Policy and Procedure Approval Form

DEPARTMENT: Regulatory Compliance POLICY DESCRIPTION: Medicare - Medical Support Necessity PAGE: 1 of 3 REPLACES POLICY DATED: 4/1/00, 10/1/00, 3/1/01, 10/1/02, 8/1/03 (GOS.GEN.002), 3/6/06, 7/1/06 EFFECTIVE DATE: June 1, 2007 REFERENCE NUMBER: REGS.GEN.002

SCOPE: All Company-affiliated hospitals performing and/or billing outpatient services. Specifically, the following departments:

Business Office Nursing Admitting/Registration Health Information Management Medical Staff Physician Office Staff Central Scheduling Ancillary Departments Revenue Integrity Utilization/Case Management Reimbursement Allied Health Practitioners Service Centers Patient Access

PURPOSE: To outline Medicare medical necessity screening and related education requirements. POLICY: Orders for tests and services must be reviewed to determine medical necessity (according to Local Coverage Determinations (LCD) and/or National Coverage Determinations (NCD)) in order to facilitate appropriate billing. If a hospital is billing for the professional services of a physician or allied health practitioner, hospital staff must review orders against their Medicare Contractor’s LCD. DEFINITIONS: Allied Health Practitioner: Any non-physician practitioner permitted by law to provide care and services within the scope of the individual’s license and consistent with individually granted clinical privileges by the Board of Trustees. For example, certified nurse-midwives, certified registered nurse anesthetists, clinical psychologists, clinical social workers, physician assistants, nurse practitioners, and clinical nurse specialists. Ancillary Services: Hospital or other health care organization services other than room and board and professional services. Examples of ancillary services include diagnostic imaging, pharmacy, laboratory and rehabilitative therapy services. Local Coverage Determinations: Policies developed by Medicare Contractors that specify the criteria and under what clinical circumstances an item/service is covered and considered to be reasonable, necessary, and appropriate. Hospitals are required to use only those LCD that have been issued by their specific Medicare Contractor. National Coverage Determinations: Medical review policies as issued by CMS which identify specific medical items, services, treatment procedures or technologies that can be covered and paid for by the Medicare program. National Coverage Determinations apply to services paid by all Medicare Contractors and can be found in the Medicare National Coverage Determinations Manual (100-03) and the Federal Register.

Outpatient Services: Outpatient services are those services rendered to a person who has not been

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admitted by the hospital as an inpatient but is registered on the hospital records as an outpatient and who receives services (rather than supplies alone) from the hospital. Outpatient services include, but are not limited to, observation, emergency room, ambulatory surgery, laboratory, radiology and other ancillary department services.

PROCEDURE: The following steps must be performed to ensure outpatient services are reviewed for medical necessity according to LCD and/or NCD.

1. Ancillary Department, Case Management, Service Center and/or Business Office personnel must obtain the CMS NCD and LCD as issued by their specific Medicare Contractor. The NCD and LCD must be organized and the material readily available for registration/Patient Access staff.

2. Ancillary Department, Case Management, Service Center and Business Office personnel must implement a screening process prior to performing outpatient services to determine if an LCD and/or NCD applies to the services to be performed.

3. If the services are included in an LCD or NCD, individuals responsible for registering and/or ordering outpatient services must review outpatient test and/or service orders for medical necessity according to the LCD and/or NCD.

4. Facility designated personnel, such as ancillary department directors, Case Management, Health Information Management, physician liaison, Patient Access Director and/or Business Office Director shall educate all physicians and staff associates responsible for ordering, referring, performing, registering, charging, coding or billing outpatient services on the requirements of this policy.

5. Facility personnel must provide all physicians and allied health practitioners with a summary of the following information:  Orders for Outpatient Tests and Services Policy (REGS.GEN.004)  Medical Necessity Guidelines (Local Coverage Determinations and National Coverage Determinations)  Advance Beneficiary Notice Policy (REGS.GEN.003)  Organ & Disease Panels Policy (REGS.LAB.004)  Custom Profiles Policy (REGS.LAB.007)  Reflex Orders Policy (REGS.LAB.010)  Laboratory – Client Billing Practices Policy (REGS.LAB.023)

6. Facility personnel must provide each physician and allied health practitioner with the Physician’s Notice Pamphlet regarding Medical Necessity (see Attachment A). The pamphlet 4/2007

will be provided to each ordering physician/allied health practitioner at least once every two years during the credentialing process.

7. Facility and Service Center personnel must perform Hospital-based self monitoring following guidance issued by Regulatory Compliance Support. The tools and instructions for the Hospital-based self monitoring can be found in the Advance Beneficiary Notice – Outpatient Services Policy (REGS.GEN.003).

The Facility Ethics and Compliance Committee is responsible for the implementation of this policy within the facility.

REFERENCES: OIG Model Compliance Plan for Hospitals (February 23, 1998) Medicare National Coverage Determinations Manual (100-03) The Office of Inspector General’s Compliance Program Guidance For Clinical Laboratories (August 1998) pp. 8-10 Medical Necessity Guidelines (Local Coverage Determinations and National Coverage Determinations) Federal Register, 42 CFR Part 410, November 23, 2001 Medicare Claims Processing Manual (100-04), Chapter 30

4/2007 Physician Notice Regarding ordered in which a LCD exists, there must be documentation of medical necessity on the claim in Medical Necessity and order for Medicare to pay for this test or service. In the Compliance case where the Medicare Contractor does not have a LCD, the National Coverage Determinations (NCD) still apply. Physicians are advised by CMS to only order those tests and/or services they believe are medically necessary. A specific diagnosis, sign, What is a Physician Notice? symptom, or ICD-9-CM code must be provided when ordering tests or services. If a test or service is not This Physician Notice pamphlet has been designed to medically necessary (according to LCD and/or NCD), notify you of Medicare, CMS, and OIG rules regarding an Advance Beneficiary Notice (ABN) must be medical necessity and billing compliance in order to obtained from the patient. Please understand that the protect both you and the hospital from potential guiding principle to determine whether an ABN must liability. be obtained is not whether you, as a physician believe that the test or service is medically necessary, but whether the patient’s diagnosis, signs, or symptoms What is Medical Necessity? are included in an LCD and/or NCD for the specific test or service being ordered. Note: Medicare Medicare will only pay for those tests and services that Contractors may have different LCD. Our facility it determines to be “reasonable and necessary.” must follow our Medicare Contractor’s LCD. Medicare Contractors may develop a “Local Coverage Determination” for specific tests and/or services. This Local Coverage Determination (LCD) indicates which What if I need assistance in ordering tests or diagnoses, signs, or symptoms are payable for these services? specific tests and/or services. If a test or service is

Attachment to REGS.GEN.002 The appropriate ancillary department will make Laboratory for additional information. We also realize available the services of a clinical consultant to assist that there are instances when abnormal values for you when you have questions regarding test or service specific tests warrant additional testing. Therefore, we appropriateness. have created laboratory reflex testing guidelines which will be updated and approved annually by the What is an ABN & why do we need one? Executive Committee of the Medical Staff and published in the Medical Staff Meeting Minutes. An ABN is an Advance Beneficiary Notice. The purpose of the ABN is to give the patient advance notice that Medicare may not pay for the test or service ordered. When ordering tests or services that do not meet LCD or NCD, physicians should explain to the beneficiary why the test is being ordered and that Medicare may not pay for the test and therefore an ABN must be signed. Signed ABNs should be forwarded to the ancillary service department performing the tests or services.

How can we work together?

To limit the potential risk for both physicians and ancillary departments, our facility has adopted several policies related to Medicare billing. We realize that it is good medicine to provide certain services and sets of tests for specific diagnoses and therefore in the laboratory we will allow you to define Custom Profiles for use in treating your patients. Please contact our Attachment to REGS.GEN.002