Public Policy

The Bare Necessities

Medicare reimburses for procedures and services deemed “reasonable and necessary.” By statute, Medicare only may pay for items and services that are “reasonable and necessary for the diagnosis or treatment of illness or injury, or to improve the functioning of a malformed body member,” unless there is another statutory authorization for payment (e.g., colorectal cancer screening).1 Medical necessity is determined by evidence-based clinical standards of care, which guide the physician’s diagnostic and treatment process for certain patient populations, illnesses, or clinical circumstances.

National Coverage Determinations

The Centers for Medicare and Medicaid Services (CMS) develop national coverage determinations (NCDs) through an evidence-based process with opportunities for public participation. In some cases, CMS’ own research is supplemented by an outside technology assessment and/or consultation with the Medicare Evidence Development and Coverage Advisory Committee (MEDCAC).

Tip of the Month:

The first line of defense in proving medical necessity is the ICD-9-CM diagnosis code. This code represents the reason for the service or procedure, and may be a sign, symptom, or condition with which the patient presents for evaluation and management. Do not select a diagnosis code that represents a probable, suspected, or “rule out” condition for physician claim submission. Although hospitals may consider these unconfirmed conditions for the facility bill (when necessary), physician reporting prohibits this practice.

When selecting the ICD-9-CM code(s), consider the primary reason for performing the service. This will prove most effective when the same or a different physician, as in concurrent care, provides multiple services for the same patient on the same date. Concurrent care occurs when physicians of varying specialties, and different group practices, participate in the patient’s care. Each physician manages a particular aspect while still considering the patient’s overall condition. When submitting claims for concurrent care services, each physician should report the appropriate subsequent hospital care code and the corresponding diagnosis each physician primarily manages. If billed correctly, each physician will have a different primary diagnosis code, and, therefore, will be more likely to receive payment.11 For example, a hospitalist manages and reports uncontrolled diabetes (250.02); a cardiologist manages and reports uncontrolled hypertension (401.0); and a nephrologist manages and reports moderate chronic kidney disease (585.3). Although each physician may address and report all three conditions, the primary condition being managed should be listed first on the claim form.

To ensure the diagnosis code is valid and complete, update billing sheets or electronic systems at least once a year. Code changes are introduced annually, at a minimum, and implemented on Oct. 1. Code changes include ICD-9-CM additions (new codes), deletions (codes no longer in use) or revisions (descriptor changes). For more info, visit www.cms.hhs.gov/ICD9ProviderDiagnosticCodes/07_summarytables.asp#TopOfPage.

All Medicare contractors must adhere to NCDs and cannot create additional limitations or guidelines. As an example, the NCD for pronouncement of death states an individual only is considered to have died as of the time he orshe is pronounced dead by a person who is legally authorized to make such a pronouncement, usually a physician; and medical services rendered up to and including pronouncement are considered reasonable and necessary.2 Further guidance authorizes physicians to report discharge day management codes (99238-99239) for the face-to-face pronouncement encounter.3 See the Medicare National Coverage Determination Manual (www.cms.hhs.gov/Manuals/ IOM/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=1&sort Order=ascending&itemID=CMS014961&intNumPerPage=10) for other applicable NCDs.

Local Coverage Determinations

In the absence of a national coverage policy, an item or service may be covered at the discretion of the Medicare contractors based on a local coverage determination (LCD).4

An LCD, as established by Section 522 of the Benefits Improvement and Protection Act (BIPA), is a decision made by a fiscal intermediary or carrier to cover a particular service on an intermediary-wide or carrier-wide basis, in accordance with Section 1862(a)(1)(A) of the Social Security Act (i.e., a determination as to whether the service is reasonable and necessary).5 LCDs may vary by state, causing an inconsistent approach to medical coverage. Non-Medicare payers do not have to follow federal guidelines, unless the member participates in a Medicare managed care plan. A list of Medicare contractor LCDs can be found at www.cms.hhs.gov/DeterminationProcess/04_LCDs.asp.

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