"Thou shalt bill only medically
necessary services.” Even though the term medical necessity
appears in nearly every coverage policy issued by payers and insurers, its precise meaning remains elusive. Taking it into account when writing an internal medical protocol or dictating a patient report is often difficult. Nonetheless, we are charged with that responsibility under various state and federal laws as well as participation agreements with payers. Government payers and private insurers have invested heavily the past 20 years in ways to monitor the medical necessity and clinical efficacy of health care services. Pathologists and laboratories should anticipate more aggressive demands for demonstration of clinical utility in the next five years. The information in this article will help you prepare. Definition of Medical Necessity
There is no universal definition of medical necessity
. Guidance from several authorities has been massaged to yield the following working definition, first published in version 14.3 (July 1, 2014) of Pathology Service Coding Handbook
(American Pathology Foundation): A medically necessary service is one that a prudent pathologist would provide to a patient for the purpose of diagnosing an illness, disease, condition, or symptom. Prudence means the service is clinically appropriate considering the patient’s history, the current clinical circumstances, and generally accepted standards of medical practice. It’s imprudent to conduct a service primarily for the convenience of the patient, the ordering physician, or the examining pathologist. Interest in the definition for purposes of this article is limited to its implications for billable versus nonbillable medical activities. It may be prudent, for example, to run a validity test on a urine sample prior to performing a quantitative toxicology assay for opiates, but to the extent the validity test represents a quality control measure instead of providing significant, independent diagnostic information, some payers will not permit a separate charge (i.e., the cost of the validity test is built into the payment for the toxicology assay). Note that clinical appropriateness from the standpoint of payment determination is driven largely by the medical facts and circumstances surrounding each patient case. For example, a pathologist at a community hospital sends a tumor tissue block to a reference lab for a fluorescence in situ hybridization (FISH) test. Although she’s confident of her invasive ductal carcinoma diagnosis and orders only the FISH test, the pathologist at the reference lab orders a hematoxylin and eosin (H&E) section from the block to confirm the original diagnosis and ensure the appropriateness of the tissue for the ordered test. Even if the reference lab’s report includes commentary on the light microscopy exam in addition to the FISH interpretation, it cannot properly bill a consultation fee (e.g., 88323) for that work, because the referring pathologist had no need for and did not order the consult. Pathologists properly strive to minimize the turnaround times of their cases. This sometimes is achieved via standing orders for a special stain (e.g., giemsa) during the routine processing stage whenever a particular type of tissue (e.g., gastric) is received in the lab. It’s not relevant whether one views the advance ordering of a special stain (i.e., prior to examining the H&E sections) to be for the convenience of the referring physician or the pathologist: From the standpoint of an insurer, the special stain is medically necessary only if the routine sections support its need. Expect More Aggressive Demands for Proof
It may simply be that news travels so much faster and wider these days with the growth of Twitter, Facebook, blogs, and other social media, but perception suggests that pathologists at large only very recently have taken notice of the trend by Medicare contractors and private insurers to issue benefit coverage (i.e., payment) guidelines that directly implicate the usual way pathologists approach their medical cases. Payer coverage guidelines have, of course, been around for many years. In terms of modern history, Medicare launched its National Correct Coding Initiative (NCCI) in the late 1990s. That was closely followed by the advent of local coverage determinations published by individual Medicare administrative contractors, which were first authorized by the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000. National coverage determinations by the central Medicare office in Baltimore must also be taken into account. To greater or lesser extent, all these guidelines focus on establishing the clinical parameters under which Medicare deems physician, laboratory, and other health care provider services to be medically necessary and thereby payable on behalf of Medicare beneficiaries. Experience indicates that, until very recently, the problem has been that pathology practice administrators, laboratory managers, coders, and billers have been the ones taking note of the coverage guidelines issued on a regular basis by Medicare, its contractors, and private insurers. Pathologists by and large have failed to take payer coverage guidelines into account in their daily practice, even at such a fundamental level as the content of their medical reports. A good example of pathologist inaction is drawn from the bone marrow case arena. Quite frequently such cases require both immunohistochemistry (IHC) and immunophenotyping by flow cytometry for thorough diagnostic evaluation. But Medicare via its NCCI policy manual since at least 2004 has said that testing by those two methods of several or many overlapping antibodies is duplicate testing
unless “the initial method [is nondiagnostic or] does not explain all the light microscopic findings.” Nonetheless, broad-based sampling indicates that many pathologists even today fail to include a simple declarative sentence (e.g., “IHC stains were evaluated to subtype the B-cell lymphoma identified by flow cytometry”) in their bone marrow reports that explains why both IHC and flow were medically indicated for a particular patient case. Without that type of defense in the report, the IHC charges are at risk of summary denial by a Medicare or private insurer auditor. The profession’s attention to the implications of payer coverage guidelines on the workaday practice of pathology seemingly came into sharp focus this past May when Palmetto GBA, the Medicare Administrative Contractor for Jurisdiction 11 (North and South Carolina, Virginia, and West Virginia), posted a policy to its Web site related to special stains and IHC for Helicobacter pylori in conjunction with gastric biopsies. The policy observed that cited professional literature indicates that a special stain or IHC is medically indicated for the evaluation of H. pylori with only about 20 percent of gastric biopsies (i.e., the H&E sections alone are sufficient for most biopsies). The policy intimated that a pathologist whose special stain utilization rate for gastric biopsies exceeded 20 percent might be subject to some type of sanction. Heavy pushback from the College of American Pathologists and practitioners in J11 resulted in Palmetto GBA rescinding the gastric biopsy policy in late July or early August. However, it’s important to note that procedural grounds played the biggest role in the reversal: Palmetto did not publish the policy as a proposed rule for public comment as it should have. The principal foundation of the policy, that Medicare’s medical necessity standards suggest that the decision to order a special stain for a case should be based on clinical criteria such as examination of the H&E sections, was in many ways sound and reasonably supported. The primary takeaways from the NCCI and Palmetto anecdotes are twofold: (1) Pathologists should incorporate payer benefit coverage guidelines into their daily practice protocols, assuming the guidelines are reasonably consistent with the sound practice of medicine, and (2) pathologists and laboratories should anticipate and prepare for many more coverage guidelines being issued by government payers and private insurers in the next three to five years. Targets for near-term coverage guideline expansion almost certainly will include the following:
Learning to Defend Your Orders
- Ongoing growth in the volume of special stains, immunohistochemistry, and in situ hybridization testing will prompt payers to closely monitor their clinical utility;
- Continued significant increase in the annual volume of toxicology tests will cause insurers to come to terms with sound medical necessity and coverage standards;
- The ever-increasing availability of molecular tests and expanded ordering practices will lead payers to strengthen their coverage guidelines; and
- “Next-generation” molecular panels have matured to the point that they’re set out separately in CPT-2015, but medical necessity-type questions remain (e.g., screening versus diagnostic; inclusion of genes with no known clinical significance vis-à-vis the tumor of interest; running an entire panel when only two or three genes are of dominant interest) that will motivate insurers to develop methods of monitoring for abuse.
Your claims for medical services are already carefully scrutinized by government payers and private insurers. Common prepayment claim edits focus on detecting duplicate services, excess units of service, suspect combinations of services, and medically unnecessary services (e.g., a particular CPT code is covered only when accompanied on the claim with one of a predefined, limited list of ICD diagnosis codes). Recent trends indicate that payers and insurers are working hard to make their pre- and post-payment claim review processes even more robust and comprehensive. You can minimize the impact of those future initiatives on your practice by taking steps now to better defend your internal medical policies and the case-by-case diagnostic decisions that you make. Following are some of the key actions you should consider near-term:
- »Base all of your internal medical policies and protocols on generally accepted standards of practice, particularly as are evidenced by material published by pathology and laboratory professional organizations and in peer-reviewed literature. Resist policies and practices that are encouraged by referring physicians but are nonetheless of questionable clinical utility. Never decide to do something merely because it’s billable or pays more than an alternate procedure. Once you and your practice associates make an internal medical policy, practice, or protocol decision, everyone should religiously adhere to the group decision—even one nonconformist can cause an outsider to view the group decision with suspicion.
- »Always remember that government regulators and insurance auditors are as much a target audience for your medical report communications as are your referring physician clients. Use CPT-based key words and terminology to the maximum extent possible (e.g., biopsy, resection, quantitative, single versus multiplex). Don’t fail to state the obvious in relation to billable procedures (e.g., decalcification, frozen section block, microscopic exam was performed). Highlight important ancillary procedures in their own section of the report (e.g., intraoperative consultations, FNA adequacy examinations, special stains).
- »Restrict standing orders for special stains and other ancillary procedures to clinical situations of unquestioned prudence vis-à-vis generally accepted practice standards, for example, a limited, defined battery of histologic and immunofluorescence stains with renal biopsies or enzyme histochemistry stains with muscle biopsies. Otherwise, base your decision to order a special stain, IHC stain, or other ancillary procedure on your findings from the microscopic examination of the routine tissue sections or smears or on the patient’s pertinent medical history. Document in your report the reason each special procedure was ordered as well as the medical conclusion you reached in respect of it; for example:
Gastric biopsy showing chronic gastritis with mild atrophy and intestinal metaplasia, suggestive of autoimmune gastritis (see comment). Comment:
Gastrin immunohistochemical stain confirms the presence of antral and body-type mucosa. Within the body-type mucosa, synaptophysin IHC stain highlights linear and nodular neuroendocrine hyperplasia, supporting the above diagnosis.
- »Monitor the coverage policy bulletins and pronouncements of your regional Medicare Part B administrative contractor and the major private insurers in your area. Communicate directly with their medical directors if you notice something amiss in a policy or coverage determination, be that an oversight, a misstatement, or an improper or incomplete interpretation. Payers make mistakes, and the mistakes won’t get corrected unless someone brings them to the medical director’s attention.
- »Encourage your state pathology professional organization to form an active payer-relations committee if one isn’t already in place, and make time to participate on that committee. State societies have proven their value time and again over the years in heading off or reforming ill-conceived local payer medical coverage policies, and the need for aggressive, grassroots action, including in the member education arena, will increase in the next five years.
Additional tips for audit-proofing your medical reports and defending the medical necessity of your work can be found at (1) Padget, D. “How to Audit-Proof Your Medical Reports: Tips for Pathologists,” G-2 Compliance Report
, V:9, October 2003, and (2) Padget, D. “Tips for Minimizing Pathology & Lab Charge Denials,” G-2 Compliance Report
, VII:7, August 2005. (Despite the age of the two articles, the principles and suggestions are still valid today, but you must ignore any CPT code changes that have since occurred.) Also consult the American Pathology Foundation’s Pathology Service Coding Handbook
. Dennis L. Padget, MBA, CPA, FHFMA, can be reached at DennisPadget@embarqmail.com