HCFA changes payment rules for automated chemistry profiles - Health Care Financing Administration

Medical Laboratory Observer, Feb, 1996 by David Albertson

At long last, the Health Care Financing Administration has issued a uniform national list of blood chemistry tests billed under CPT automated profile codes for Medicare. In addition to this, however, the agency has tightened rules on the medical necessity of those tests required for reimbursement - a condition that could prove to be a significant hassle out-weighing the benefits of HCFA's former initiative.

As of Jan. 1, 1996, the Medicare roster of automated tests was fixed at 22. HCFA made three additions to the CPT list of 19 tests previously considered automated by most carriers: creatine kinase; gamma glutamyltransferase; and triglyceride. An extra payment of 50 cents per test is permitted when more than 19 medically necessary tests are billed in a profile.

Medical necessity is key

Effective March 1, Medicare will no longer pay for an automated profile if at least one of those tests is deemed medically unnecessary. All tests in the new list must meet the requirement. Failing that, the amount paid for a profile will be limited to what would have been paid had only the medically necessary tests been ordered.

The old policy was based on the nature of automated equipment that ran a fixed number of tests. This means, ostensibly, no money would be saved by running fewer tests. But technological advances now enable some equipment to produce individualized results, so "It is no longer appropriate for payment to be made for all tests in a profile when some of the tests are not medically necessary," says HCFA carder instructions.

HCFA's instructions as to what determines medical necessity are not explicit. Generally, the agency has told carders, "Assume the medical necessity of a laboratory test if there is documentation each test performed was ordered individually by a physician." Note: An order for an organ or disease-oriented panel is considered an individually ordered test.

When a test is ordered as part of an automated profile or custom panel, the carrier must consider if the test provides added needed information, if the data could be obtained through a less costly test, and if the test is ordered at an unusually high frequency. Follow-up tests done due to compromised, inadequate/incorrect specimens, or incorrect test ordering will be denied unless there is acceptable documentation to justify payment.

If a claim review finds a pattern of overutilization and documentation "doesn't support" claims of medical necessity, carriers should pursue recoupment, even if tests were individually ordered, says HCFA. Officials have instructed carriers to remind physicians and suppliers that at least annually the agency will review claims for patterns of high utilization of automated profiles with numerous tests.

New duties for doctors, labs

The most immediate impact of HCFA's new reimbursement rules is on the ways in which doctors must now order tests, moving away from set panels toward individual requests. To accommodate this, labs likely will have to supply new order forms and key in each test ordered. Industry members warn the latter duty could mean at least an initial increase in incorrect test orders.

What's more, the new instructions still permit carriers to use ICD-9 diagnosis codes to document medical necessity and to use the lack of those codes to deny payment. The problem for labs is physicians do not routinely supply diagnosis codes on their requisition forms, and labs don't require them before performing tests. Labs that fail to backtrack and supply codes with direct billing to Medicare theoretically could be denied payment.

HCFA faced a difficult challenge in defining medical necessity, but giving carriers broad latitude also makes it very tough on clinical laboratories, especially large, multi-state operations that are forced to comply with different requirements. Physicians, too, are put off by the prospect of having to look up a code to justify all of their clinical laboratory orders. Some believe it is a disingenuous way of addressing government's real concern, which is that doctors are ordering too many tests.