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Local medical review policies (LMRPs) are among the more challenging aspects of complying with Medicare medical-necessity criteria. They’re also another potential reimbursement headache, points out Jim Smith, senior health care consultant for Accelerated Receivables Management Ltd. in Park Ridge, IL.
LMRPs, developed by local fiscal intermediaries and carriers under the direction of the Health Care Financing Administration, address tests and procedures that have a higher likelihood — based on claims histories — of not meeting the Medicare criteria for being medically necessary and reasonable, Smith says.
Certain medical indicators, in the form of appropriate diagnosis codes, must be documented and accompany the physician’s order for the tests and procedures affected by LMRPs, he notes. "Should the diagnosis code not support the LMRP medical indications for the test or procedure, local fiscal intermediaries and carriers have edits built into their claim systems, which render the claim denied for payment."
In Illinois, for example, there are 38 LMRPs in existence and nine more in development, Smith adds. "One of the LMRPs is for an electrocardiogram. Should the patient be sent to a hospital for an EKG with the diagnosis of chest pain NEC [not elsewhere classifiable],’ the test would be covered according to the existing Illinois LMRP for electrocardiogram."
However, he explains, if the physician also orders lab tests — a complete blood count, electrolytes, and blood glucose, for example — the diagnosis does not justify those tests according to the LMRP and the charges would be denied. Additional signs or symptoms, such as "fatigue and malaise," would be required to justify medical necessity, Smith adds.
Medicare guidelines will not allow providers to bill patients for uncovered services based on LMRPs unless an advance beneficiary notice (ABN) is signed by the patient before the service is performed, says Smith. He emphasizes that providers may not obtain ABNs on all Medicare patients for all tests ordered to prevent themselves from lost revenue. "ABNs are to be obtained only when the test or procedure ordered is impacted by an LMRP."
Providers must keep proof of signed ABNs on file — hard copy or on-line — to satisfy Medicare auditors, he adds. If the provider bills patients for noncovered services and is not able to demonstrate that an ABN was secured before the service, Medicare can hold the facility liable for violating its contractual agreement and may impose significant financial penalties, Smith cautions. "Dollars associated with tests and procedures provided that do not meet LMRP medical-necessity criteria are lost unless an ABN is signed in advance. The dollars cannot be written off to bad debt or charity."
Failure to manage LMRPs and obtain ABNs appropriately, he points out, can result not only in lost reimbursement, but in charges of fraud being brought against the provider.