Corporate Compliance

Note: Medically Unlikely Edits and medical necessity

Medicare Weekly Update, April 28, 2009

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In last week’s Note from the Instructor, Kimberly Hoy focused on recently issued FAQ 9697. In FAQ 9697, CMS restated its position that hospitals cannot bill beneficiaries for units of service in excess of MUE limits, even when the hospital has provided an ABN to the beneficiary prior to the provision of the services subject to the MUE. CMS's rationale is that MUEs are coding edits, not medical necessity edits.

Generally, when a physician orders services in excess of what the hospital believes to be medically necessary under Medicare guidelines, the hospital is permitted to provide an Advanced Beneficiary Notice (ABN) to the beneficiary prior to the performance of the services. The purpose of the ABN is to notify the beneficiary that Medicare is unlikely to pay for these services and that the beneficiary will be liable if Medicare does not pay. If Medicare then denies coverage, the hospital is permitted to bill the beneficiary for these non-covered services.
 
CMS’s position with respect to ABNs and MUEs appears to be inconsistent with its general policy on medical necessity. This is interesting in light of the fact that CMS does recognize that units in excess of MUE limits might be medically necessary, and, therefore, covered, in certain circumstances. In that case, CMS has instructed hospitals to report units in excess of the MUE limits on separate lines on the claim, with an appropriate modifier, so that the number of units on each line is within the MUE limit (see FAQ 8736). This is consistent with prior guidance indicating that MUE limits are to be applied against each line of a claim, rather than the entire claim. Thus, if a HCPCS code is reported on more than one line of a claim, the MUE for that service is to be applied against each line separately (see FAQ 8735).
 
Unfortunately,  many hospitals that have followed CMS’s guidance on billing medically necessary units in excess of MUE limits have had their claims Returned to Provider (RTP) because the contractors applied the MUEs on a per claim, rather than a per line, basis. When a claim RTP’s, all that the hospital can do in order for the claim to process and pay is to decrease the number of units reported so that it no longer exceeds the MUE limit.
 
Thus, even when hospitals are reporting medically necessary units in excess of the MUE limits, as instructed by CMS, they ultimately receive no reimbursement for those medically necessary services, nor are they permitted to appeal this de facto “denial” of services. Hospitals are encouraged, however, to review the impact of the MUEs and their inability to recover the cost of units in excess of the MUEs, regardless of the medical necessity of those excess units.
 
If you have questions or concerns, CMS has provided two contacts for giving feedback and making inquiries about the MUEs. If a provider wants to request a change to the value of an MUE, they would do so through National Correct Coding Initiative, Correct Coding Solutions, LLC, P.O. Box 907, Carmel, IN, 46082-0907. The fax number is 317/571-1745. For general inquiries, CMS provides the following contact in FAQ 8741: valeria.allen@cms.hhs.gov.
 
Editor’s note: Judith Kares, JD, CPC, regulatory specialist for HCPro, Inc., is the author of this week’s note from the instructor.



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