(Medicare Program Integrity Manual)

3.6.2.1 - Coverage Determinations  (Rev. 10365; Issued: 10-02- 20; Effective: 08 -27-20; Implementation: 08-27-20)  The MACs, CERT, Recovery Auditors, and UPICs shall deny an item or service if it does not meet any of the conditions listed below:   The item or service does not fall into a Medicare benefit  category.    The item or service is statutorily excluded on grounds other than 1862(a) (1) (A) of the  Act.   The item or service is not reasonable and necessary under 1862(a) (1) (A) of the Act.    The item or service does not meet other Medicare program requirements  for payment.  3.6.2.2 - Reasonable and Necessary Criteria  (Rev. 10365; Issued: 10-02- 20; Effective: 08 -27-20; Implementation: 08-27-20)  This section applies to MACs, CERT, Recovery Auditors, and UPICs, as indicated.   CMS issues national coverage determinations (NCDs) that specify whether certain items, services, procedures or technologies are reasonable and necessary under 1862(a) (1) (A) of the Act. In the absence of an NCD, Medicare contractors are responsible for determining whether services are reasonable and necessary. If no local coverage determination (LCD) exists for a particular item or service, the MACs, CERT, Recovery Auditors, a nd UPICs shall consider an item or service to be reasonable and necessary if the item or service meets the following criteria:    It is safe and effective;    It is not experimental or investigational; and   It is appropriate, including the duration and frequency in terms of whether the service or item  is:  o Furnished in accordance with accepted standards of medical practice for  the diagnosis or treatment of the beneficiary's condition or to improve the function of a malformed body member;   o Furnished in a setting appropriate to the beneficiary's medical needs  and condition;   o Ordered and furnished by qualified personnel;  and,  o One that meets, but does not exceed, the beneficiary's medical  need.   There are several exceptions to the requirement that a service be reasonable and necessary for diagnosis or treatment of illness or injury in order to be considered for payment. The exceptions appear in the full text of 1862(a) (l) (A) of the Act. See also PIM chapters 13,  5.1 and 7.1.  3.6.2.3 - Limitation of Liability Determinations  (Rev. 10365; Issued: 10- 02-20; Effective: 08 -27-20; Implementation: 08 -27-20)  This section applies to MACs, CERT, Recovery Auditors, and UPICs, as indicated.   Section 1879(a) -(g) of the Act limits the financial liability of beneficiaries, providers, and suppliers by permitting Medicare payments, or requiring refunds, for certain services and items for which Medicare payment would otherwise be denied. The purpose of this provision is to protect beneficiaries from liability in certain cases of denied services. The limitation of liability provisions apply only to claims for services not statutorily excluded, that are denied for the following reasons:    The service or item did not meet the reasonable and necessary  criteria;    The beneficiary or provider did not know, or could not have been reasonably expected to know that the service or item would not be covered;  and   The beneficiary receives certain screeni ng tests and preventive services in  excess of the guidelines.  (See IOM Pub. 100-04, chapter30, 20 for more information).  The MACs, CERT, and UPICs shall first examine benefit categories and statutory exclusions to determine if a service or item is cover ed. Recovery Auditors shall examine categories and exclusions as outlined in their SOW. If the item or service meets the requirements of the appropriate benefit category and is not excluded by statute, the next consideration is whether the service was reasonable and necessary. When a claim is denied, in full or in part, because an item or service is not reasonable and necessary, MACs, CERT, Recovery Auditors, and UPICs shall make and document determinations as appropriate to 1879, 1870, and 1842(l) of the Act. Because the determinations can be appealed, it is important that the rationale for the determination be documented initially and at each level of appeal.   Limitations of liability provisions do not apply if there is a statutory exclusion, even if the service meets the reasonable and necessary criteria.   3.6.2.4 - Coding Determinations  (Rev. 10365; Issued: 10-02- 20; Effective: 08 -27-20; Implementation: 08-27-20)  This section applies to MACs, CERT, SMRC, Recovery Auditors, and UPICs, as indicated.   ICD-10-CM is used for diagnoses on inpatient discharges and for other services provided on and after the implementation of ICD-10- CM.. ICD -9-CM is used for discharges and other servi ces before that date.   The MACs, CERT, SMRC, Recovery Auditors, and UPICs shall determine that an item/service is correctly coded when it meets all the coding guidelines listed in the Current Procedural Terminology- 4 (CPT -4), Coding Clinic for ICD, Coding Clinic for HCPCS, and any coding requirements listed in CMS manuals or MAC articles.  In certain situations, it is appropriate for contractors to up code or down code a claim (or items or services on a claim) and adjust the payment. When the medical record supports a higher or lower level code, the MACs, SMRC, CERT, UPICs and Recovery Auditors shall not deny the entire claim but instead shall adjust the code and adjust the payment.  The MACs, SMRC, CERT, UPICs and Recovery Auditors shall up code or down code when it is possible to pay for the item or service actually provided without making a reasonable and necessary determination or if otherwise specified in applicable CMS medical  review  instructions. The MACs, SMRC, CERT, UPICs and Recovery Auditors shall not substitute the payment amount of one item or service for a different item or service based on a reasonable and necessary  determination.   Example situations where it is appropriate to up code or down code a claim are:  1. CBC with diff was ordered and bill ed but CBC without diff was  provided;   2. X-ray with contrast  was ordered  and billed  but X-ray without  contrast  was provided;   3. E&M level 3 was billed but the medical record supports level 2 (or other  level);   4. PPS (DRG/RUG/HHRG)  code  was billed  but the medical  records  supports  a different code;  and  5. Quantity  of diabetic  test strips  exceeds  limits; for example,  quantity was provided for insulin treated but the patient was not insulin treated.   3.6.2.5 - Denial Types  (Rev. 10365; Issued: 10- 02-20; Effective: 08 -27-20; Implementation: 08 -27-20)  The term Medicare beneficiary identifier (Mbi) is a general term describing a beneficiary's Medicare identification number. For purposes of this manual, Medicare beneficiary identifier references both the Health Insurance Claim Number (HICN) and the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition period and after for certain business areas that will continue to use the HICN as part of their processes.   This section applies to MACs , CERT, RACs, and UPICs, as indicated.   A. Distinguishing Between Benefit Category, Statutory Exclusion and Reasonable and Necessary  Denials   The MACs, CERT, RACs, and UPICs shall be cognizant that the denial type may affect the financial liability of beneficiaries. They shall ensure that benefit category denials take precedence over statutory exclusion and reasonable and necessary denials. They shall ensure that statutory exclusion denials take precedence over reasonable and necessary denials. MACs, CE RT, and UPICs shall use the guidelines listed below in selecting the appropriate denial reason. RACs shall follow denial reason guidance outlined in their SOW.   If additional documentation was requested from the provider or other entity for any MR reason ( benefit category, statutory exclusion, reasonable/necessary, or coding), and the information is not received within 45 calendar days or a reasonable time thereafter, the MACS, CERT, and UPICs shall issue a reasonable and necessary denial, in full or in part.   If additional documentation was requested because compliance with a benefit category requirement is questioned and the documentation received fails to support compliance with the benefit category, the MACs, CERT, and UPICs shall issue a benefit categor y denial.    If additional documentation was requested because compliance with a benefit category requirement is questioned and the received documentation shows evidence that the benefit category requirement is present but is defective, the MACs, and UPICs s hall issue a reasonable and necessary  denial.   EXAMPLE 1: A MAC is conducting a review of partial hospitalization (PH) claims from a provider who has a pattern of failing to comply with the benefit category requirement that there be a signed certification in the medical record. In the first medical record, the MAC finds that there is no signed certification present in the medical record. The MAC shall deny all PH services for this beneficiary under 1835(a) (2) (F) of the Act (a benefit category denial). However, in the second medical record, the MAC determines that a signed certification is present in the medical record, but the documentation does not support the physician's certification, the services shall be denied under 1862(a) (1) (A) of the Act (a reasonable and necessary denial) because the certification is present but defective.   Example 2: The MAC performs a medical record review on a surgical procedure claim and determines that the procedure was cosmetic in nature and was not reasonable and necess ary; the denial reason would be that the service is statutorily excluded since statutory exclusion denials take precedence over reasonable and necessary denials.   The MACs, CERT, RACs, and UPICs shall deny payment on claims either partially (e.g., by down coding or denying one line item on a multi -line claim) or in full, and provide the specific reason for the denial whenever there is evidence that a service:    Does not meet the Benefit Category requirements described in Title XVIII of the Act, NCD, or coverage provision in an interpretive manual;    Is statutorily excluded by other than 1862(a)(1) of the Act;   Is not reasonable and necessary as defined under 1862(a) (1) of the Act. MACs, CERT, RACs, and UPICs shall use this denial reason for all non-responses to documentation requests;    Was not billed in compliance with the national and local coding, payment or billing requirements; and/or   Was not delivered or provided to the beneficiary, or not provided as billed.   The denial explanation needs to be more specific than merely repeating one of the above bullets. The general exception to the need for a full denial explanation is in the event of a clerical error, for example, the billing entity transposes two digits in the Medicare beneficiary identifier on a claim. The claim is quickly returned, usually electronically, to the provider for correction. In the case of dual- eligible beneficiaries where there is a State -specific policy, see CMS IOM Pub. 100-04, chapter 30, 60.5 A for a detailed explanation of handling administrative denials.  3.6.3 - Beneficiary Notification  (Rev. 10365; Issued: 10-02- 20; Effective: 08 -27-20; Implementation: 08-27-20)  This section applies to MACs, CERT, RACs, and UPICs, as indicated.  A. General   If a claim is denied through prepayment or postpayment review, the MAC shall notify the beneficiary consistent with the requirements in PIM chapter 3, 3.6.2.3. The MAC shall include limitation of liability and appeals information. Notification can occur via Medicare Summary Notice (MSN). The CERT, RACs, and UPICs are not required to issue beneficiary notices for claims they deny. Instead, CERT, RACs, and UPICs shall comm unicate sufficient information to the MAC to allow the MAC to develop an appropriate beneficiary  notice.   The MACs are required to give notice to Medicare beneficiaries when claims are denied in part or in whole based on application of a LCD. All denials t hat result from LCDs shall provide the MSN message 15.19 in addition to the current applicable message. Message 15.19 states ( IOM Pub. 100-04, chapter 21):