Coverage indications, limitations and medical necessity

Coverage indications, limitations and medical necessity

Ask the Coding Experts, by Doug Morrow, O.D., Harvey Richman, O.D., and Rebecca Wartman, O.D.
From the September 2014 edition of AOA Focus, page 51


One of the most common questions the Coding Experts receive has to do with medical necessity. Often doctors are denied for special ophthalmologic or other diagnostic tests with an explanation of "experimental or not medically necessary," and they don't understand why.

In an ideal world, there would be a list of all diagnosis and procedure codes that were permitted, but many times we find policy of inclusion but very few of exclusion. Occasionally, inclusion of a service or procedure in a carrier's policy or Medicare Local Coverage Determination (LCD) indicates that the service is considered to be not reasonable and necessary and claims reporting the service will be denied as such.

In order to be covered under Medicare, according to the Centers for Medicare and Medicaid Services (CMS), a service shall be considered reasonable and necessary, and further, that when appropriate, a contractor shall describe the circumstances under which the service is reasonable and necessary as part of its LCD process. Section 1862(a)(1)(A) of the Social Security Act is the basis for the above manual citation, and is the fundamental determinant of the coverage of a specific service for a Medicare beneficiary. Services considered not reasonable and necessary for the diagnosis or treatment of an illness or injury, or to improve the function of a malformed body member are excluded from coverage.

A service that appears to meet the technical requirements for coverage may also be excluded if that service:

  • is not generally accepted as safe and effective by the medical community

  • is not supported in peer-reviewed medical literature

  • is experimental or investigational (exception: routine costs of qualifying clinical trial services with dates of service on or after September 19, 2000, which meet the requirements of the clinical trials national carrier determination are considered reasonable and necessary.)

  • is not medically necessary in a specific case, or for a specific medical diagnosis

  • is furnished at a level, duration, dosage or frequency not appropriate for a specific patient or clinical condition

  • is not furnished in a manner consistent with community standards of care

  • is not furnished in a setting (place of service) consistent with the patient's medical needs and condition

  • is furnished in a manner primarily for patient or provider convenience

  • is a device not approved for marketing by the FDA and is not included in an FDA-approved investigational device exemption trial

  • is a test or service now considered obsolete by the medical community, and replaced by more efficacious services.

Remember that a new service is not immediately considered covered or medically necessary with the issuance of either FDA approval or the issuance of a Current Procedural Terminology code. As technology increases and new diagnostic devices and therapeutic procedures are being integrated into the market, it is imperative that optometrists follow the policies set based on the codes that apply. Services that are not reasonable and necessary are being looked at more closely and therefore denied. For further guidance on any procedure or service, visit the insurance carrier's policy page or local Medicare carrier LCD page.

January 14, 2015

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