Centers for Medicare & Medicaid Services Internet site at http://
www.cms.gov/coverage/8a1.htm

     Appropriate use of procedure codes.


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--We clarified that the term screening or screen in Current Procedure 
Terminology (CPT) Codes does not necessarily describe a test performed 
in the absence of signs or symptoms of an illness, disease, or 
condition.
--We clarified use of the -59 modifier as an indication for claims for 
multiple billings of the same CPT code for the same beneficiary for the 
same day when those services are medically necessary.

     Documentation and recordkeeping requirements.

--We proposed adding language to the Code of Federal Regulations (CFR) 
to clarify the documentation physicians and laboratories, respectively, 
are required to maintain.
--We proposed CFR provisions clarifying that if the documentation 
submitted by the entity submitting the claim is inadequate, we will 
seek information directly from the ordering physician.
--We clarified that we do not require the signature of the ordering 
physician on a requisition for laboratory tests. However, documentation 
that the physician ordered the test must be available upon our request.
--We summarized the various record retention requirements that 
presently exist.

     Procedures for filing claims.

--We clarified that the entity submitting the claim may assign an 
appropriate diagnosis code to a narrative, even if there is not an 
exact match between the code descriptor and the narrative the 
laboratory received from the ordering physician.
--We clarified that until standards permitting eight ICD-9-CM codes are 
implemented, Medicare contractors, whose systems accept fewer than 
eight ICD-9-CM codes in the diagnoses field, would permit the 
laboratory to submit additional codes in the narrative field.
--We encourage matching of procedures to diagnoses, but we clarified 
that claims would not be denied solely because there is no matching of 
diagnosis and procedure codes on the claim form. In lieu of identifying 
a noncovered service through matching noncovered diagnoses to specific 
procedures on a claim, we also proposed that laboratories have the 
option of submitting a separate claim for a procedure that is not 
covered by Medicare.

     Limitation on frequency.

--We proposed to issue instructions that state February 21, 2002 that 
contractors may not use a frequency screen that could result in a 
frequency-based denial unless information published by us or our 
contractors includes an indication of the frequency that is generally 
considered reasonable utilization of that test for Medicare purposes.
--We proposed to clarify the CFR provision by including the existing 
requirements related to automatic denials from the manual in the CFR.
--We solicited new ideas for addressing the problem of notification of 
beneficiaries of potential overutilization of testing.
--We proposed to issue instructions February 21, 2002 that all Medicare 
contractors consistently use remittance advice language that identifies 
the reason for denial as excess frequency when that is the reason for 
denial.

     We clarified that the limitation on liability provisions 
that are currently found in section 1879 of the Act, 42 CFR part 411, 
subpart K, section 7330 of the Medicare Carriers Manual, section 3440 
through 3446.9 of the Fiscal Intermediary Manual, and any currently 
applicable rules are equally applicable to laboratory services.
    The changes we proposed to make to Sec. 410.32 are set forth as 
follows:
     We proposed to redesignate paragraph (d) introductory text 
as paragraph (d)(1), and we proposed to add a heading.
     We proposed to redesignate paragraphs (d)(1) through 
(d)(7) as paragraphs (d)(1)(i) through (d)(1)(vii).
     We proposed to add a new paragraph (d)(2) to Sec. 410.32 
that would outline documentation and recordkeeping requirements related 
to clinical diagnostic laboratory tests. The documentation and 
recordkeeping requirements read as follows:
    ++ Paragraph (d)(2)(i) would specify that the physician (or 
qualified nonphysician practitioner) who orders the service must 
maintain documentation of medical necessity for the service in the 
beneficiary's medical record.
    ++ Paragraph (d)(2)(ii) would require the entity submitting the 
claim to maintain documentation it receives from the ordering physician 
and information documenting that the claim submitted accurately 
reflects the information it received from the ordering physician.
    ++ Paragraph (d)(2)(iii) would authorize the entity submitting the 
claim to request additional diagnostic and other medical information 
from the ordering physician to document that the services it bills are 
reasonable and necessary. This request must be relevant to the medical 
necessity of the specific test(s), and take into consideration current 
applicable rules and regulations on patient confidentiality.
     We proposed adding a new paragraph (d)(3) to Sec. 410.32 
relating to claims review.
    ++ Paragraph (d)(3)(i) will specify that the entity submitting the 
claim must provide documentation of the physician's order for the 
service billed, showing accurate processing and submission of the 
claim, and diagnostic or other medical information supplied to the 
laboratory by the ordering physician or qualified nonphysician 
practitioner, including any ICD-9-CM code or narrative description 
supplied.
    ++ Paragraph (d)(3)(ii) will specify that if the documentation 
submitted by the laboratory does not demonstrate that the service is 
reasonable and necessary, we will provide the ordering physician 
information sufficient to identify the claim being reviewed and request 
from the ordering physician those parts of the beneficiary's medical 
record that are relevant to the claim(s) being reviewed. If the 
documentation is not provided timely, we will notify the billing entity 
and deny the claim.
    ++ Paragraph (d)(3)(iii) will authorize the entity submitting the 
claim to request additional diagnostic and other medical information 
that is relevant to the medical necessity of the specific services from 
the ordering physician consistent with applicable patient 
confidentiality laws and regulations. h We proposed adding a new 
paragraph (d)(4) to Sec. 410.32 to outline when we may deny a claim 
without manual review.
    ++ Paragraph (d)(4)(i) will state that unless indicated in 
paragraph (d)(4)(ii), we will not deny a claim for services that exceed 
utilization parameters without reviewing all relevant documentation 
submitted with the claim.
    ++ Paragraph (d)(4)(ii) will permit automatic denial of claims when 
there is a national coverage decision, or LMRP that specifies the 
circumstances under which the service is denied, or the statute 
excludes Medicare coverage for the service, or the specific provider or 
supplier has engaged in egregious overutilization of the service and 
the claim is for that service.

III. Comments and Responses Based on the March 10, 2000 Proposed 
Rule

    We received responses from 61 commenters during the public comment 
period. The commenters included many of the members of the negotiation

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committee; other national and State organizations, such as the American 
Society of Hematology, and the Iowa Association of Pathologists; 
representatives of various laboratories and hospitals; individual 
physicians and other health care practitioners; a seniors' legal 
advocate; and a Medicare contractor medical director.

Information Required With Each Claim

    Comment: Eighteen commenters expressed concern that the proposed 
rule did not specifically require physicians to provide information 
necessary to support medical necessity. The commenters believe that 
laboratories billing Medicare will have to collect information from 
various sources to support medical necessity. The commenters proposed 
that the final rule should clearly state that physicians are required 
to provide the information necessary to support medical necessity with 
the order, if that information is needed for claims processing.
    Response: The Committee discussed when diagnostic information to 
support medical necessity must be submitted with a claim. The 
Committee's discussion focused on whether diagnostic information should 
be required on claims for all tests, even those not addressed by a 
national coverage policy or LMRP. Some Committee members emphasized 
that providing information related to the reason for the patient visit 
or for the test would be useful in evaluating patient outcomes and 
quality of care and would ensure consistency and simplicity. 
Physicians' representatives expressed concern, however, about the 
burden that may be involved in providing the information. Laboratory 
representatives expressed concern about laboratories' ability to be 
paid if the physician does not provide the information.
    The Committee concurred that this proposed rule would not 
promulgate a requirement that diagnostic information be submitted with 
every claim. While we recognize the concerns of the commenters, we 
believe that such a requirement would present significant burdens on 
some physicians. We will continue to study this issue and weigh the 
benefits of requiring diagnostic information on every claim for 
laboratory services against the burden that it would impose on 
physicians and laboratories. We welcome the public to share with us any 
specific suggestions they have for mitigating the burden on physicians 
inherent with instituting a mandatory diagnostic information 
requirement.
    In addition, we encourage physicians voluntarily to provide 
diagnostic information (either the reason for the visit or the reason 
for the test) with the order. Likewise, we encourage laboratories to 
submit information that they receive with the claim. Of course, if the 
diagnostic information is required for claims payment, such as where 
there is published national or local policy, physicians and 
practitioners are required under section 4317(b) of the BBA to provide 
diagnostic information at the time that the test is ordered.
    Comment: One commenter expressed concern about the proper procedure 
with which to handle patients who have no referring diagnosis but can 
provide complaint, symptoms, or diagnosis. The commenter believes that 
not having a process to handle those situations may result in the 
patient experiencing delay or postponement of the service.
    Response: For situations in which the patient does not present with 
a referring diagnosis but is able to provide complaint, symptom(s), or 
diagnosis, the proposed rule stated that the patient should be coded to 
the highest level of specificity that corresponds to his/her state of 
health. That is, the physician should provide this information (in 
narrative or code) to the laboratory, and the laboratory should report 
the complaint or symptom as one of the diagnoses on the claim. The 
national coverage decisions in this final rule include appropriate ICD-
9-CM codes for relevant signs and symptoms in the sections entitled 
``ICD-9-CM Codes Covered by Medicare Program.''
    Comment: Twenty-eight commenters addressed the issue of date of 
service, which is defined in the proposed rule as the date of specimen 
collection. Twenty-one of the commenters generally agreed with the 
proposed rule's definition, but made suggestions for additional 
information or clarifications, such as the following in the definition: 
include the time the specimen was collected; clarify how to handle 
archived specimens and collections that span a 24-hour time period; 
specify that the entity collecting the specimen be responsible for 
reporting the date of service; and ensure that the laboratory is not 
held liable if an inaccurate date was reported on Medicare claims.
    One commenter suggested that laboratories should be given the 
flexibility to also define date of service as the date of accession in 
cases for which date of collection is not available.
    Six commenters were not in favor of the proposed definition on date 
of service and submitted suggestions about how the date of collection 
may be redefined. Three commenters suggested that the definition be 
changed to the date of accession. Two commenters suggested that the 
definition be changed to the date the test results were reported. In 
addition, one commenter suggested that laboratories be given the 
flexibility to choose the date of service as either the date of 
collection, date test results were reported or the date of accession in 
the laboratory. One commenter suggested that we reserve the dates of 
service issue for further study and not proceed with finalization of 
the proposal in this rule.
    Response: The date of service is a required data field for 
laboratory claims. A laboratory service may take place over a period of 
time. That is, the date the physician orders the test, the date the 
specimen is collected from the patient, the date the laboratory 
accesses the specimen, the date of the test, and the date results are 
produced may not be the same. For example, often several days elapse 
between taking a sample and producing results in microbiology tests 
that are cultured. The Committee discussed what ``date of service'' 
laboratories must report on claims for clinical diagnostic laboratory 
services. To ensure equitable treatment of beneficiaries and providers, 
as well as to promote national claims processing consistency, it is 
necessary that all laboratories report this date consistently.
    We are committed to establishing a national coverage policy 
regarding the date of service for Medicare claims that will promote 
program integrity and national uniformity, yet minimize the burden on 
laboratories. Laboratory representatives reported that some laboratory 
computer systems are programmed to report the date of acquisition of 
the specimen or the date of accession (the date the test is entered 
into the computer system), in the date of service field on the claim 
form. In addition, Medicare issued Program Memorandum A-95-4 in April 
1995 that instructed hospital-based laboratories to report the date of 
performance as the date of service for automated multi-channel tests.
    We believe that the date of collection most closely relates to the 
date the test was ordered and that the use of only one date of service 
is consistent with the goal of promoting program integrity and national 
uniformity. We also agree that in order to promote national uniformity, 
the claims processing instruction implementing this provision needs to 
include clarifications regarding handling of special circumstances, 
such as archived specimens and tests requiring extended acquisition 
time.
    For specimen collections that span more than a 24-hour period, the

[[Page 58792]]

implementing instructions will clarify that the entity performing the 
collection should define the date of service as the date the collection 
began. For laboratory tests that require a specimen from stored 
collections, the date of service should be defined as the date the 
specimen was obtained from the archives.
    One commenter suggested that the time of specimen collection also 
be reported. We do not see the need for this information in processing 
Medicare claims. Further, the computer software used by the industry 
and us for claims processing does not include a field to report this 
information. Thus, the addition of specimen collection time as a 
required element on Medicare laboratory claims would result in a 
substantial cost for all involved parties. The commenter did not 
identify benefits from this addition that were commensurate with the 
costs. Consequently, we are not adopting this change.
    Several of the laboratory representatives commenting on this issue 
expressed concerns with the potential problems that may arise when the 
entity collecting the specimen fails to comply with the requirement to 
supply the specimen collection date. The implementing instruction for 
this provision will carefully emphasize the requirement to those 
collecting specimens to report the date of collection. We are 
optimistic that after adequate education from us and the Committee 
member organizations, such as the American Medical Society and national 
laboratory organizations, most of those collecting specimens for 
laboratory testing will take care to report required information. We do 
not believe that it is consistent with the statutory requirement to 
promote national uniformity to permit a variety of means to report the 
date of service.
    We note, however, that we are providing a grace period of up to 12 
months after the effective date of the final rule to accommodate any 
system changes required by the policy changes or clarifications 
resulting from the provisions of this rule. Entities that want to 
obtain the benefit of a grace period to permit additional time to 
implement computerized system changes must contact us in writing 90 
days before the effective date of the provision(s) they are not able to 
implement timely.
    The request for a grace period must include a description of the 
nature of the system change not able to be implemented timely, a 
description of the actions the entity has taken in an effort to 
implement timely, date upon that the entity will be able to implement 
fully, and a workplan with a timeline providing a detailed description 
of the acts which the entity shall undertake to accomplish full 
implementation and the dates by which acts shall be performed. We will 
review the submittal and advise the entity if we grant or deny the 
request for a grace period. We may grant or deny the request for a 
grace period at our discretion. Notwithstanding the foregoing, we may 
terminate at any time any grace period already provided if we determine 
that the entity has not acted in good faith or we determine the entity 
has failed to perform any of the conditions upon which we agreed to 
extend a grace period.
    If we need additional time to implement system changes associated 
with a particular provision of this rule on a nationwide basis, we well 
issue a program memorandum detailing the rationale for the extension 
and provide a new effective date.
    Thus, laboratories will have up to 24 months (12 months delayed 
effective date and up to 12 months grace period for system changes) 
after publication of the final rule to achieve system modification to 
submit claims in accordance with the final policy on date of service. 
We believe this extended time before implementation will ease any 
anticipated problems with the reporting of the specimen collection 
date.

Medical Conditions for Which a Test May Be Reasonable and Necessary

    Comment: One commenter expressed concern about designating the 
coverage policies included in the addendum to the proposed rule as 
national coverage determinations. The commenter requested that national 
coverage determination status not be conferred to the 23 coverage 
policies because this would render them unchallengeable.
    Response: Section 4554 of the BBA specifies that the negotiated 
rulemaking develop national coverage policies for clinical diagnostic 
laboratory services. The statute goes on to state that the rules 
consider the medical conditions for which a laboratory test is 
reasonable and necessary (within the meaning of section 1862(a)(1)(A) 
of the Act).
    Our regulations do not use the term ``national coverage policies'' 
in developing policies that describe the medical conditions for which a 
test is reasonable and necessary. Rather, Sec. 405.860 defines national 
coverage decisions (NCDs) in this fashion. Specifically, the section of 
the regulation states, ``CMS makes NCDs either granting, limiting, or 
excluding Medicare coverage for a specific medical service, procedure, 
or device. NCDs are made under section 1862(a)(1) of the Act or other 
applicable provisions of the Act.'' We believe that the Congress by 
requiring the Secretary to adopt ``national coverage and administrative 
policies for clinical diagnostic laboratory tests under part B of title 
XVIII,'' clearly intended the coverage policies developed under this 
rule to be considered as NCDs. We believe that to not confer NCD status 
on these policies would conflict with the statutory intent of section 
4554(b) of the BBA.
    We note, however, that the policies are developed to provide 
flexibility in all but a very limited number of diagnoses. That is, the 
policies have been constructed in a fashion to permit a Medicare 
contractor to consider coverage of additional indications on a case-by-
case basis.
    The Committee consensus includes the restatement of existing 
Medicare program requirements that contractors consider all information 
that is submitted with a claim. The policies include very few diagnoses 
that may not be covered under any circumstances in the section entitled 
``ICD-9-CM Codes Denied.'' Codes included in the list entitled ``Codes 
That Do Not Support Medical Necessity'' may be covered when they are 
accompanied by sufficient medical justification for the test for a 
particular patient's condition.
    Thus, the commenter's concern that NCD status would establish an 
irrefutable barrier to coverage is not inherent in the NCDs as 
negotiated. Moreover, section 522 of BIPA includes a provision to 
provide for review of NCDs with regard to requests for review of NCDs 
filed on or after October 1, 2001. Under the provisions of section 522 
of BIPA, a beneficiary who is adversely affected by an NCD may request 
a review with the Department of Health and Human Services Appeals Board 
(DAB). The DAB may take evidence, consult with appropriate scientific 
and clinical experts and will look at the reasonableness of the 
determination. Final decisions of the DAB are subject to judicial 
review. Thus, the policies will be reviewable.
    Comment: One commenter expressed concern that the March 10, 2000 
proposed rule did not specifically state that a laboratory is not 
required to provide an advance beneficiary notice with respect to the 
ICD-9-CM codes that are listed in the category ``ICD-9-CM Codes 
Denied.''
    Response: The diagnoses listed in the section entitled ``ICD-9-CM 
Codes Denied'' are codes that are not covered by Medicare for a variety 
of reasons. For example, some codes are excluded because they are 
screening services;

[[Page 58793]]

others are listed because they are services to caretakers rather than 
beneficiaries; another is based on the hearing aid exclusion. Advance 
Beneficiary Notices (ABNs), with respect to laboratory services, are 
required only for claims that the provider or supplier believes may not 
be covered by Medicare based on section 1862(a)(1) of the Act 
(reasonable and necessary exclusion).
    Historically, Medicare's exclusion of screening services has been 
attributed to section 1862(a)(7) of the Act. In a 1988 Program 
Memorandum (AB-88-2), we stated that we consider the 1862(a)(7) of the 
Act exclusion to be the basis for denial of screening services. Thus, 
under current policy, providers or suppliers are not required to 
provide the beneficiary with an ABN before to billing them for 
screening tests that are provided for the diagnoses listed in the 
section entitled ``ICD-9-CM Codes Denied.'' However, we believe that 
advance notice to beneficiaries of that liability is prudent, and we 
encourage providers and suppliers to voluntarily notify beneficiaries 
that they will be liable for the cost of the tests.
    We are, however, reconsidering whether to exclude screening tests 
based on section 1862(a)(7) of the Act rather than section 
1862(a)(1)(A) of the Act. We are concerned that it may not be in the 
best interest of our beneficiaries to permit providers and suppliers to 
bill them for screening services without advance notice. Should we 
issue a change to the policy, laboratories will be required to issue 
ABNs for services that are not covered based on the diagnoses in the 
list that are screening services. Any such change would be 
prospectively effective.
    Comment: Two commenters addressed the fact that the 23 tests 
identified in the national coverage decision represented 60 percent of 
the volume of Medicare outpatient laboratory testing. The commenters 
requested information about what percentage of Medicare outpatient 
laboratory payments is represented by the 23 laboratory services.
    Response: We performed an analysis on the 1999 bills that were 
processed by the Medicare carriers. This database does not include the 
laboratory claims processed by hospital-based laboratories. In this 
data set, the 63 laboratory tests that make up the 23 services 
represent 43 percent of carrier lab services and 51 percent of carrier 
laboratory payments.
    Comment: Two commenters expressed concern with the development of 
policies using both an inclusionary and exclusionary basis. They noted 
that using two different forms of logic in the development of computer 
edits is costly. They suggested that we re-evaluate the benefits of 
this approach relative to the benefits.
    Response: We decided to display the diagnosis codes in the coverage 
policy for blood tests on an exclusionary basis. That is, rather that 
list the ICD-9-CM diagnosis codes than presumptively support medical 
necessity of a blood count, they listed the codes for which a blood 
count would not be presumptively medically necessary. We decided to use 
the exclusionary approach for listing the codes when the list of codes 
that supported medical necessity was considerably larger than the list 
of those that did not. Thus, blood counts was the only test that was 
developed using the exclusionary approach.
    We note that the coverage policy for blood counts was developed in 
the same manner as all other tests. That is, based on scientific 
evidence, we listed those conditions that are indications for the test, 
or the inclusionary approach. It was for reasons of administrative 
simplicity that we displayed the codes in an exclusionary manner. Thus, 
any organization developing its own internal edits is free to edit 
using an inclusionary approach of computer logic by listing the codes 
that are not displayed as excluded.
    Comment: One commenter suggested that the narrative indications and 
the ICD-9-CM codes contained in the policies needed to be reviewed for 
consistency in all sections. The commenter believes that not all codes 
that can be used for the indications have been included in the list for 
``ICD-9-CM Codes Covered by Medicare Program.'' However, the commenter 
did not make specific suggestions for changes.
    Response: During the development of the proposed policies, we made 
a valiant effort to ensure that the coding corresponded to the 
indications included in the NCDs. This effort included development of 
the initial list of codes by an interdisciplinary workgroup that 
included at least one ICD-9-CM coding expert designated by the American 
Health Information Management Association, as well as multiple 
physicians, including Medicare contractor medical directors who are 
familiar with coding from their claims analysis activities. After the 
workgroup produced the draft NCDs, they were posted on the Internet for 
public comments.
    Several of the public comments related to coding suggestions, which 
the Committee took under advisement in making its final 
recommendations. We assigned a team of coders and physicians to review 
the recommended policies as well before they were published as proposed 
policies in the Federal Register.
    In addition, to help ensure a complete listing of codes, we 
specifically solicited comments on the policies from the public in the 
preamble to the proposed rule. However, in that preamble we explicitly 
stated that requests for changes should be accompanied by scientific 
evidence supporting the request. We encouraged commenters ``to submit, 
with their comments, copies of medical literature supporting their 
recommendation for change * * *''
    We received a number of comments regarding specific codes that 
members of the public believe were appropriate changes to the lists. 
None of the requests or comments regarding coding changes was 
accompanied by supporting scientific evidence, however. As discussed 
more fully in subsequent comments, we carefully reviewed each of these 
suggestions using a team of our physicians and coding experts and made 
appropriate decisions regarding their inclusion in the list based on 
the indications described in the policies.
    We believe the use of the Committee to develop the initial list of 
covered codes, together with the opportunity for public comment both 
during the Committee meetings and in response to the March 10, 2000 
proposed rule provides adequate assurances that the list of codes is 
appropriate. If members of the public have additional suggestions, we 
invite them to use the national coverage process to request specific 
changes for the future.
    Comment: One commenter expressed concern with the language in the 
``Reasons for Denial'' section relating to Food and Drug Administration 
(FDA) approval or clearance of tests. The commenter believes that there 
are additional exceptions beyond the Category B Investigation Device 
Exemption (IDE) noted in the March 10, 2000 proposed rule. The 
commenter suggested that the language provide for other exceptions. 
Further, the commenter requested that we specify the procedures that 
would apply to this section through an additional document that would 
be subject to notice and comment.
    Response: The last bullet in the Reasons for Denial section of the 
proposed policies states that ``Tests that require FDA approval or 
clearance will be denied as not reasonable and necessary if FDA 
approval or clearance has not been obtained, except for those having a 
Category B Investigational Device Exemption (IDE). Coverage of

[[Page 58794]]

Category B IDE devices is left to contractor discretion. (See 60 FR 
48425, September 19, 1995).'' The purpose of including the reasons for 
denial was to provide information that may be helpful to users of the 
policy. We note that this section was not negotiated by the Committee 
and included general policies of Medicare that apply to various types 
of services rather than being specific to laboratory services.
    Subsequent to the publication of the March 10, 2000 proposed rule 
we published a policy on Medicare coverage of services under clinical 
trials. This policy was published on our coverage web site on the 
Internet
(http://www.cms.gov/coverage/8d.htm) and in Program Memorandum AB-00-89 
and Coverage Issues Manual Section 30-1. The national coverage decision 
that related to clinical trials provides for coverage of routine costs 
incurred during certain clinical trials. Thus, as the commenter noted, 
there are other exceptions to FDA approval. As part of implementation 
of this policy, we will be modifying our regulations governing coverage 
of IDEs that was referenced in this bullet. We believe it is 
appropriate to remove this bullet from the reasons for denial section 
at this time. We should point out, however, that we will continue to 
consider FDA approval when appropriate in making coverage 
determinations on Medicare claims.
    Comment: One commenter noted that none of the coverage policies 
considered family history as a medically necessary reason for a test. 
The commenter believes that in a limited number of diseases family 
history should be included as a basis for diagnostic testing, but did 
not identify any specific conditions.
    Response: The policies have been developed based on Medicare's 
long-standing interpretation of sections 1862(a)(1)(A) and 1862(a)(7) 
of the Act. Section 1862(a)(1)(A) of the Act provides that Medicare 
payment may only be made for services that are reasonable and necessary 
for the diagnosis or treatment of illness or injury. Section 1862(a)(7) 
of the Act excludes Medicare coverage of routine physical checkups. We 
have interpreted this to exclude routine testing provided during such a 
physical checkup. Thus, all of the policies were developed based on the 
concept that tests that are performed when no specific sign, symptom, 
or diagnosis is present and when the patient has not been exposed to a 
disease are excluded from coverage as screening services. (See Coding 
Guideline #2.)
    We, as well as many members of the Committee, recognize that there 
may be many instances when testing of beneficiaries in the absence of 
specific signs, symptoms, diagnosis, or exposure to disease is good 
health care. The value of many preventive services and screening tests, 
particularly in the case of family history of disease is well 
documented. The exclusion of family history was not based on a belief 
by the Committee or us that such testing should not be performed.
    We are considering generating an internal request for a national 
coverage decision addressing the role of family history as a medical 
justification for a test being reasonable and necessary under our 
national coverage decision process. National coverage decisions are 
evidence-based decisions. If, after careful analysis, we believe there 
is a basis for covering screening services, we will post a notice on 
our coverage page on the Internet to allow the public an opportunity to 
participate by submitting evidence for our further consideration.
    Comment: One commenter expressed concern that certain pre-operative 
tests were not included in the proposed policies. The commenter 
explained that surgeons and other involved physicians will be bound by 
unreasonable and inflexible protocols that impose barriers to prudent 
management of an individual patient about to undergo surgery.
    Response: The coverage policies negotiated by the Committee are 
evidence-based policies. In situations in which the scientific evidence 
supports the administration of tests, such as blood counts, prothrombin 
time and partial thromboplastin time, before surgery, the policies 
provide for coverage of these tests.
    There are a number of other tests, however, that are routinely 
administered to all patients about to undergo surgery in some 
hospitals. We note that the value of that routine testing for all 
patients undergoing all surgery is questionable. For example, a recent 
study of pre-operative testing of cataract patients showed that the 
routine testing did not affect the outcome of the patients. (The New 
England Journal of Medicine 342 (2000): 168). Based on our discussion 
with physicians on this issue, we have concluded that there is not 
consensus among physicians regarding the appropriateness of furnishing 
a broad spectrum of tests to seemingly well individuals merely because 
they are about to undergo surgery.
    We believe that the proposed policies developed by the Committee 
appropriately handle the issue of pre-operative surgery given the 
constraints of the law related to screening that are discussed above. 
That is, tests furnished to patients who present with signs, symptoms, 
or history of disease are covered for those conditions. Although 
screening individuals without signs, symptoms, or past history may be 
good medical practice, we do not believe it is a service that is 
covered by the Medicare program.
    However, we are interested in continuing to study this issue. We 
encourage the public to use the national coverage process discussed 
elsewhere in this document to forward to us any scientific literature 
related to improvements in outcomes associated with administering 
specific pre-operative laboratory tests routinely to Medicare patients.
    Comment: One commenter expressed concern that the proposed policies 
may not be appropriate for certain populations. The commenter was 
particularly concerned that the proposed policies did not address the 
specific needs of certain socioeconomic or ethnic groups.
    Response: We acknowledge that the proposed policy does not 
generally address specific socioeconomic or ethnic groups. Generally, 
additional testing of particular socioeconomic or ethnic groups is 
based on higher propensity for a disease state, which is considered 
screening. Rather, the policies were designed to identify the specific 
medical indications (signs, symptoms, or disease) for testing that were 
supported by the scientific literature. However, the policies were not 
designed to be an irrefutable list of diagnoses that may warrant a 
particular test. Diagnoses, other than those listed in the section 
entitled ``ICD-9-CM Codes Denied,'' or more frequent tests may be 
covered on an individual basis when they are supported by medical 
justification submitted with the claim.
    Comment: One commenter suggested that the title of the list of 
codes called ``ICD-9-CM Codes Denied'' be changed to ``ICD-9-CM Codes 
Denied as Not a Benefit of Medicare'' to clarify that these are not 
medical necessity denials.
    Response: As noted above, we are re-evaluating our policy related 
to screening services. Thus, we do not believe it is in the best 
interest of the users of the policy to change the title of this section 
at this time.
    Comment: One commenter requested that the coding guidelines remain 
in the Coding Clinic of the American Hospital Association (AHA), rather 
than in the Federal Register. The commenter explained that AHA's Coding 
Clinic for ICD-9-CM is a more flexible means of updating codes than is 
the Federal Register, in which changes would be

[[Page 58795]]

subject to administrative processes such as notice and comment periods.
    Response: Several of the coding guidelines from the AHA Coding 
Clinic were printed in the proposed coverage policies for purposes of 
providing assistance to the users of the policies. We believe that 
repeating certain coding guidelines in the policies would clarify 
coding policies for users and would be beneficial because users would 
not need to consult alternative manuals for expeditious resolution of 
common coding questions.
    The incorporation of existing coding guidelines in the national 
coverage determinations was not intended to imply that future changes 
to the coding guidelines would be subject to publication in the Federal 
Register or make composite coding guidelines subject to the 
Administrative Procedure Act. If one of the coding guidelines that was 
printed in the proposed policies is changed in the future, the revised 
guideline may be incorporated into a national coverage decision through 
the NCD coverage process without publication in the Federal Register.
    Comment: One commenter expressed concern with coding guideline 2 on 
screening services. The commenter believes that the V01 codes, contact 
with or exposure to communicable diseases should be denied under all 
circumstances as screening. Further, the commenter suggested 
clarification of coding when a screening test shows an abnormal 
finding.
    Response: We believe that confirmed exposure to disease is not 
considered a screening test in all circumstances. For example, the 
proposed policy does not consider HIV testing of patients who have been 
exposed to HIV through needlesticks from an HIV-positive patient as 
screening. Further, Medicare Program Memorandum AB-99-04 details that 
we do not consider testing for hepatitis C infection screening when it 
is performed on patients who have been exposed to hepatitis C through a 
blood transfusion from a patient that later is determined to have 
hepatitis C. Thus, we are not adopting the commenter's first 
recommendation.
    We acknowledge that the appropriate coding for tests that were 
ordered as screening, but show abnormal findings, is an issue that 
needs clarification. We have learned that there are significant 
differences in the common coding practices between hospitals and 
nonhospital settings. We believe, however, that this issue is most 
appropriately handled by the ICD-9-CM Coding Committee. The ICD-9-CM 
Coding Committee is comprised of representatives from Centers for 
Medicare & Medicaid Services, the AHA and the National Center for 
Health Statistics, who are experts in the coding field. They are best 
able to discuss the differences among the various uses of coding 
guidelines and issue clarifications. We will ask the ICD-9-CM Coding 
Committee to include this issue on an upcoming agenda. Clarification 
will be published through the AHA Coding Clinic when the differences 
are resolved.
    Comment: One commenter made reference to coding guideline #5, which 
refers to nonspecific codes. The commenter believes the guideline does 
not define nonspecific codes, nor is the appropriate meaning of the 
term clear. The commenter requested that the final rule clarify whether 
the term ``non-specific codes'' refers to the ICD-9-CM code ``not 
otherwise specified'' (codes ending in an 8) or ``unspecified'' (codes 
ending in 9) or something else.
    Response: Coding guideline #5 states, ``When a non-specific ICD-9-
CM code is submitted, the underlying sign, symptom, or condition must 
be related to the indication for the test above.'' In including this 
statement in the coding guideline, the Committee was not addressing the 
``not otherwise specified'' or ``unspecified'' codes exclusively. 
Rather, the list of covered codes frequently includes codes that are 
very broad and encompass several related but different conditions, only 
a few of which would justify the test in question.
    For example, assume that a given code (X) is appropriate for three 
conditions (A, B, and C). An indication for test 1 is condition A. The 
coding guideline is intended to remind users that if you report code X 
for test 1, it is expected that the patient have condition A. In other 
words, if upon medical review of the chart, the contractor finds that 
the patient only has condition B, which is not included in the 
indications, it may deny the claim despite the fact that code X is 
included in the list of codes that support medical necessity.
    Comment: Many commenters suggested additional
    ICD-9-CM diagnosis codes be added to the various policies. The 
commenters generally did not provide rationale for the suggestions and 
none of the requests were supported with scientific evidence as we 
specifically requested in the preamble of the March 10, 2000 proposed 
rule. In short, the commenters asserted the policies were incorrect or 
incomplete without providing explanation or support for their concern.
    Response: As described in the preamble to the March 10, 2000 
proposed rule and in response to another comment above, the Committee 
developed the policies in a systematic and uniform manner. The 
Committee developed the narrative portion of the NCDs based on 
scientific evidence. That is, the narrative indications for a test were 
evidence based. Once the narrative indications were developed, the 
Committee attempted to identify the ICD-9-CM codes that appropriately 
translated the narrative.
    The Committee provided a brief public comment period on the 
policies as developed by the workgroups before the full Committee 
discussion of the issue and before the rule was published by Centers 
for Medicare & Medicaid Services on March 10, 2000. During this public 
comment period, numerous suggestions for coding changes, similar to 
those received during this public comment period, were made. In 
considering these public comments, the Committee decided that unless 
the coding changes were supported by medical evidence, the Committee 
would continue to look to the narrative indications and make a 
determination if the suggested code was an appropriate translation of 
the narrative.
    It is critical that the narrative indications for the proposed 
policy and the ICD-9-CM codes that support medical necessity be 
consistent. Thus, in order for us to add codes to the list of ICD-9-CM 
codes that support medical necessity, those codes must either be 
determined to be an appropriate translation of an existing indication, 
or we must add a new indication for the test in the policy narrative. 
The preamble to the March 10, 2000 proposed rule in soliciting public 
comments on the policies clearly requested that any suggested changes 
be accompanied by scientific literature supporting the change. Since 
both the Medicare NCD process and the negotiating committee use 
evidence-based decision making, it would not be appropriate to use 
opinion-based decision making to change the proposed policies in 
responding to the public comments. Therefore, we believe the approach 
similar to that taken by the negotiating committee in handling the 
comments it received from the public is a reasonable and appropriate 
means of addressing the suggestion for coding changes that were 
submitted to us during the public comment period on the March 10, 2000 
proposed rule.
    Since none of the suggested coding changes we received on the 
proposed coverage policies was accompanied by scientific literature, we 
looked to the

[[Page 58796]]

proposed narrative indications in determining if the code was an 
appropriate addition to the ICD-9-CM list in the policy. We used a team 
of our physicians and coding experts to evaluate each of the codes that 
was suggested during the public comment period. The team carefully 
studied the narrative descriptions of the indications for the test in 
the proposed NCDs. When the suggested code was a reasonable application 
of the existing narrative, we added the code to the list.
    Our physicians acknowledged that many of the ICD-9-CM codes that 
were suggested might be clinically understandable in certain 
situations. However, gathering the scientific-evidence and conducting 
the analysis necessary to make a reasonable determination as to the 
appropriateness of adding indications to the proposed policies for each 
of the multitude of codes suggested would be a daunting task and would 
have resulted in unreasonable delay in the finalization of the 
policies. We do not believe it is appropriate to further delay adoption 
of the proposed policies to conduct this search for medical evidence to 
support unsubstantiated suggestions. However, requestors are free to 
use the national coverage decision process (published in the April 27, 
1999 Federal Register (64 FR 22619) and on the Internet at
http://www.cms.gov/coverage/8a1.htm) to request further refinement of 
the national coverage decisions.
    The following codes were suggested for addition to specific 
policies. We believe these codes are an appropriate translation of the 
indications listed in the policy and we are adding them to the ICD-9-CM 
codes covered by Medicare.

Blood glucose: 780.31, 781.0, 783.6
Digoxin: 429.2, 972.0
Fecal Occult Blood Test: 003.0, 003.1, 095.2, 095.3, 098.0, 098.7, 
098.84, 139.8, 159.0-159.9, 569.82, 569.83, 596.1, 751.1
Gamma Glutamyl Transferase: 230.7, 230.9, 642.5, 782.4, 789.1, 790.4, 
790.5, V42.7
Lipids: 278.00, 401.0-401.9, 402.00-402.91, 403.00-403.91, 404.00-
404.93, 405.01-405.99, V42.7
Prostate Specific Antigen: 236.5, 599.6, 788.30, 788.41, 788.43, 788.62
Human immunodeficiency virus testing (Diagnosis): 263.0, 263.1, 263.9, 
486
Partial thromboplastin time: 362.30, 362.31, 362.32, 362.33, 362.34, 
362.35, 362.36, 362.37, 410.0-.9, 456.8, 530.82,
Prothrombin time: 786.50, V12.51-V12.59
Iron studies: 579.8, 579.9, 713.0, 716.4-716.9, V56.0, V56.8
Thyroid: 290.3, 297.1, 333.99, 358.1, 359.5, 376.21, 376.22, 425.7

    The following codes were suggested for changes to the NCDs.
    Our physician staff and coding experts reviewed these codes. Based 
on their clinical judgment and knowledge of coding guidelines, we do 
not believe these codes appropriately stem from the indications 
included in the respective policies.

Blood counts: 300.00, 300.01, 575.6, V45.89, 715.00-715.98, 716.00, 
716.99
Blood glucose: 279.9, 357.2, 357.8, 785.1, 800.00-804.99, 805.00-
806.79, 850.00-854.19, V22.0-V22.2, V72.73-V72.84, V72.81
Iron studies: 253.5, 276.0, 276.1, 278, 282.0, 282.1, 282.2, 282.3, 
282.4, 282.5, 282.60-282.63, 282.69, 282.7, 282.8, 282.9, 283.0-283.9, 
289.0-289.9, 333.99, 564.5, 607.84, 708.8, 714.0-714.9, 715.0-715.9, 
716.0-716.3, 733, 758.0, 758.1-758.9, 775.3, 780.4, 790.4
Partial thromboplastin time: 036, 040, 041, 050, 054, 056, 078.5, 081, 
082, 083, 084, 085, 086, 087, 115, 117.3, 152.0-152.9, 162, 171, 174, 
183, 185, 188.0-188.9, 198.1, 204, 205, 206, 207, 208, 239.4, 239.5, 
250.1, 282, 283, 285.0, 287.3, 289.5, 290.40-290.43, 331.81, 345.3, 
369.1-369.9, 377.53. 377.62, 386.2, 386.5, 394.0-394.9, 395.0, 395.2, 
396.0-396.9, 397.0-397.9, 398.0, 398.90-398.99, 411.1, 411.81, 411.89, 
413.0, 413.1, 413.9, 414.00-414.05, 414.8, 414.9, 415.0, 415.11, 
415.99, 416.9, 424.0, 424.1, 424.90, 424.2, 424.3, 424.91, 425.0-425.9, 
427.0-427.9, 436, 437, 440.0-440.9, 443.0-443.9, 447.6, 452, 459.2, 
514, 555.0-555.9, 577.0, 671.9, 710, 746.00, 746.01-746.09, 746.1-
746.89, 747.1, 786.50, 789.1, 789.5, 940, 941, 942, 943, 944, 945, 946, 
947, 948, 949, 958.1, 958.4, 991.6, 992.0, 994.1, 995.0, 996.85, 
V12.51, V15.1, V42.2, V42.7, V43.2, V43.4, V43.60-V43.69
Prothrombin time: 036, 040, 050, 054, 056, 078.5, 081, 082, 083, 084, 
085, 086, 087, 115, 117.3, 162, 171, 174, 183, 185, 204, 205, 206, 207, 
208, 250.1, 282, 283, 287.3, 331.81, 410.0-410.9, 435.3, 427.5, 447.6, 
577.0, 630, 710, 747.1, 785.5, 940, 941, 942, 943, 944, 945, 946, 947, 
948, 949, 958.1, 958.4, 991.6, 994.1, 995.0, 996.85, V43.60-V43.69, 
V72.81, V72.82, V72.83, V72.84
Thyroid: 198.82, 518.5, 611.6, 780.53-780.57, 786.05, 790.6, 790.94, 
793.2, 995.0, V58.0
Digoxin: 402.00, 402.10, 402.90, 414.01, 412, 414.02, 414.03, 414.04, 
414.05, 414.10, 414.11, 414.19, 557.1, 746.1-746.6, 746.81-746.89, 
747.22, V78.8
Fecal Occult Blood: 003.20-003.24, 003.8, 003.9, 095.4-095.9, 096, 
097.0, 097.1, 097.9, 098.10-098.19, 098.2, 098.3-098.39, 098.40-098.49, 
098.50-098.59, 098.6, 098.81-098.83, 098.85, 098.89, 139.0, 139.1, 
751.2, V12.79, V82.8
Gamma Glutamyl Transferase: 230.0-230.6, 231.0-231.9, 232.0-232.9, 
233.0-233.8, 234.0, 234.9, 790.6, V11.3
Lipids: 427.0-427.2, 427.31, 427.32, 427.41, 427.42, 427.5, 427.60-
427.69, 436, 443.0, 443.1, 443.8, 443.89, 443.9, 574.00, 574.01. 
574.10. 574.11, 574.20, 574.21, 574.30, 574.31, 574.40, 574.41, 574.50, 
574.51, 574.60, 574.61, 574.70, 574.71, 574.80, 574.81, 574.90, 574.91, 
575.2-575.8, 783.1, V67.51
Glycated Hemoglobin/Protein: 359.6
Prostate Specific Antigen: 188.8, 222.2, 584.5-584.9, 596.0-596.9, 
599.1, 600, 606.0, V71.1, V76.44

    Comment: One commenter submitted a list of pregnancy-related codes 
for addition to the codes identified as medically necessary for human 
chorionic gonadotropin (HCG), quantitative.
    Response: In analyzing requests for additions of codes to the list, 
we have generally looked to the indication section of the proposed 
policies. The indication section of the HCG proposed policy states that 
HCG is useful for diagnosis of pregnancy and pregnancy-associated 
conditions. We note that the proposed policy is exclusively 
quantitative HCG (CPT code 84702). The proposed policy is not 
applicable for qualitative HCG. Based on review of scientific evidence, 
such as textbooks (Clinical Interpretation of Laboratory Tests by 
Frances K. Widen, M.D.) and advice of medical consultants, we believe 
the language in the indications of the proposed policy relative to the 
utility of quantitative hCG for diagnosing pregnancy is overly broad 
and inaccurate. Pregnancy tests for the diagnosis of pregnancy use 
qualitative methods of identifying HCG, rather than quantitative 
methods. Quantitative HCG in pregnant patients is useful to monitor 
patients with suspected complications of pregnancy, such as ectopic or 
molar pregnancy.
    We believe the Committee had this understanding of the policy in 
that the list of covered codes included vaginal bleeding, molar 
pregnancy, missed abortion, ectopic pregnancy, threatened abortion, and 
pregnancy. Thus, the codes do not coincide with the language of the 
test being useful for diagnosing pregnancy. That is, codes that 
indicate suspected pregnancy, such as the

[[Page 58797]]

absence of menstruation, are not included.
    Consequently, we are altering the indications for the policy for 
HCG in this final rule to more precisely describe the utility of 
quantitative HCG. The final policy will read, ``In addition, HCG is 
useful for monitoring pregnant patients with vaginal bleeding, 
hypertension and/or suspected fetal loss.'' Given this revised 
indication, we believe the following codes suggested by the commenter 
should be added to the list of codes covered by Medicare: 634.0, 636.0, 
642.3, 642.4, 642.5, 642.6, 642.7, 642.9. The following codes, 
suggested by the commenter are not being included at this time: 623.8, 
626.0, 626.1, 646.5, 658.1, 658.2, 658.3, 658.4, 659.2, 659.3, V22.2. 
Further, we are deleting codes V22.0 and V22.1 from the list of covered 
codes. These codes indicate normal pregnancy. We do not believe that 
quantitative HCG is reasonable and necessary for a pregnancy that is 
confirmed as normal.
    Comment: Seventeen commenters addressed the proposed NCD on the 
collagen crosslinks test. Fifteen of the commenters generally expressed 
support for adopting the NCD on the collagen crosslinks test in the 
final rule but suggested clarification and revision in a number of 
different areas. One other commenter questioned the clinical usefulness 
and reliability of the test and concluded that Medicare should not 
reimburse it.
    Another commenter did not indicate whether or not he supported the 
proposed national policy, but expressed the view that there were 
internal inconsistencies in the policy that needed to be clarified 
before publication in the final rule. Only one of the commenters 
produced scientific evidence for their views; however, much of this 
evidence had already been reviewed the rest of the negotiating 
committee and us during the deliberations.
    Response: There was considerable discussion at the November 1998 
meeting of the negotiation Committee on this proposed policy as well. 
It also noted that this was a field that was changing rapidly. We 
believe that the evidence available supports the policy. Since the 
field is rapidly changing and there are limited and inconsistent 
findings in the literature, it is not surprising that we received 
several inconsistent comments on this proposed policy. That is, some 
commenters believe the policy is too restrictive, and others believe it 
goes beyond what is supported by the science. We note, however, that 
most of the commenters believe that the policy is basically sound, but 
they were requesting refinements. After careful studying of the 
comments and the limited additional scientific literature submitted by 
the commenters, we do not believe that the public comments have 
presented such a radically different view as to undermine the policy we 
had proposed and which was recommended by the Committee.
    Therefore, we are including the collagen crosslinks policy in the 
final rule with only minor clarification as we explain in our response 
to several of the more specific comments summarized below. We invite 
commenters to use the NCD process that was published in the April 27, 
1999 Federal Register (64 FR 22619) to request further changes in the 
policy.
    Comment: Some of the commenters expressed concern that the NCD on 
the collagen crosslinks test did not recognize that these tests may be 
useful in men who have degenerative bone loss. The commenters noted 
that while the majority of bone loss patients are women, bone loss can 
also affect men as well--especially those over 70 years of age.
    Response: We agree that the collagen crosslinks test may be useful 
in assessing or monitoring the treatment regimens of men who have 
osteoporosis, Paget's disease, or are otherwise at risk for 
degenerative bone loss. We did not intend to exclude, nor do we believe 
that the proposed NCD should be interpreted to preclude men from 
coverage of collagen crosslinks tests as long as one of the applicable 
medical indications for coverage is met. Nonetheless, we have clarified 
this point in the final rule by revising the fourth sentence of the 
``Indications'' section of the NCD to provide that ``Coverage for bone 
marker assays should be established * * * for younger beneficiaries and 
for those men and women who might become fast losers because of some 
other therapy such as glucocorticoids.''
    Comment: Nine commenters indicated that the proposed NCD on the 
collagen crosslinks test reflects that these tests may be performed on 
urine, but not on serum samples. One of these commenters stated that 
the FDA had approved the serum-based technique as ``substantially 
equivalent'' to the urine-based version and offered documentation in 
support of adding it to the urine-based collagen crosslinks test in the 
final rule. Another commenter mentioned that the serum-based technique 
might be a more reliable test of bone turnover than the urine test, but 
suggested that there was insufficient information available to 
determine whether either test was clinically useful for monitoring drug 
therapy for individuals with or at risk for bone loss.
    Response: We recognize that since the proposed Medicare NCD on 
urine-based collagen was negotiated, the FDA approved the serum 
collagen crosslinks test in February 1999 for the purpose of assessing 
or monitoring drug therapy for individuals with or at risk for bone 
loss. However, serum collagen crosslinks test was not part of the 
negotiated rulemaking. We do not believe it is appropriate to include 
additional tests that were not subject to negotiation in this final 
rule. That is, the negotiated rulemaking committee carefully selected 
the tests for which it wished to negotiate a coverage NCD.
    The commenter noted that the FDA had determined that the serum-
based technique is ``substantially equivalent'' to the urine-based 
version. The criteria the FDA uses in making determinations related to 
substantial equivalency under section 510(k) of the Food, Drug and 
Cosmetic Act is significantly different from the scientific evidence we 
consider in making ``reasonable and necessary'' determinations under 
Medicare. FDA does not require clinical data or outcomes studies in 
making a determination of substantial equivalency for the purpose of 
device approval under section 510(k) of the Food, Drug, and Cosmetic 
Act. Medicare evidence-base decisions consider medical benefit and 
clinical utility of an item or service in determining whether the item 
or service is considered reasonable and necessary under the Medicare 
program. Thus, a substantial equivalency approval under section 510(k) 
of FDA is not sufficient for making determination concerning Medicare 
coverage.
    When sufficient clinical studies have been done on the serum tests, 
we encourage the commenters to use the NCD process published in the 
April 27, 1999 Federal Register to request inclusion of serum version 
of the test in the collagen crosslinks NCD. In the meantime, in the 
absence of an NCD on the serum collagen crosslink test, Medicare 
contractors will have local discretion in deciding whether this type of 
collagen crosslinks test is medically necessary for assessing or 
monitoring bone loss therapy.
    Comment: Fifteen commenters indicated that available scientific 
evidence and clinical expert opinion support the view that contrary to 
the first paragraph of the ``Indications'' section of the proposed NCD 
on the coverage of collagen crosslinks tests, rapid bone loss 
frequently does occur

[[Page 58798]]

after age 65. In view of their concerns, the commenters have 
recommended that the first paragraph of the ``Indications section'' be 
deleted or substantially revised in the final rule.
    Response: In response to the commenters' concerns, we re-examined 
the scientific evidence considered by the negotiating Committee and 
that was submitted during the public comment period on the collagen 
crosslinks proposed NCD. In the studies we reviewed, the sensitivity 
and specificity of the biochemical markers was relatively low, and 
there are wide confidence intervals associated with the results. We 
believe these factors demonstrate the clinical utility of biochemical 
markers only for patients who are rapid bone losers.
    The commenters do not appear to dispute the determination that 
collagen crosslinks are most clinically useful only for rapid bone 
losers. Rather, the commenters believe that many patients over age 65 
are considered rapid bone losers. While several practicing physicians 
indicated that in their clinical judgment patients over age 65 
frequently are rapid bone losers, this clinical judgment was not 
supported with clinical studies to indicate the extent to which rapid 
bone loss may be a significant problem for Medicare beneficiaries age 
65 and older.
    Further, in our review of the literature, we did not find 
scientific evidence either supporting or disputing this assertion. In 
the absence of evidence to support this clinical judgment, we are not 
convinced that the policy negotiated by the Committee is inappropriate. 
In short, we find no persuasive reason to revise the proposed policy. 
Therefore, we believe that the first paragraph of the ``Indications'' 
section of the proposed NCD on this test should be included unchanged 
in the final rule except for the clarification discussed above with 
respect to men.
    We would point out, however, that the age limitation is not an 
absolute exclusion from coverage. The language in the NCD states, 
``Generally speaking, collagen crosslink testing is useful mostly in 
`fast losers' of bone. The age when these bone markers can help direct 
therapy is often pre-Medicare. By the time a fast loser of bone reaches 
age 65, she will most likely have been stabilized by appropriate 
therapy or have lost so much bone mass that further testing is 
useless.'' Thus, physicians who encounter an occasional patient age 65 
and over for whom they have reason to believe collagen crosslinks 
testing is clinically useful, may obtain Medicare coverage through 
documentation that the service is reasonable and necessary for that 
patient.
    Comment: One commenter noted that there appears to be an 
inconsistency in the proposed NCD for collagen crosslink tests because 
the list of ICD-9 codes for this policy includes multiple myeloma, but 
this condition is not included in the ``Indications'' section for this 
policy. It is suggested that these two portions of the policy be made 
consistent.
    Response: We agree that the two portions of the policy should be 
made consistent. The Committee operated under the ground rules that the 
codes included under the ``List of ICD-9-CM Codes Covered by Medicare'' 
should be an appropriate representation of the narrative indications. 
In addressing all requests for changes to the codes that were received 
during the comment period, we have consistently held that the codes 
must be a codification of a condition that was included in the 
indication section of the NCD. Therefore, we have removed ICD-9-CM 
codes 203.00 and 203.01 from the list of ICD-9-CM codes covered by 
Medicare for collagen crosslinks. If commenters believe this is an 
appropriate indication for collagen crosslinks, they may use the NCD 
process described in the April 27, 1999 Federal Register to submit 
scientific evidence in support of the change.
    Comment: One commenter also stated that if the purpose of the 
proposed NCD for collagen crosslink tests is to permit this test to be 
used to diagnose the presence of osteoporosis or the risk of developing 
it, we should determine how frequently this test may be used for this 
purpose and whether collagen crosslinks and bone mineral density tests 
may be done in the same period for diagnosing osteoporosis. Otherwise, 
the commenter noted that the predisposing conditions for osteoporosis 
should be deleted as acceptable conditions for coverage of this test, 
and only the conditions for coverage of monitoring known osteoporosis 
treatment should be allowed.
    Response: The purpose of the proposed NCD for the collagen 
crosslinks test was not to permit coverage of the test to diagnose the 
presence of osteoporosis or the risk of developing it. Rather, the 
purpose of the test, as stated in the proposed NCD, was to (1) identify 
individuals with elevated bone resorption, who have osteoporosis in 
whom response to treatment is being monitored, (2) predict response (as 
assessed by bone measurements) to FDA-approved antiresorptive therapy 
in postmenopausal women, and (3) assess response to treatment of 
patients with osteoporosis, Paget's disease of the bone, or at risk for 
osteoporosis for which treatment may include FDA approved 
antiresorptive agents, anti-estrogens or selective estrogen receptor 
moderators. We are including this language unchanged in the final rule. 
It should be interpreted to mean that all covered indications for 
collagen crosslinks in the final rule relate solely to the assessment 
or monitoring of treatment regimens for postmenopausal women, patients 
with osteoporosis, Paget's disease of the bone, or others who are at 
risk for osteoporosis. None of the covered conditions relate to the 
diagnosis of osteoporosis or the risk of developing osteoporosis.
    Comment: Fifteen commenters expressed the view that the proposed 
NCD on collagen crosslinks tests should be implemented immediately upon 
publication of the final rule without the 12-month delay in the 
effective date and the additional grace period of up to 12-months 
beyond the effective date called for in the March 10, 2000 proposed 
rule. One of the commenters stated that our reasoning in the March 10, 
2000 proposed rule for the delayed implementation that referenced the 
need for time to allow for educational efforts and computer systems 
changes to be made for the various new policies was not applicable to 
the collagen crosslinks test for several reasons. First, the commenter 
suggested that the volume of Medicare collagen crosslink test claims 
anticipated is so negligible that the immediate implementation of the 
NCD on the test would not disrupt the Medicare claims process or cause 
related education or computer systems problems. Second, the commenter 
believes that the collagen crosslinks test has a unique legal status 
that necessitates that it be excluded from the delay in the effective 
date that has been proposed for all of the clinical diagnostic test 
NCDs that have been developed. Specifically, the commenter suggested 
that the collagen crosslinks test is subject to the provisions of 
section 4106 of the BBA, which mandated national coverage for bone mass 
measurements effective July 1, 1998.
    Response: We continue to believe that the concerns expressed by the 
negotiating committee relative to the need for the delayed effective 
date to allow for important education and systems changes to be 
completed is appropriate and should be applied in the final rule to all 
of the 23 NCDs, including the one on collagen crosslink tests. We 
recognize that the volume of Medicare collagen crosslink test claims 
that may be anticipated may be small in comparison to the volume of 
Medicare

[[Page 58799]]

claims for the other 22 clinical laboratory tests, but the lower volume 
of claims expected will not preclude the need for important educational 
efforts and systems changes to be made for the collagen crosslinks 
test.
    As for the commenter's suggestion that the collagen crosslinks test 
has a unique legal status under section 4106 of the BBA that should 
allow it to be excluded from the delay in the effective date of the 
various policies, we disagree that this is the case. Section 4106(b) of 
the BBA amended the law to provide that payment for bone mass 
measurements that are covered under the new benefit must be made under 
the Medicare physician fee schedule, as provided in section 1848(j)(3) 
of the Act. We have interpreted these provisions in the interim final 
rule that was published on June 24, 1998 (63 FR 34320) on coverage and 
payment for bone mass measurements to mean that the scope of the 
benefit includes bone densitometry or bone sonometry procedures that 
are performed with devices that have been approved or cleared for 
marketing by the FDA. We did not include coverage of crosslink tests 
within the bone mass measurement benefit. Collagen crosslink tests are, 
in fact, clinical laboratory tests that are paid for under the Medicare 
clinical laboratory fee schedule, and Medicare coverage of these tests 
has been addressed under section 4554 of the BBA, which, of course, 
mandated this negotiated rulemaking process for the coverage of certain 
clinical laboratory tests. Collagen crosslinks measure bone resorption 
and are used to monitor the effectiveness of antiresorptive therapy. We 
do not believe collagen crosslinks tests are appropriately considered 
bone mass measurements.
    Comment: Ten commenters suggested that we develop a specific 
process for updating policies and to introduce additional national 
coverage decisions without having to wait for the biennial review.
    Response: It is not necessary to wait for the biennial review in 
order to request changes in the Medicare national coverage decisions. 
As we noted in the preamble to the March 10, 2000 proposed rule, 
Medicare has announced a new process for making requests for new 
Medicare national coverage decisions or for requesting changes to 
current coverage decisions. The coverage process was delineated in a 
notice in the Federal Register published April 27, 1999, and is 
available on the Internet at http://www.cms.gov/coverage/8a1.htm
    We should point out that the new coverage process includes an 
opportunity for members of the public to participate in coverage 
decisions. We post all pending coverage issues on the Internet and 
welcome the submission of evidence related to every issue. In addition, 
for some issues, we hold public meetings of the Medicare Coverage 
Advisory Committee (MCAC) to assist us in assessing the evidence. We 
have established a specific MCAC panel to address diagnostic issues, 
such as clinical diagnostic laboratory tests.
    We intend to solicit changes in the laboratory policies biennially, 
as directed in section 4554 of the BBA. In addition, we will accept 
requests for changes to current policies at any time, as long as they 
comply with the requirements in the coverage notice.
    Comment: One commenter was concerned that implementation of the 
final rule may result in denial of payment for laboratory services that 
are currently being paid by Medicare. The commenter suggested that a 
laboratory should be able to rely on the existing local medical review 
policies (LMRP) without fear of claims denial and potential government 
enforcement action until the applicable contractor changes its LMRP or 
until the proposed rule is effective.
    Response: We agree with the commenter that the final rule should 
not be enforced before its effective date. Contractors should be using 
their existing local policies until these policies become effective. 
Once these national coverage decisions become effective, contractors 
will need to use these policies as they are published. LMRPs may not 
conflict with the 23 national coverage decisions outlined. If a LMRP 
conflicts with a national coverage decision, the contractor is required 
to change it so it complies with the national coverage decision. When a 
national coverage decision is silent on an issue, such as frequency 
guidance, a contractor may develop an LMRP that supplements the 
national coverage decision. However, the LMRP may not conflict with the 
national coverage decision.

Appropriate Use of Procedure Code

    Comment: Three commenters expressed the view that it is not 
appropriate to use modifier -59 for medically necessary repeat clinical 
laboratory tests for the same CPT code for the same beneficiary on the 
same day because that modifier applies to physician procedures and not 
clinical laboratory tests. They indicated that modifier -91 is 
specifically designed for clinical laboratory tests, and is a more 
appropriate modifier to use in billing for medically necessary repeat 
tests of this type.
    Response: The issue of use of modifiers -59 and -91 can be 
confusing. Both modifiers have a place in coding repeat clinical 
diagnostic laboratory tests. Modifier -91 is appropriate when in the 
course of treatment of the patient it is necessary to repeat the same 
laboratory test on the same day to obtain subsequent test results, such 
as when a beneficiary requires repeated blood tests that were performed 
at different intervals during the same day.
    The commenters are correct that the new modifier -91 that was added 
by the American Medical Association's CPT Editorial Panel, as part of 
its year 2000 update, is specifically designed for the reporting of 
that type of repeated test. For example, if an arterial blood sample is 
drawn from a patient at three different intervals on the same day, and 
the blood testing is performed three times that same day, then CPT code 
82803, Gas, blood, any combination of pH, PCO2, P02, CO2, HC03 
(including calculated oxygen saturation), should be reported as 
follows: 82803, 82803-91, and 82803-91. We believe one of the examples 
provided in the March 10, 2000 proposed rule--Biochemical studies 
performed on different samples, for example, renins (CPT code 84244)--
is an example of when the modifier -91 is appropriate.
    The purpose of the Committee consensus on the use of modifier -59 
was to resolve coding situations that were presented to the Committee 
by the microbiology community that do not meet the definition of 
repeated tests for which modifier -91 is appropriate. They cited 
situations, for example, in which samples or cultures are taken from a 
patient from different anatomical sites, or even different wounds, and 
then are tested the same day. We believe that the use of modifier -59 
in reporting multiple claims submissions by a clinical laboratory for 
the same CPT code for the same beneficiary on the same day is the 
appropriate way to handle these situations and is consistent with 
established CPT coding conventions. We have consulted with the American 
Medical Association, the proprietors of the CPT coding system including 
modifier, in ensuring that modifier -59 is the appropriate means of 
indicating repeat laboratory test coding when there are two tests 
involving different sites. As mentioned in the preamble to the March 
10, 2000 proposed rule, a few examples of appropriate use of modifier 
-59 would be the following:

[[Page 58800]]

     Multiple blood cultures (CPT codes 87040 and 87103), 
generally 2-3 collected from different sites to document etiology of 
sepsis.
     Multiple lesion samples collected from distinct anatomic 
sites for culture for bacteria (CPT codes 87070 and 87075).
    Comment: One commenter noted that it is the experience of its 
organizations members that some Medicare contractors are not currently 
accepting the use of modifier -59, and it is suggested that we should 
issue an instruction to its contractors to ensure that they will accept 
multiple claims submitted by laboratories using modifier -59.
    Response: We agree that all Medicare contractors processing 
laboratory claims should be accepting both modifier -59 and modifier 
-91 when used appropriately in billing for medically necessary 
laboratory services for the same CPT code for the same beneficiary on 
the same day, as described above in our reply to the previous comment. 
We will clarify the use of these two modifiers in the instructions that 
we will be issuing to our contractors.
    Comment: One commenter indicated that there was a need for us to 
identify all of those clinical laboratory tests that frequently result 
in multiple tests being billed.
    Response: We do not believe that we have the expertise or 
experience to attempt to identify all of the various clinical 
laboratory tests that might warrant the use of modifier -59. If we were 
to attempt this action and make errors in omission, laboratories would 
not be able to receive payment when it may become necessary to perform 
repeat testing on patients to attend to their specific medical needs. 
We believe that it is sufficient to provide a few examples of 
appropriate use of the modifier, which we will repeat in our 
instructional issuance.
    Moreover, the Committee believes that there was not sufficient time 
and information available for them to attempt to identify all the 
various clinical laboratory tests that might warrant use of modifier 
-59. As a result, the Committee agreed that it would be sufficient to 
provide a few examples are of appropriate use of the modifier. We agree 
with the Committee that a few examples are sufficient to address the 
concern with the -59 modifier. Moreover, we believe that any attempt on 
our part to identify a comprehensive list of situations that would 
warrant the use of the -59 modifier is likely to be incomplete due to 
our lack of field experience and would thus generate additional 
concerns.

Documentation and Recordkeeping Requirements

    Comment: Three commenters expressed concern about the process by 
which diagnostic information supporting medical necessity is to be 
collected from the ordering physician. Two of the commenters suggested 
that we publish a guideline for collecting additional information from 
the ordering physician. Another commenter further suggested that our 
guideline state the baseline effort required for obtaining 
documentation by the entity submitting the claim. The commenter 
suggested that claims should be denied only if the required effort for 
obtaining the documentation has been met.
    Response: We acknowledge the burden that accompanies the task of 
collecting diagnostic information to support medical necessity. 
However, the Act requires that Medicare only pay for services that are 
reasonable and necessary. Medicare cannot pay for services that do not 
meet this standard simply because the laboratory has expended a 
specified amount of effort to obtain documentation. We have, however, 
identified a process for requesting documentation that we believe 
reduces the burden on the laboratories for collecting and submitting 
information to us.
    As part of the negotiated rulemaking process, the Committee 
established a consensus to the guidelines for documentation that 
appeared in the preamble to the March 10, 2000 proposed rule. 
Specifically, the consensus statement and proposed rule provide that 
the laboratory is responsible for maintaining information it receives 
from the ordering practitioner, and the practitioner, is responsible 
for maintaining the information in the medical record. Our initial 
request for information is made to the entity submitting the claim. 
That entity should submit whatever documentation it has in support of 
the claim.
    If the documentation provided by the entity submitting the claim 
does not demonstrate that the service is reasonable and necessary, we 
will take the following action: (1) Provide the ordering physician 
information sufficient to identify the claim being reviewed; (2) 
request from the ordering physician those parts of a beneficiary's 
medical record that are relevant to the specific claim(s) being 
reviewed; and (3) if the ordering physician does not supply the 
documentation requested, inform the entity submitting the claim(s) that 
the documentation has not been supplied and deny the claim.
    Since the entity submitting the claim will be the entity to 
experience a payment denial if documentation does not support the 
medical necessity of the claim, we agreed laboratories should not be 
precluded from requesting additional diagnostic or other medical 
information from the ordering provider. In making requests for 
additional information, laboratories must focus their request for 
additional information on material relevant to medical necessity. In 
addition, documentation requests must take into account applicable laws 
and regulations related to patient confidentiality.
    Comment: One commenter requested that we publish a quarterly 
summary that specifies the total number of tests ordered and the total 
number of tests not paid by Medicare due to lack of medical necessity 
by the ordering physician.
    Response: We question the utility of quarterly reports that specify 
the total number of tests and total number denied due to lack of 
medical necessity. We fail to see how this report would assist 
laboratories without identification of the laboratories and/or 
physicians involved. Furthermore, the commenter did not identify a 
method of distribution of this information that would be beneficial and 
reasonably priced. We are not convinced that the benefits of such a 
report would outweigh the costs.
    Laboratories are free to prepare any reports for their own use with 
the payment information they receive. For example, laboratories can 
link denial rates for failure to provide medical necessity information 
to specific clients and target educational efforts toward those 
specific problems.
    Comment: Twenty-six commenters expressed concern that the March 10, 
2000 proposed rule makes it possible for laboratories to be held liable 
for claims denial due to the lack of information supporting medical 
necessity. That is, the commenters were concerned that the laboratories 
would be the entity experiencing the loss if the physician does not 
submit the information supporting medical necessity. The commenters 
believe that the March 10, 2000 proposed rule will result in unfairness 
and financial hardships for the laboratory industry. Several commenters 
suggested that in the final rule, laboratories should not be 
financially responsible in this situation. Some commenters believe that 
the situation may be best addressed if (1) we simultaneously notify 
both the entity submitting the claim and the ordering physician that 
additional information is

[[Page 58801]]

being requested; (2) we tracks which physicians have failed to comply 
with requests for additional information; and (3) we identify a time 
frame that specifies when responses to requests need to be made. One 
commenter suggested that we create a database of medical records that 
service providers may access for claims purposes.
    Response: The commenters do not seem to recognize that the March 
10, 2000 proposed rule does not change the current provisions for 
liability on claims due to lack of information supporting medical 
necessity. Section 1862(a)(1)(A) of the Act provides that, 
notwithstanding any other provision of the Act, payment may not be made 
for services that are not reasonable and necessary for the diagnosis or 
treatment of illness or injury. Presently, all entities that bill the 
Medicare program are held liable when they bill for services and are 
not able to produce documentation of the medical necessity of the 
service. Although the Committee discussed at length the special 
circumstances related to laboratories, which frequently do not have 
direct contact with the patient, the Committee recognized that the law 
does not provide the authority to exempt laboratories from the 
provision related to medical necessity.
    In addition, we do not agree that the provision related to denial 
of claims for laboratory services when documentation is not provided is 
unfair. Rather, we believe it would be unfair to exempt laboratories 
from this provision while continuing to require it for other providers 
and suppliers. For example, durable medical equipment (DME) suppliers 
frequently do not have direct contact with beneficiaries but are 
dependent upon physician documentation of medical need in order to 
receive payment.
    Some commenters suggested that we simultaneously notify both the 
entity submitting the claims and the ordering physician that additional 
information is being requested. We are not accepting this suggestion 
for several reasons. First, in many cases, we do not have the address 
of the ordering physician at the time the initial request for 
information is made. This information will be supplied by the entity 
that submitted the claim following our initial request so that we can 
directly request additional information from the physician as is 
contemplated in Sec. 410.32(d)(3)(ii). Moreover, we believe that it 
would be confusing to request information from both the ordering 
physician and laboratory simultaneously because both the laboratory and 
the physician could send information or both can believe that the other 
is handling it. Finally, duplicate mailings to both the laboratory and 
physician are costly to the program. This appears to be a cost without 
benefit.
    Some commenters suggested that we track which physicians have 
failed to comply with requests for additional information. Similarly, 
this is a suggestion that would result in significant cost to the 
program if adopted. The commenters were not clear about how this 
information ought to be used. We do not agree that tracking these 
physicians would be beneficial. Several of the commenters suggested 
that we identify a time frame between a request for documentation from 
the carrier and denial of the claim for lack of documentation. We agree 
that physicians should be advised of the period of time that they have 
to respond to the Medicare contractor's request. Section 521 of the 
BIPA requires that the carrier or fiscal intermediary must make initial 
determinations on claims within 45 days of receipt of the claim.
    Claims subject to additional information requests on prepayment 
review must be handled within the statutory mandated time frame. In 
cases for which the initial request would have been made to the entity 
submitting the claim before the request to the physician, it is very 
likely that there will be minimal time for the physician to respond. 
Requests for additional information made on a postpayment basis is not 
subject to the time frames contained in section 521 of BIPA. In issuing 
instructions implementing this provision of the rule, we will instruct 
the contractors to identify the date by which they need information on 
claims that have not received an initial determination and provide 60 
days notice before denying a claim for failure to supply requested 
information when claims are identified for development based on 
postpayment review.
    Comment: One commenter addressed the process that would allow 
physicians to justify additional tests that may not be deemed by local 
medical review policy (LMRP) as medically necessary.
    Response: Most local medical review policy is written in a fashion 
similar to that employed by the Committee in development of the 23 
national coverage decisions contained in the addendum to the March 10, 
2000 proposed rule. That is, most LMRPs provide a list of codes for 
which medical necessity is presumed, a list of codes that are not 
covered, and a list of codes that are presumed not medically necessary. 
Contractors are required to consider any documentation that is 
submitted with the claim. Thus, a process already exists for physicians 
to justify tests that are not presumed medically necessary. Further, 
LMRPs are not binding upon the Administrative Law Judges that 
adjudicate appeals of contractor denials. Physicians may use the appeal 
process to seek payment for claims that the contractor determines are 
not justified.
    Comment: One commenter requested that a form be produced that would 
allow physicians to justify additional clinical laboratory tests that 
may not be considered medically necessary by the local LMRP.
    Response: Under current Medicare guidelines, clinical laboratories 
are already allowed, if they choose, to require that their ordering 
physicians use a specified medical documentation form in support of 
claims as the commenter has suggested. We, however, are obligated under 
the Paperwork Reduction Act to limit the reporting burden placed upon 
providers unless there is a demonstrated need for it to carry out the 
provisions of the applicable law and regulations. Since clinical 
laboratories already have the ability to require their clients to use a 
specified medical documentation form, we do not believe that it is 
necessary to require the use of such a form by all physicians for all 
of the tests that they order for their Medicare beneficiaries. It is 
possible for us to engage in this type of documentation gathering 
through use of a national certificate of medical necessity for clinical 
laboratory services. However, before we actively consider imposing this 
type of reporting burden on the public, we believe we need to research 
this proposal carefully.

Signature on Requisition

    Comment: Twelve commenters addressed the March 10, 2000 proposed 
rule's provision about signature requirements on requisitions. Seven of 
the commenters were in agreement with the March 10, 2000 proposed rule 
provision that a signature not be required on a claim and did not 
submit suggestions to us. Two of the commenters requested that we 
publish other means of indicating that a physician has ordered a 
laboratory service. Three of the commenters expressed concern that the 
March 10, 2000 proposed rule was in conflict with CLIA requirements 
that a written authorization be obtained within 30 days of a verbal 
request for the laboratory service. One suggested that we should 
require USER ID instead of physician signature while another suggested 
that another individual who has the authority to order for the 
physician be required to sign the requisition in place of the 
physician.

[[Page 58802]]

    Response: Regulations set forth at Sec. 410.32(a) require that 
diagnostic x-ray tests, diagnostic laboratory tests, and other 
diagnostic tests must be ordered by the physician who is treating the 
beneficiary for a specific medical problem and who uses the results in 
the management of the beneficiary's specific medical problem. Some have 
interpreted this regulation to require a physician's signature on the 
requisition as documentation of the physician's order. While the 
signature of a physician on a requisition is one way of documenting 
that the treating physician ordered the test, it is not the only 
permissible way of documenting that the test has been ordered. For 
example, the physician may document the ordering of specific tests in 
the patient's medical record. As stated in the preamble to the March 
10, 2000 proposed rule, we will publish an instruction to Medicare 
contractors clarifying that the signature of the ordering physician is 
not required for Medicare purposes on a requisition for a clinical 
diagnostic laboratory test.
    We also do not agree with the commenters that the March 10, 2000 
proposed rule conflicts with the CLIA requirements. Regulations 
implementing the Clinical Laboratory Improvement Amendments of 1988 
(CLIA) at Sec. 493.1105, relating to the requisition, specify that a 
laboratory must perform services only at the written or electronic 
request of an authorized person. Further, this section permits oral 
requests for laboratory services only if the laboratory subsequently 
requests written authorization for the testing within 30 days.
    Authorization does not equate to physician signature; the CLIA 
regulations provide, for example, that the patient's chart or medical 
record may be used as the test requisition. The CLIA regulations 
address this written authorization as a means of ensuring that 
laboratories are not performing tests that were not authorized. They do 
not address or conflict with the requirement that there be 
documentation of the physician's order available upon request of the 
Medicare contractor. Of course, if the physician signs the requisition 
himself, it would satisfy both the requirement in Sec. 410.32(a) and 
Sec. 405.1105.

Procedures for Filing Claims

    The Committee discussed concerns expressed by various members of 
the Committee and reached a consensus on the following three issues 
relating to ``Procedures in Filing Claims.'' These included (1) Coding 
of Narrative Diagnoses, (2) Limitation on Number of Diagnoses, and (3) 
Matching of Diagnosis to Procedure. We received no comments from anyone 
on these issues.

Limitation on Frequency

    Comment: Three commenters cited the lack of frequency limitations 
in many of the national coverage policies that had been developed in 
the March 10, 2000 proposed rule. Two commenters requested that we 
specify the allowed frequency limitations in all of the proposed 
policies. One commenter expressed support only for screens that are 
national in scope and suggested that in the absence of these national 
frequency limitations, local contractors should not be permitted to 
apply their own frequency limitations at that level.
    Response: The Committee discussed this subject and agreed to set as 
its goal the development of specific language on frequency limitations 
for the various national coverage policies drafted whenever possible to 
promote uniformity throughout the country. The Committee spent a great 
deal of time and worked very diligently on this issue, but they were 
unable to reach a consensus on specific frequency limitations for most 
of the proposed national coverage policies.
    We have continued to study the scientific evidence related to 
frequency limitations, and we do not believe that the medical evidence 
is sufficient to develop national frequency limitations for those 
policies that do not contain them at present. Further, we note that the 
public comments on the March 10, 2000 proposed rule did not include 
information supporting the addition of any specific frequency 
limitations to the national coverage policies. Contractors analyze data 
to allow them to identify what is the prevalent practice in the area. 
In the absence of scientific data to support national frequency 
limitation, we have decided to defer to local contractors in this 
regard who will base their determinations on the local practices.
    In the absence of a national coverage policy on a particular 
laboratory procedure that specifies a frequency limitation, Medicare's 
local contractors are responsible for making individual coverage 
determinations on the procedure, including, if they choose, 
establishing appropriate local frequency limitations on the procedure.
    The Committee discussed this issue and agreed that a frequency 
limitation would not result in a frequency-based denial at the local 
level unless information published by our contractor (or by us in the 
case of a national frequency limitation) includes an indication of the 
frequency that is generally considered reasonable use of that test for 
Medicare payment purposes. The contractor must consult with appropriate 
advisors, including medical specialty and other organizations, before 
developing and publishing frequency information for a clinical 
diagnostic laboratory test.
    Comment: One commenter opposed the use of frequency screens that 
result in automatic denials and believes that the use of these screens 
conflicts with court cases that have held that their use contravenes 
the Medicare statute. The commenter believes that this type of 
frequency screen is used as an absolute denial mechanisms or 
irrebuttable presumption that forecloses the opportunity for an 
individualized determination of medical necessity and is, therefore, 
illegal. The court decisions of Vorster v. Bowen, 709 F. Supp. 934 
(C.D.Cal. 1989); and Fox v. Bowen, 656 F. Supp. 1236 (D.C.Conn. 1987) 
are cited in support of the commenter's assertion.
    Response: We believe the commenter has misunderstood the March 10, 
2000 proposed rule with respect to Medicare policy on automatic denial 
of laboratory claims as the policy applies to frequency screens. This 
policy does not provide for automatic denials of laboratory claims 
based on frequency. Rather, under the proposed policy, contractors will 
provide frequency guidance before implementation of any frequency 
screens. Entities submitting claims for laboratory services that exceed 
the frequency guidance are encouraged to submit documentation of the 
medical necessity of the service with the claim. Contractors will 
review all documentation submitted before making a determination on the 
claim.
    We do not believe that this policy is in conflict with the court 
cases that the commenter has referenced. On the contrary, the Court in 
Vorster expressly determined that the Medicare statute and its 
legislative history supported the use of utilization screens by 
carriers in processing claims under Part B. In that case, the 
plaintiff, a Medicare beneficiary, submitted claims for covered 
chiropractic services to the carrier that were subsequently denied 
entirely, based on application of a utilization screen. The plaintiff 
then sought a review determination from the carrier and submitted 
additional information to the carrier in support of her claim. The 
carrier again denied the claims, and the beneficiary then filed suit, 
alleging that the use of utilization screens was a violation of the 
Medicare statute.

[[Page 58803]]

    The Court in Vorster rejected the plaintiff's allegation that the 
use of utilization screens violated the Medicare statute. According to 
the Court in that case: The Congress instructed the Secretary to use 
the expertise of private sector carriers in administering the Part B 
plan, and has acknowledged that the efficient administration of the 
Part B program includes review of utilization and the control of 
unnecessary utilization of covered services. [Citations omitted.]
* * * * *
    Based upon the foregoing legislative history, it appears that in 
general, the Congress would approve the use of utilization screens in 
processing claims. Vorster, 709 F. Supp. 940-41. The Court in Vorster 
noted that the use of utilization screens would contravene the Medicare 
statute if they were used as ``absolute denial mechanisms'' or as 
``irrefutable presumptions, which foreclosed any meaningful opportunity 
to receive an individualized determination of medical necessity.'' 
Vorster, 709 F. Supp. at 941. As we have stated above, however, the use 
of utilization screens as contemplated in the policy does not act as 
either an ``absolute denial mechanism'' or as an ``irrefutable 
presumption which foreclose[s] any meaningful opportunity to receive an 
individualized determination of medical necessity.''
    We also do not think that the reasoning in the Fox v. Bowen case, 
also cited by the commenter, is applicable to the proposed policy. The 
Fox case involved a challenge to a denial of claims for physical 
therapy services to skilled nursing facility patients. A fiscal 
intermediary in that case had established parameters for determining 
whether physical therapy services would be covered for patients in 
skilled nursing facilities. The Court characterized those parameters as 
``informal presumptions'' or ``rules of thumb,'' applied across the 
board ``without regard to the therapeutic requirements of the 
individual patient.'' Fox, 656 F. Supp. at 1248. The regulations 
promulgated by the Secretary, and the manual that was provided to 
assist intermediaries in making coverage determinations for physical 
therapy services, however, contemplated clearly that beneficiaries 
would receive an individualized assessment of need for physical therapy 
services. Id. Because an intermediary's practice in that case did not 
conform to the requirements of the regulations calling for an 
individual assessment of need for covered services, the Court in Fox 
determined that the practice was unlawful. We believe, therefore, that 
the Fox case is inapplicable to the proposed policy. The proposed 
policy does not constitute a denial of benefits based on ``informal 
presumptions'' or ``rules of thumb'' applied across the board without 
regard to the therapeutic requirements of the individual patient.
    Comment: One commenter expressed concern that there is little 
oversight of the LMRP development process, which often results in LMRPs 
being developed without regard to our coverage guidelines. The 
commenter indicated that, although the Medicare Carrier's Manual 
requires, and the March 10, 2000 proposed rule suggests that LMRPs must 
be based on medical literature and current clinical practice 
guidelines, many are not. The commenter also stated that because there 
is no public notice for the development of LMRPs, there is no 
opportunity for beneficiaries to comment on them, and only limited 
opportunity for affected practitioners to do so.
    Response: An LMRP is primarily a program integrity tool. It is 
developed to address identified or potential abuse, such as 
overutilization. In the absence of national policy, it is generally 
developed to specify criteria that describe whether the item or service 
is covered and under what clinical circumstances it is considered to be 
reasonable, necessary, and appropriate. The process for developing 
LMRPs includes the following: (1) Development of a draft policy based 
on review of medical literature and the contractor's understanding of 
local practice; (2) soliciting comments from the medical community, 
including the Contractor Advisory Committee (CAC); (3) responding to 
and incorporating into a final policy the comments received; and (4) 
notifying providers of the policy's effective date.
    In accordance with our instructions to contractors, LMRPs must be 
based on the strongest evidence available. The initial action in 
gathering evidence in developing an LMRP must always be a search of 
published scientific literature for any available evidence pertaining 
to the item or service in question. We instruct contractors to heavily 
weigh published authoritative evidence derived from randomized clinical 
trials or other definitive studies. We also instruct contractors to 
consider as evidence the consensus of expert medical opinion (that is, 
recognized authorities in the field) or medical opinion derived from 
consultation with medical associations or other health care experts. We 
do advise them, however, that acceptance by individual providers or 
groups of providers does not normally indicate general acceptance by 
the medical community. Testimonials and limited case studies 
distributed by sponsors with a financial interest in the outcome is not 
sufficient evidence of general acceptance by the medical community.
    Contractors are required to provide a minimum comment period of 45 
days on proposed LMRPs. The 45-day period begins with distribution to 
the CAC. Contractors are required to make their CAC meetings open to 
the public, and all interested parties, including beneficiaries, may 
attend and comment on the proposed policies. Further, the proposed 
policy is not only distributed to the CAC, but also to representatives 
of specialty societies, other than those represented on the CAC, when 
appropriate. Contractors are instructed to remain sensitive to other 
organizations or groups, which may have an interest in an issue. All 
comments received are considered and responded to either through the 
contractor's newsletter or individually to the commenter. The final 
policy is announced in a contractor bulletin at least 30 days before 
implementation.
    Our regional staffs review the contractors' performance annually. 
If the commenter has specific details regarding a contractor that is 
not following the above requirements in the development of its local 
policies, they should notify us so that it can be investigated.
    Comment: Three commenters expressed concern with limitations that 
might be imposed by the provision for automatic denial for egregious 
utilization.
    Response: After considering the comments, we believes that the 
March 10, 2000 proposed rule was not sufficiently detailed in respect 
to this provision to benefit from public comment. Consequently, we are 
withdrawing the provision of automatic denial for egregious utilization 
and will study the matter further.
    Comment: One commenter believes that the use of frequency screens 
that results in automatic denials will lead to underutilization of 
Medicare-covered medically necessary services by encouraging 
laboratories to give Advance Beneficiary Notices (ABNs) in every 
situation.
    Response: The commenter appears to have misunderstood the March 10, 
2000 proposed rule with regard to automatic denials. The proposed 
policy severely limits automatic denial based on frequency. The 
proposed policy, which we are incorporating in this final rule, 
provides that, except in limited and specified circumstances as 
described in

[[Page 58804]]

these regulations, we will not deny a claim for services that exceed 
utilization parameters without reviewing all relevant documentation 
submitted with the claim. For example, before denying a claim, 
contractors must review and consider justifications prepared by a 
provider or supplier, primary and secondary diagnosis, and copies of 
medical records that are submitted with the claim. Contractors may 
automatically deny a claim without any manual review only if a national 
coverage decision or LMRP specifies the circumstances under which a 
service is denied and those circumstances exist, or the service is 
specifically excluded from Medicare coverage by statute.
    We do not believe that application of a Medicare policy on 
automatic denial of laboratory claims, as described in these 
regulations, will result in the underutilization of Medicare covered 
services as the commenter suggested. To the extent that laboratories 
and physicians may issue additional ABNs to these patients that they 
would not do otherwise, we believe that this may, in fact, be helpful 
to beneficiaries. The purpose of the ABN is to give beneficiaries 
advance notice that a service may not be covered so that they have the 
opportunity to make an informed choice on whether to have the service 
or not.
    Comment: Four commenters offered suggestions for how the Medicare 
policy on Advance Beneficiary Notices (ABNs) should be clarified with 
respect to situations when laboratory tests that are performed exceed 
frequency limitations. They also made suggestions regarding when ABNs 
need to be signed by beneficiaries under the Medicare limitation on 
liability provisions.
    Response: As we indicated in the preamble to the March 10, 2000 
proposed rule, section IV, Other Topics Discussed by the Committee, the 
Medicare provisions on limitation on liability (sometimes called waiver 
of liability) were identified as falling outside the scope of the 
clinical laboratory negotiations. The limitation on liability 
provi