Medical Necessity of Laboratory Tests (Part B)
(From Medicare Focus, November, 1997, pp. 28-29.
Used with permission.)
The statutory basis for Medicare is found in Title 18 of the Social Security Act. Paragraph 1862(a)(1)(A) defines reasonable and necessary as those tests and procedures used in the diagnosis or management of illness or injury or to improve functioning in a malformed body part. Tests and procedures defined as experimental by the Food and Drug Administration (FDA) or the Health Care Financing Administration (HCFA) are not considered reasonable. FDA approval does not also automatically mean medical necessity.
Paragraph 1862(a)(7) excludes routine physical checkups from coverage. Some other tests, procedures, equipment or devices are statutorily excluded as noncovered services, for example, cosmetic surgery. Except for tests mandated by statute, presently pap smears and mammography, screening tests are not a covered Medicare benefit.
Over the past 18 months, several local medical review policies (LMRPs) have been developed concerning the more frequently utilized laboratory tests. Each LMRP contains a list of diagnosis to define "medical necessity" for the laboratory tests within the context outlined above.
Laboratory tests performed during annual physical examinations or other routine screening situations without signs, symptoms or illness should use one of the following ICD-9 diagnosis codes as appropriate:
V 70.0 - Routine general medical examinations at a health care facility.
V 70.1 - General psychiatric examination, requested by the authority.
V 70.2 - General psychatric examiniation, other and unspecified.
V 70.3 - Other medical examination for administrative purposes.
V 70.4 - Examination for medicolegal reasons.
V 70.5 - Health examination of defined subpopulations.
V 70.6 - Health examination in population surveys.
V 70.7 - Examination for normal comparison or control in clinical research.
V 70.8 - Other specified general medical examinations.
V 70.9 - Unspecified general medical examination.
The use of these ICD-9 diagnosis codes will result in the claim being denied as a non-covered benefit with an ANSI reason code 49 on the remittance notice, based on statutory exclusion as outlined above. The narrative of this code is, "These are non-covered services because this is a routine examination or screening procedure done in conjunction with a routine examination." The beneficiary is liable for payment of non-covered services. Discussion of non-covered services with the patient is encouraged. An advance beneficiary notice is not necessary.
All other ICD-9 diagnosis codes will either be paid, assuming medical necessity for diagnosis and/or frequency of utilization, or denied as not medically necessary. Those claims denied as not medically necessary will be denied with an ANSI reason code 50 or 57 on the remittance notice. The narratives of these codes are respectively, "These are non-covered services because this is not deemed a 'medical necessity' by the payer" and "Claim/service denied/reduced because the payer deems the information submitted does not support this level of service, this many services, this length of service, or this dosage." The beneficiary may not be charged by the physician or laboratory performing the test. The waiver of liability for the patient is applied because of the medical necessity denial.
If you have reason to believe a particular test will be denied because of lack of medical necessity, you may ask the patient to waive (release) their protection from liability by asking them to sign an advance beneficiary notice (example below). The advance beneficiary notice must specify each service and each date of service, and the specific reason why it is believed the service will be denied.
Only the physician that orders laboratory services can provide correct diagnostic information for the laboratory services. A physician who does not supply ICD-9 diagnosis codes for a laboratory specimen and allows other people (for example, nurses working for other employers such as a home health agency, hospital medical records coders, or laboratory personnel) to attach payable ICD-9 diagnosis coding, put themselves at risk in the event of a medical review or Fraud and Abuse Unit investigation.
NOTE: Underline added for emphasis
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