HCFA increases attention on medical necessity
Practices could be liable for bills
As part of its crackdown on fraud and abuse, the Health Care Financing Administration (HCFA) and its local carriers are devoting more energy to determining if practices are following established guidelines regarding the medical necessity of the services they bill for and whether they provide the required documentation. Medicare’s policy says it will only pay for those services and procedures it determines are medically "reasonable and necessary" for diagnostic, treatment and therapeutic purposes.
According to the Medicare manual, if a provider knows or should have known that a specific service was not covered by Medicare, then the provider is financially liable for the cost the provider incurred delivering the service. But, if it is determined the beneficiary knew or should have known the service he or she received was not covered by Medicare, then the beneficiary is ultimately liable.
Tip: Practices must remember to ask patients to sign an advance beneficiary notice (ABN) waiver informing them that a particular service is not covered by Medicare, which means they will be responsible for paying the bill. (See "HCFA unveils changes in advance notice form," in this issue.)
However, if neither the Medicare patient nor the provider knew or could have reasonably been expected to know that the service was not considered medically reasonable and necessary and would not be covered by Medicare, then HCFA is ultimately responsible for paying the claim.
Bottom line: Providers are responsible — and will be increasingly held accountable — for knowing what services are covered and considered medically necessary and which ones are not.
The first step toward protecting yourself from getting struck with denied claims is to stay on top of current Medicare payment policies. When a new national payment policy is approved by HCFA, individual Medicare carriers are supposed to notify local providers of the change. Carriers are also charged with interpreting national coverage policy and applying these interpretations on a case-by-case basis to the providers they service.
In turn, if HCFA or a local carrier has published a policy, the policy is that the provider "should have known" about the standard before performing the service and submitting the claim, which will probably be denied. However, if it initially slips through the system and is paid, it may still be red-flagged for recovery in a post-payment audit.
If there is no national policy for a specific service or medical circumstance, Medicare carriers can form their own local medical review policy setting coverage criteria and clinical conditions under which they consider certain services reasonable and necessary. The local carrier is also responsible for informing the appropriate providers of the new policy and its effective date.
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