Annual Notice to Physicians

MEDICAL NECESSITY

The Office of the Inspector General (OIG) has advised clinical laboratories to remind physicians (or other individuals authorized by law to order tests) to ensure that when ordering tests for which Medicare reimbursement will be sought, they should only order tests that are medically necessary for the diagnosis or treatment of a patient rather than for screening purposes.

We urge all ordering physicians to retain in the patient's medical record and history, notes documenting the patient's conditions and diagnoses, with relevant clinical signs/symptoms or abnormal laboratory test results, appropriate to one of the covered indications. Documentation in the beneficiary's medical record must support the medical necessity of the test(s) provided. We ask that you provide us with all of the relevant diagnostic information from your medical records on all of your patients, for the dates of service that you request clinical lab testing from ACS. It is critical that the codes are as specific as possible. This means that the ICD-9-CM 4th and 5th digit subclassifications should be used in your coding.

We remind you that Medicare does not cover tests for beneficiary's annual physicals or for screening purposes. If you want to order tests for screening purposes, patients should be informed of their responsibility to pay. With the proper patient acknowledgement, you may order screening tests with one of the appropriate screening diagnosis codes.

USE OF DIAGNOSTIC CODES (ICD-9)

Laboratories do not treat patients or make determinations regarding medical necessity. Diagnostic information, such as ICD-9 codes, is one way to document medical necessity. As a licensed laboratory, we are required by the OIG to "require physicians to document the need for each test by inserting a diagnosis code for each test." Further, many third-party carriers require us to provide this information before a claim is reviewed.

Please note, however, that these codes must be as accurate and specific as possible. Thus, to avoid potential liability, you should not code on what you assume the diagnosis to be, but rather should only code on the basis of what you actually know of the patients condition. If you are ordering tests and cannot as yet determine a diagnosis, you should provide the appropriate codes that describe the patient's signs and symptoms. You should not code on the basis of any diagnosis you are seeking to "rule-out". A pattern of inaccurate or incomplete diagnosis codes may create the appearance of impropriety, which can be interpreted by regulators as fraud and/or abuse deserving of the aforementioned penalties. Naturally, the codes you provide must be based on the patients actual condition as documented in the medical record.

American Clinical Services may "only submit diagnostic information that is obtained from the ordering physician." We are prohibited from using diagnostic information provided from earlier dates (except for certain standing orders described below), and from inserting diagnosis codes based on our own estimate of the patient's condition. Therefore, for your protection, as well as ours, we ask that you provide the most specific ICD-9 code for each test you order. Providing this information on the requisition submitted with the specimen will ensure our mutual compliance with government rules, and will also minimize the need for us to contact you afterwards.

REFERRING PHYISICIAN NAME

Laboratories are required to supply the ordering/referring physician name and UPIN on all claims to Medicare. Further, many third-party carriers require us to provide this information before a claim is reviewed.

STANDING ORDERS

In those situations in which a patient is receiving an extended course of treatment, it may be necessary to create a standing order with us to have the same test run on a periodic basis. Like any other lab test, these procedures must be medically necessary, and we are required by the OIG to verify the patient's continuing need for a specialized test. In addition, please note that the frequency of tests that you wish to order on a standing order basis needs to be specified. We will contact you at least every six months to conduct such verification. We ask for your cooperation and patience in this area.

CUSTOMIZED PROFILES

ACS recognizes that physicians must be able to order any test that they believe is appropriate for the treatment of their patients. ACS is ready, as always, to respond to your needs and requests and to support you in your practice with top quality clinical laboratory services.

It is, however, incumbent upon us to remind you that Medicare will only pay for those tests that meet the Medicare coverage criteria and are reasonable and necessary to treat or diagnose a patient. The Social Security Act states that "no payment may be made under Part A or Part B [of Medicare] for any expense incurred for items or services which are not reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body member." Accordingly, Medicare may deny payment for a test that you believe is appropriate, but which does not meet the Medicare coverage criteria (i.e. a test done for screening purposes or part of a routine physical examination does not meet the coverage criteria) or where documentation in the patient record (including the patient record you maintain) does not support a finding that the test was reasonable and necessary, for a given patient.

Empire Medicare has, through its local medical review policy, designated certain clinical diagnostic laboratory tests as limited coverage tests ("Limited Coverage Test"). For each Limited Coverage Test, Empire has established a list of covered ICD-9 codes - diagnosis and condition codes that support medical necessity. A Limited Coverage Test is considered medically necessary and payable only when it is reported with a diagnosis or condition that is listed among the Covered ICD-9 codes for the test. Empire has also identified certain clinical diagnostic laboratory tests that are subject to frequency limitations ("Frequency Limited Tests").

It is also incumbent upon us to advise you that Medicare will only pay for organ or disease related panels if all of the tests in the panel or profile are medically necessary. Please do not order any of the panels or profiles outlined in the attached list unless each and every test in the panel or profile is medically necessary. Any of the tests offered as part of a panel or profile may be ordered individually using the ACS requisition form.

ADVANCED BENEFICIARY NOTIFICATION

If reimbursement is denied due to lack of medical necessity documentation, Medicare rules prohibit the laboratory or health care provider from billing the patient unless an Advance Beneficiary Notice (ABN) has been signed and dated by the patient prior to the service. If applicable, an ABN must be completed each time services are ordered. A blanket ABN is not acceptable to the Medicare program.

The Centers for Medicare and Medicaid Services (CMS) has established a standardized ABN that ensures the patient understands that he/she may be responsible for payment if the test is considered to be medically unnecessary by Medicare. The ABN identifies the limited coverage laboratory test(s) and gives the reason(s) the test(s) is likely to be denied. In order for the patient to make an informed decision whether or not to receive the service, the ABN provides two options. Option 1 states that the patient chooses to have the service performed and understands that he/she is personally responsible for payment in the event Medicare denies payment. Option 2 states that the patient refuses to have the service performed and will notify his/her doctor of that decision. If a Medicare patient in an American Clinical Services' patient service center refuses to sign an ABN, the service generally will not be performed.

To comply with these new guidelines, physicians should (1) only order tests that are medically necessary in diagnosing or treating their patients; (2) be certain to enter the appropriate and correct ICD-9 code in both their patient files and on the test request forms; and (3) always have their patients sign and date an Advance Beneficiary Notice if they believe that the service is likely to be denied.

SUPPLIES

American Clinical Services provides supplies and materials to ordering physicians only to the extent that such items are directly related to the collection, preservation, transport or storage of specimens for which tests are being ordered from our laboratory. In addition, such items are provided only if there are assurances that they are in fact being used for these limited purposes. We track the amount of supplies that we provide to your office and compare that volume with the volume of specimens referred to us by you so that excessive and or improper ordering of supplies can be prevented.. If you have any questions regarding your supply orders, please contact your laboratory representative.

PERTINENT PATIENT INFORMATION

Various state laws require clinical laboratories to report positive findings of markers of certain specific communicable diseases. In order for us to properly comply with these regulations, we need to provide pertinent patient information to the Department of Health. Such information includes the name of the patient, as well as the patent's date of birth, sex, and address. If such information is not supplied, we need to obtain it from your office, thus necessitating a telephone call to your staff. In order to avoid having to interrupt your staff during working hours, we would greatly appreciate it if you could assure that all laboratory requisition forms are completed fully before the specimens are sent in to ACS.