The laboratory community, which fought to get standardized national coverage decisions (NCDs) almost a decade ago so it would not have to deal with local coverage decisions (LCDs) that differed by Medicare jurisdiction, may see its efforts thwarted. The Centers for Medicare and Medicaid Services (CMS) in a recent Federal Register notice describes a new expedited process for the removal of an NCD it considers no longer valid, which would result in local contractors instituting LCDs if they believe a coverage decision still needs to be in place. Even if the local contractor does not immediately issue an LCD, payments could be in jeopardy in post-payment reviews if physicians revert to ordering tests for the wrong reasons or do not supply appropriate diagnosis codes when they order. The effective date of the notice is Aug. 7, 2013. If CMS contractors begin taking advantage of these new policies soon, labs could find themselves making software changes to accommodate the removal of existing NCDs and the potential creation or revision of corresponding LCDs. One motivating factor for CMS to expedite the removal of NCDs is that the cost of maintaining NCDs is high, partly because of the quarterly requirement to update them, make the corresponding changes to editing software, and distribute those changes to all contractors. CMS also submits an annual report to Congress that tracks the agency’s performance with respect to certain key steps in the process (the report is also posted on the CMS Web site). CMS is also facing a massive project with respect to converting NCDs that include ICD-9 diagnosis codes to the new ICD-10 codes. Virtually all laboratory NCDs, many of which include hundreds of diagnosis codes, will have to be converted to the new coding system by October 2014. The notice lays out the details of the new expedited administrative process for the periodic review of NCDs that have not been reviewed for 10 years to determine if there is a continued need for a national policy. Many laboratory NCDs could fall within this time frame depending on the date that CMS uses to determine when they were last reviewed. Previously, it could take from nine to 12 months to remove an NCD because they had to go through a formal reconsideration process. Under the new expedited process, the time frame will be shortened considerably and the result will be immediate upon publication of the final determination. At this point, a local contractor would make coverage determinations. CMS to Provide Rationale Under the new process, CMS will periodically publish a list of NCDs proposed for removal along with the rationale for the proposed removal. The public will have 30 calendar days to comment on the entire list of NCDs. The commenters are asked to include their rationale to support their comments. After consideration of all comments, CMS will decide to remove the NCD, retain the NCD, or start a formal reconsideration of the NCD. No specific time frame is provided for when they must complete this part of the process. When the decisions are finalized, CMS will publish final determinations and provide brief rationale for each determination. The final determinations will be effective immediately upon posting to the CMS Web site. Criteria for removal of older NCDs include:

• Local contractor determinations about coverage better serve the program and its beneficiaries;
• Technology is obsolete;
• In the case of noncoverage because a service was considered experimental, the service may no longer be considered experimental;
• Newer polices supersede the older coverage policy;
• The national policy no longer meets current definition of a national policy; and
• The benefit category is no longer consistent with a category in the Social Security Act.

One potential impact of this new process is that an item or service that has enjoyed coverage under an existing NCD may no longer be covered when the local contractor is making coverage determinations. Further, an item or service may be covered in one jurisdiction but not in another. Providers, manufacturers, and independent labs may find themselves with the same problems and issues that existed prior to the creation of national coverage policies a decade ago. One thing not specifically addressed in the notice is what guidelines providers and suppliers should follow to make medical necessity determinations after an NCD is removed. Generally, NCDs are put into place as a remedy for improper utilization of a test or service. The NCD forces a behavior change until the problem ceases to exist. It is not far-fetched to assume that in a post-payment review an auditor could find a test to be not reasonable and necessary if it did not meet the requirements of a removed NCD. Also, in the absence of an NCD or LCD, a laboratory could not legally issue an Advance Beneficiary Notice and could find itself liable for denials based on subjective medical necessity determinations made by government auditors or error testers with no way to seek payment from the beneficiary. The idea that medical necessity determinations can be based on retired coverage decisions is not new. In a Nov. 20, 2012, Part B News published by Noridian Administrative Services, now Noridian Healthcare Solutions, the contractor explains that providers remain responsible for correct performance, coding, billing, and medical necessity whether or not an LCD is in place. In the same article, it warns that “post-pay review will continue not only as before, but also with the addition of Recovery Audit Contractors (RACs). Payment for a service does not mean the service was medically necessary and/or correctly billed. The service may therefore be subject to recoupment even several years later.” Without the ability to present an ordering physician with an active NCD or LCD, a laboratory may find it difficult to get physicians to comply with a request for a diagnosis that supports the tests they order. The 2013 notice supersedes the previous 2003 Federal Register notice and any subsequent guidance documents issued in the intervening period. It is meant to provide clarity and define how the agency will provide transparency for the NCD process. In addition to the expedited process for removing unnecessary NCDs, the notice also covers procedures for requesting a new NCD or a redetermination of an existing NCD, how the public can participate in the NCD process, issues concerning informal contacts prior to requesting an NCD, what constitutes complete formal requests for new NCDs or for seeking reconsideration of an existing NCD, external requests for NCDs, CMS-generated internal reviews of NCDs, and time frames for all of these processes. The stated motivation for taking on this project, according CMS, is that clinical science and technology are evolving and items and services that were once considered state-of-the-art or cutting-edge may be replaced by more beneficial technologies or clinical paradigms. Any individual or entity can request an NCD or seek a change to an existing NCD. A laboratory may want to request one, or an update to an existing NCD, because it wants to establish coverage or it wants to limit or expand coverage. While CMS encourages laboratories and other providers to communicate via conference call or a meeting with staff in the Coverage and Analysis Group within the Center for Clinical Standards and Quality at CMS before submission of a formal request, it is not required. A requester may want to have this prerequest meeting to make certain it has all of the necessary supporting documentation for its request. Among the criteria for a new laboratory NCD is a full and complete description of the test to include the target Medicare population and the relevance and usefulness of the test within the targeted population. The requester must also provide scientific evidence like peer-reviewed literature or clinical trial study results in support of the request. If the requester has submitted an application to the Food and Drug Administration for a 510(k) clearance, certain sections of the application may be copied and used to support the request. Develop Procedures Laboratory compliance officers and managers and directors of billing for a laboratory can prepare for the challenges presented by these changes by developing specific procedures to respond to posted notices of NCDs proposed for removal. Assign an individual to be responsible to monitor both CMS and the local contractors you do business with and make sure that person participates in any CMS listservs where this information is posted. Develop policies to address what the laboratory will do in the case of the removal of an NCD and there is no existing LCD when there is no longer published medical necessity guidance. One way to address this is retain the existing edits in your billing system so you can accurately monitor the volume of orders that would not have met the previous criteria for payment. Each laboratory will have to make a determination about what it will do with that information, and that determination should include input from appropriate legal counsel. Takeaway: Post-payment determinations of medical necessity are subjective, and the guidance provided by a previously active NCD or LCD can be used to deny claims and seek recoupment in a post-payment audit or review.