HCFA Reconsiders Proposal to Require Documentation for Medicare Claims

The Health Care Financing Administration (HCFA) has faced intense criticism from the medical community over its proposal to require physicians and labs to document medical necessity for each test billed to Medicare. In response, HCFA is reconsidering the proposal and exploring alternative ways to reduce unnecessary testing. HCFA officials acknowledge that the agency's initial proposal was met with concerns over administrative burdens and quality-of-care issues.

Key Takeaways:

• HCFA's proposal to require documentation for 19 or more tests was met with alarm from medical groups, who questioned how medical necessity would be interpreted and documented.
• Lab groups expressed concerns over the additional administrative burden, potential financial losses, and the potential for reduced testing of vulnerable patients.
• HCFA is shifting focus towards identifying patterns of excessive billing, rather than requiring documentation for each test.
• The agency is considering various alternatives, including:

+ Completely eliminating profiles and having doctors order each test individually.

+ Cross-referencing physician billing with lab billing using diagnosis or symptom codes.

+ Putting in symptom or diagnostic codes only for tests that have been questioned in a postpayment audit.

• HCFA aims to develop a policy that looks for patterns of excessive billing, but has not yet determined how it will define overutilization.

Statistics:

• 60% of automated tests billed to Medicare were for panels of 19 or more tests (Source: HCFA's Barbara Wynn).
• Cutting the number of tests ordered from 19 to 12 would save Medicare $60 million (Source: HCFA's Barbara Wynn).
• HCFA estimates that payers have no idea which tests were performed when a panel is ordered, resulting in "grab bag" tests panels combined for automation purposes (Source: HCFA's Barbara Wynn).
• Lab groups point out that direct and indirect costs of the extra test can be greater than the proposed reimbursement for tests in excess of 19 (Source: ACLA).

Sources:

• HCFA's Barbara Wynn
• American Medical Association (AMA) Trustee Donald T. Lewers, MD
• American Clinical Laboratory Assn. (ACLA) President David N. Sundwall, MD
• HCFA's Bureau of Policy Development