Medical-Necessity Audits Gain Steam, Hit On Chemo, Cardiac; Watch for New LCDs

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Written by Nina Youngstrom Created on Wednesday, 03 June 2015 22:37

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 ofThe 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.