College of American Pathologists
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At last, more uniform coverage for high-volume tests

January 2002
Carl Graziano

The federal "negotiated rulemaking" process, which the College and other organizations participated in three years ago, has finally produced national coverage policies, which will be carried out in two stages this year.

The policies, published Nov. 23, 2001 in the Federal Register, include 23 national coverage policies for specific tests (Fig. 1) and will apply to all who bill for clinical and anatomic pathology services under Medicare Part B and the carriers who process those claims.

"The policies provide for uniform coverage of high-volume laboratory tests in a broad range of clinical settings," says Stephen N. Bauer, MD, who represented the College on a panel that crafted the policies. "The impact on practitioners will vary depending on their location and how their carrier previously implemented coverage decisions."

In regions that previously had restrictive policies limiting the ICD coded diagnoses that would be covered, this will provide "much greater clinical latitude" for testing, Dr. Bauer says. Where there were few or no restrictions on coverage, this will impose a new documentation requirement. "Overall," he says, "we believe that the benefits will outweigh the need for more documentation, and, more important, the process will be uniform and have received broad input from the organized physician and laboratory communities."

The coverage and administrative policies are the culmination of a process that began in July 1998, when, under a mandate by the Balanced Budget Act of 1997, the federal government established a negotiated rulemaking committee. The budget act provision was a response to concerns in the laboratory community about inconsistent coverage policies among Medicare’s many claims contractors nationwide.

The committee, which included representatives from the Health Care Financing Administration (now the Centers for Medicare and Medicaid Services), the College, and 16 private groups, reached tentative agreement on Jan. 27, 1999 on 23 national coverage policies and other uniform documentation and claims-processing requirements. After the groups on the committee made a round of revisions, HCFA released a draft rule July 9, 1999 and a formal proposed rule March 10, 2000.

The November final rule reflects public comments the CMS received on the March 2000 proposed rule, including the College’s comments submitted in May 2000. The CAP had asked that, to establish a date of service on claims, the coverage policies recognize both the date of specimen collection and the date of accession and leave the choice to the laboratory. The College also asked that the policies allow for routine use of advance beneficiary notices as a way to alert physicians and patients to the use of frequency screens under the policies.

On the first point, CMS replied that it would maintain its position that the date of service be reported as the date of specimen collection. "We do not believe that it is consistent with the statutory requirement to promote national uniformity to permit a variety of means to report the date of service," CMS said in the rule, responding to the College’s comment. The agency did note that the "implementing instructions" for the national coverage policies "will carefully emphasize" the requirement to report the date of collection to those collecting specimens. "We are optimistic that after adequate education from us and the Committee member organizations ... most of those collecting specimens for laboratory testing will take care to report required information," the CMS said.

On the issue of ABN use to protect laboratories that are denied compensation because of frequency screens, CMS simply said ABNs were not within the scope of the negotiated rulemaking process.

The agency was more positive in its response to a third College recommendation: that, for certain diseases, the policies should recognize family history as a basis for diagnostic testing. Medicare now considers such testing to be screening services and, under long-standing program policy, not eligible for coverage.

CMS said it, as well as many members of the committee, "recognize that there may be many instances when testing of beneficiaries in the absence of specific signs, symptoms, diagnosis, or exposure to disease is good health care." While it did not include the College’s request in the final rule, it did say it would consider "generating an internal request for a national coverage decision addressing the role of family history as a medical justification for a test being reasonable and necessary. . . ."

Says Dr. Bauer: "Coverage for testing based solely on family history is problematic because of the wording of the Medicare statute. The negotiated rulemaking process only dealt with covered services, and as a result the coverage for such testing was not negotiated. But this is an area of concern for the College and other physician groups, and I would hope that there will be further discussions with CMS. In the meantime, providers will need to obtain ABNs to allow them to bill for testing in this setting."

New ABN policies are near completion and expected to provide an important companion tool for laboratories to use in ensuring they receive payment for Medicare testing when the program will not cover a service. For information on new ABN forms and instructions, log on to the CAP Web site at

Under the final rule’s timeline, the national coverage determinations will replace locally developed carrier and intermediary policies next fall. Those local-level policies, called local medical review policies, or LMRPs, explain when an item or service will or won’t be considered "reasonable and necessary" and eligible for Medicare coverage. It was inconsistency across carriers in their LMRP criteria that, in part, prompted efforts to seek the legislative mandate for negotiated rulemaking and national coverage policies.

In the November final rule, CMS is clear on how LMRPs will fit into the national coverage policy scheme. The agency wrote: "An LMRP may not conflict with a national coverage decision once the national coverage decision is effective. If a national coverage decision conflicts with a previously established LMRP, the contractor must change its LMRP to conform to the national coverage decision. A contractor may, however, make an LMRP that supplements a national coverage decision where the national coverage decision is silent on an issue. The LMRP may not alter the national coverage decision."

Most of the new policies that require health care providers to make adjustments will not go into effect until Nov. 25. Provisions (Fig.2) not likely to require system changes or result in a significant volume of claims denials will begin Feb. 21. Most of these policies clarify existing conventions that either have caused confusion among health professionals or have been largely unpublished. Other policies (Fig.3)—those that will require adjustments by laboratories, ordering physicians, or Medicare contractors—will be put in place next fall after extensive educational programs conducted by those who developed the policies take place.

Educational efforts are planned to ensure that those affected by the new policies know about them and know their roles under the new rules before the policies start. Also, entities that need time for computer system changes necessitated by the new policies can apply for an adjustment period extension of up to 12 months.

Dr. Bauer emphasizes that the new coverage and administrative policies are not set in stone. "The final rule makes it clear that CMS will meet the statutory requirement for review every two years," he says. Furthermore, "it was clear in the rulemaking process that both CMS and providers wanted an ongoing process for review." The CMS Web site offers one route for feedback, including direct e-mail links to agency staff involved in the negotiated rulemaking process.

The complete final rule that discusses the new policies in detail, including the 23 coverage policies, is on the College’s Web site ( in the "Advocacy" area, under "From the Government." The CAP will post notices about educational seminars on the coverage policies as they’re announced this year.

Carl Graziano is CAP TODAY Washington editor and CAP manager of government communications.