The Georgia Scroll
January 1998
Model Compliance Plan
for Clinical Laboratories
In response to the government’s focus on healthcare fraud, the Office of the Inspector General(OIG) of the Department of Health and Human Services (HHS) has written a "Model Compliance Plan for Clinical Laboratories", published in the March 3, 1997 issue of the Federal Register. The guidelines in the Plan are based on the OIG’s experience with fraud investigations of clinical laboratories, the Health Care Financing Administration’s (HCFA) regulations, input from the clinical laboratory industry, and requirements imposed on clinical laboratories in corporate integrity agreements negotiated with the OIG. The Plan is designed to provide structure and guidelines to enable laboratories to comply with healthcare laws. The OIG suggests that every laboratory develop its own compliance plan that would include, at a minimum, the following elements:
One of the elements that should be included in the policies and procedures section of any laboratory’s compliance plan are written guidelines and requirements for ensuring that claims submitted to Medicare or any other third-party payer, represent tests or procedures that the laboratory believes are medically necessary. Each laboratory is responsible for ensuring that medically necessary tests are performed for Medicare beneficiaries. Upon request, a laboratory should be able to provide documentation, such as requisition, supporting the medical necessity of a service that it has provided and billed to Medicare.
Diagnostic codes, of ICD-9-CM codes, help to establish and identify the medical necessity of services and tests provided by describing the circumstances of the patient’s condition. The Georgia Medicare fiscal intermediary (FI), and other FI’s, have issued local medical review policies (LMRP) for the test Serum, Potassium, COT code 84132. This test has over 50 diagnosis codes that would support its medial necessity. Most third-party payers, including Medicare, use claims edits or automatic denial/review commands in their computer system to review claims. These "diagnosis to procedure" edits ensure that payment in only made for specific procedure codes when provided for a patient with a specific diagnosis code or predetermined range of ICD-9-CM codes. In the example of Serum, Potassium, the claim would be denied if a diagnosis code other than one of those listed in the LMRP were given on the claim. All Medicare claims are required to contain a linkage between the CPT code and the ICD-9-CM diagnostic code.
According to the OIG’s suggestion, a requisition form should be designed that is standardized for all non-customized tests. The form should require the physician to document the need for each test ordered by placing an ICD-9-CM diagnosis code next to each test ordered. The forms should also be designed to require physicians to order tests separately unless they fall under the following criteria:
Each requisition should have a printed statement that when ordering tests for which Medicare presumably will reimburse, physicians need to order only those tests that are medically necessary for the diagnosis and treatment of a patient instead of for screening purposes.
In addition to a standardized requisition form, the OIG suggests that laboratories provide an annual notice to the physicians and other clients. This notice should describe the Medicare medical necessity policy, the individual components of each automated, multichannel profile including the CPT/HCPCS code for each component, the Medicare National Limitation amount for each CPT/HCPCS code, and a description of how the laboratory will bill Medicare for each profile. If the laboratory allows physicians to create their own custom profiles, the physician should sign an "acknowledgment" stating, among other things, that he/she is aware that by using a customized profile, some tests might be ordered that are not considered medically necessary by Medicare.
Finally, within the medical necessity section of the laboratory’s compliance plan there should be a methodology for test utilization monitoring. Once all of the steps previously outlined have been implemented, a monitoring mechanism needs to be in place. As suggested in the Model Compliance Plan, laboratories need to retain and analyze test utilization data from year to year. This data would be categorized by CPT/HCPCS codes for the top 30 tests performed for Medicare beneficiaries. The laboratories would then compute the percentage of growth in claims submitted to Medicare for these top 30 tests. If a test’s utilization rate grew more than 10 percent, the laboratory would need to investigate the cause of growth.
Because knowledge of coverage and medical necessity for certain tests billed to Medicare is of the utmost importance, continuing education for physicians, laboratory personnel, front-end registration personnel, and coders should be an on-going, routine event throughout the year. Information received from FIs as well as guidelines for physicians ordering the tests and coders providing diagnostic codes should be discussed to assure that all parties involved have a thorough knowledge of compliance requirements. By obtaining a thorough knowledge of Medicare’s compliance requirements, either from the Model Compliance Plan for Critical Laboratories or from any other published regulations or guidelines, the laboratory will achieve better quality control of claims submission and therefore, reduce their risk of liability.