On Sept. 1, CMS proposed a new rule that would, among other things, shed some light on an issue that has been a perennial compliance and reimbursement stumbling block for developers of new lab tests: What makes a new “breakthrough” service or product “reasonable and necessary” for Medicare coverage purposes? Here’s the lowdown. The Reasonable and Necessary Rule Medicare covers only medical services and products that are “reasonable and necessary.” The Social Security Act (Section 1862((a)(1)(A), to be precise) gives the Secretary of Health and Human Services (HHS) the authority to determine whether a particular service or product meets the standard. However, HHS has never established a formal regulation to define “reasonable and necessary.” Instead, the current working definition used for Medicare coverage determinations comes from the Program Integrity Manual which provides instructions to Medicare contractors in deciding if a service or product is covered. The Newly Proposed 3-Pronged Definition The proposed rule would codify the Manual definition into a regulation. Specifically, an item or service would be deemed “reasonable and necessary” if it’s: Safe and effective; Not experimental or investigational; and Appropriate for Medicare patients. What “Appropriate for Medicare Patients” Means The proposed rule also establishes parameters for the…
