Spot the Compliance Mistake(s): Customized Test Panels & Medical Necessity

SITUATION
As a convenience to clients, Nonexistent Laboratories (NL) offers medical groups the option of designing their own customized test panels. NL requires the medical director of the group to sign off in advance to verify that every test in the panel is medically necessary. NL devises a special requisition form for the group listing each of its panels (but not its component tests). Individual physicians can order the test using the group's NPI. At the bottom of the requisition, NL lists the following statement:

"In ordering the listed panels, the physician agrees that each test in the panel is medically necessary, reasonable and appropriate for purposes of evaluating, diagnosing and treating a patient's medical condition."

QUESTION
Can you spot the four things NL did wrong?

ANSWER
Physicians often welcome and sometimes even request the convenience of being able to order tests in panels. But while panels may make clients happy, they also raise medical necessity red flags. NL recognized and attempted to address those concerns. But it didn't do so effectively. Here's a rundown of the mistakes.

Mistake 1: Relying on Medical Director Verification
Having a central authority, like the medical director of a practice group, isn't adequate to establish medical necessity, experts say. Every physician in the group that orders a customized test panel should verify medical necessity individually.

Mistake 2: Letting Physicians Order Panel Using Group NPI
Mistake 2 is another variation on the theme of relying on a central medical director rather than individual ordering physicians for medical necessity verification.

Mistake 3: Not Listing Component Tests
Failure to list the panel's component tests on the requisition removes the physician's option to order the tests individually and forces them to order the panel.

Mistake 4: Relying on Medical Necessity Statement
A blanket statement on the requisition purporting to make the act of ordering a panel an indication that each test it contains is medically necessary isn't enough—especially when those individual tests aren't listed. "It's not the recitation of the sentence that's important, it's the reason why it's medically necessary," according to Jane Pine Wood, now Chief Legal and Compliance Officer at BioReference Labs, who addressed the issue of medical necessity in detail in "Compliance Perspectives: Focus Medical Necessity Efforts on Three Core Elements," GCA, Febuary 2016, pages 6-8.

Takeaway: What You SHOULD Do
If you offer customized test panels, conduct an audit to ensure that the records include the three core elements of medical necessity documentation that Wood emphasized:

1. Documented Test Order

• A signed requisition;

• An electronic signature via e-mail; or

• Signed documentation in the patient's chart.

What if you don't have one of those three things? Answer: Wood advised getting a signed attestation from the ordering physician documenting the test order.

2. Documented Need for Test
The next core element is documentation in the medical record that each test in the panel is medically necessary.

3. Documented Use of Test Results
The third core element is documentation that the ordering physician actually reviewed and/or used the test results in the patient's treatment. Absence of such documentation is bound to raise red flags with payers about whether the panel and its component tests were medically necessary.