EDITOR’S NOTE: This is a summary of RAC University’s live Webinar, “Is That Service Necessary? The New Medical Necessity Target,” presented by Ronald Hirsch, MD, Vice President of the Regulations and Education Group at Accretive Physician Advisory Services. The article appears courtesy of The Report on Medicare Compliance.

If hospitals and physicians are not already reviewing their use of chemotherapy drugs to determine if they are reasonable and necessary, now is the time, experts say.

Medicare auditors are all over them as part of their growing scrutiny of the medical necessity of providing and billing for various expensive drugs, procedures and tests.

With auditors dwelling less on patient status, there is more attention paid to whether documentation supports the rationale for the services, and whether a less conservative treatment would minimize the risk of harm to the patient and the Medicare trust fund.

Chemotherapy fires on all of these compliance cylinders, along with cardiac procedures, radiology, cataract surgery, back surgery and other pricey or high-volume services, said Ronald Hirsch, vice president of Accretive Physician Advisory Services, during a recent webcast sponsored by RACmonitor.

“One area that will be a big target and is starting to grow is denials for chemotherapy in the outpatient setting,” he said. “We have to look at chemotherapy and make sure it’s medically indicated.”

The Medicare administrative contractor for California, for example, has probe audits underway of many chemotherapy drugs and biologics. Noridian Healthcare Solutions selected the drugs because “data analysis identified a potentially high use,” the MAC said on its website. Targets include the following: 

  • Denosumab injection, 1mg (HCPCS code J0897)
  • Pegfilgrastim injection, 6mg (HCPCS J2505)
  • Aflibercept injection, 1mg (HCPCS J0178)
  • Bortezomib injection, 0.1 mg (HCPCS J9041)
  • Rituximab injection, 100 mg (HCPCS J9310)
  • Cetuximab injection, 10 mg (HCPCS J9055) 

“It’s starting to happen,” Hirsch says. “Noridian is doing 100% prepayment claim audits.” The focus on

Neulasta (pegfilgrastim) is worrisome, he noted, because payment for the drug, which builds white blood cells, is $6,000 to $8,000 per dose, so denials will hit providers hard. “You may want to pull out criteria and see how much you are billing.” Then look at medical records: how doctors are documenting, whether lab results are there, and whether the health information management staffers know when they get chart requests, find all the documentation “and send it all along with the chart” to auditors at their request, Hirsch said.

Medicare bases medication coverage on the patient’s condition, the appropriateness of the dose/route of administration and the standard of practice for the drug’s effectiveness for the diagnosis and condition, Hirsch says. Cost doesn’t factor into Medicare coverage decisions, which is where Medicare diverges from the commercial payers, he says. Medicare requires providers to select drugs according to protocols listed in accepted compendia ratings, such as the National Comprehensive Cancer Network and American Hospital Formulary Service-Drug Information. 

There Are High Rates of Denial for Chemo 

Apparently providers don’t always comply with Medicare billing rules for chemotherapy drugs, at least in the eyes of auditors. For example, Palmetto GBA, another MAC, recently audited claims of the chemo drug Bevacizumab, 10 mg (J9035) submitted by providers in South Carolina, North Carolina, Virginia and West Virginia.

According to findings posted on its website, the MAC partly or completely denied 81 of 97 claims reviewed in South Carolina. That means $431,708 was deemed noncovered out of $677,251. The chief reason for the denials: documentation did not support the medical necessity of services billed. Providers in the other states didn’t fare much better. 

Chemotherapy is far from the only service on the medical-necessity chopping block. Medicare has been cracking down on other services that don’t rise to the level of medical necessity. The Social Security Act states that Medicare doesn’t cover items and services that “are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” Just because they’re FDA-approved doesn’t mean they’re covered by Medicare and/or other payers, Hirsch says.

Medical necessity, according to Hirsch says, is often set forth in national coverage determinations (NCDs) and local coverage determinations (LCDs). CMS publishes NCDs, which set forth the circumstances in which they will cover a particular drug or procedure. In the absence of an NCD, MACs may publish LCDs for the same purpose, but they’re applicable only to hospitals in their jurisdiction.

They are generally ironclad, Hirsch said, but can be overruled by an administrative law judge during an appeal of a claim denial. 

“When there’s no LCD or NCD, it comes down to the clinical judgment of a medical reviewer and gets much more subjective,” he said. “Sometimes a payer’s experience with a procedure sets in motion an LCD.”

Take the case of low-density lipoprotein (LDL) apheresis, a procedure to suck out cholesterol from the patient’s blood by removing it, “taking out the fatty stuff and putting the blood back in,” Hirsch said. After one MAC, First Coast Service Options, noticed an 800 percent increase in the use of LDL apheresis, it implemented an LCD (L32998). According to the MAC’s LCD for Florida, Puerto Rico and the Virgin Islands, Medicare pays for LDL apheresis in the MAC’s jurisdiction only when patients: 

  • Have refractory familial hypercholesterolemia (FH),
  • Failed at least six months of continuous trial of maximum- tolerated drug therapy and diet therapy; and
  • Fall into one of two categories: Group A, functional homozygous FH with LDL-C > 500 mg/dl; or Group B, functional heterozygous (or homozygous) FH with LDL-C > 190 mg/dl with coronary heart disease or with a coronary heart disease risk equivalent as defined in the LCD (http://tinyurl.com/mqgpryp). 

LDL apheresis is an example of the procedures that should give hospitals pause, Hirsch said. “New things come out, they pay well and are quick to be adopted. But is it appropriate for all of those patients getting it?” he asked. Hospitals also have to consider how much it will cost to provide the service vs. how much it pays; whether it requires precertification from commercial payers; and the extent of training necessary for physicians and hospital staff.

Perhaps nothing is more scrutinized for medical necessity than cardiac procedures, including cardiac catheterizations, pacemakers, stents, defibrillators and “drive-by angiograms,” Hirsch said.

“Cardiac catheterizations are a big target of commercial and Medicare auditors,” he said. “We have to make sure patients really need to have it done before it’s done.” Emergency rooms often send chest-pain patients to the cath lab “without an objective measure of whether they’re having ischemia,” which is a decrease in blood flow to the heart caused by a blockage, he said. Yet there are guidelines for the use of cardiac cath that providers could follow to ensure medical necessity (see the Society for Cardiovascular Angiography and Intervention at http://scaiaucapp.org/auc), he said. Patients at the hospital for high-risk surgery also may require cardiac cath, but their physicians must document the reasons why or payment may be questioned, Hirsch says.

Sometimes physicians perform “extra-cardiac angiography” during the cardiac cath, but these are invitations to a claim denial. That’s what Hirsch called “drive-by” catheterizations because physicians take a look at other arteries — such as the carotid and renal arteries — while en route to the heart. “These procedures are generally not indicated during cardiac catheterization and will be denied unless there are specific medical conditions that would have been appropriate to require angiography independent of the cardiac catheterization being performed during the same encounter,” he said.

Expensive diagnostic tests, such as nuclear stress tests and CT scans, also are being scrutinized by auditors as Medicare spending on imaging has skyrocketed.

Auditors are starting to probe whether nuclear stress tests are medically necessary or run-of-the mill stress tests (without injecting radioactive substances to enhance the image) will do. Patients must show up at the hospital with a signed, dated physician order that has a diagnostic code required for coverage of a nuclear stress test (e.g., ICD-9 786.50).

Auditors Eye Progress Notes for CT Scans

Even when hospitals have their paperwork ducks in a row, they may fail to ask whether patients actually need the stress test compared to the lower-paying version. 

“These are being audited, but no one is looking at these things,” he said. If your MAC has an LCD, it will be spelled out. For example, Noridian LCD L33660 states that a nuclear stress test is covered only if the patient has an abnormal ECG with a high likelihood of coronary artery disease based on multiple risk factors, takes medication that makes it harder to interpret a conventional stress test, already had one that indicated more evaluation is necessary and has a condition that makes it likely a standard stress test would be inaccurate.

CT scans are in a similar audit and compliance boat. Auditors want to know why the physician thought they were medically necessary, especially since the percentage of emergency room visits where CT scans were performed rose from 2.8% to 13.9% between 1995 and 2007, according to the journal Radiology.

While hospitals have gotten the hang of ensuring patients have signed and dated orders and the right ICD-9 diagnosis code, they may drop the medical-necessity ball, Hirsch said. But Medicare auditors will ask for progress notes and other medical record entries, such as the patient’s exam and history, from the ordering practitioner, because they want proof the CT scan wasn’t a waste of resources, according to the April 2014 edition of CMS’s Medicare provider compliance newsletter.

High-cost tests and procedures shouldn’t hog the compliance attention, Hirsch said. In their own medical necessity reviews, hospitals may be tempted to bypass dirt-cheap lab tests. They may shrug their shoulders when claims are denied, but that’s a mistake because $3 lab tests, such as complete blood counts and urinalyses, are high volume — and because overarching compliance matters, Hirsch said. “Do you want to intentionally avoid a Medicare regulation? If an auditor or OIG comes in and asks what procedure you have to ensure these things are medically necessary, do you want to say, ‘well, it wasn’t worth our time and money?’ That would not be an acceptable answer to them.”

About the Author 

Nina Youngstrom has been writing The Report on Medicare Compliance since 1992 and has a reputation for being one of the most knowledgeable journalists and incisive writers in the field. With excellent contacts at the IG’s office and at CMS, and strong relationships among industry experts and line compliance officers, every week Nina’s Report on Medicare Compliance has inside news you won’t read anywhere else.

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