A Clarification on Medical Necessity Determinations

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adrienneClintonBy Adrienne Dresevic, Esq. and Clinton Mikel, Esq. of The Health Law Partners, P.C. 

On December 11, the US District Court for the District of Columbia concluded that a laboratory is not required to independently determine medical necessity; instead, a laboratory can rely on the ordering physician’s medical necessity determination when it submits claims for payment to Medicare. Although this case involves laboratory tests and billings, it is an important clarification which could have a broader reach, impacting other service providers (such as imaging providers) who also rely on the ordering physician’s determination of medical necessity when submitting claims for payment to Medicare.

United States ex rel. Groat v. Boston Heart Diagnostics Corp. (Boston Heart)

The Boston Heart case involves a qui tam action brought against a laboratory by a physician relator who alleged that Boston Heart engaged in a scheme to encourage physicians to order medically unnecessary tests through false marketing and pre-printed test requisition forms. In an earlier ruling, the court concluded that Boston Heart had an obligation to establish the medical necessity of tests for which it sought reimbursement. However, Boston Heart asked the court to reconsider its ruling, which resulted in this latest determination.

In its latest ruling, the court relied on the Department of Health and Human Services Office of the Inspector General (OIG) guidance and Medicare regulations, which make clear that “laboratories do not and cannot treat patients or make medical necessity determinations.” The court also said that laboratories should be able to produce or obtain documentation from the treating physicians to support the medical necessity of the service provided but it does not make such determinations. The court also acknowledged that Medicare regulations underscore that physicians, not laboratories, establish medical necessity. The court went on to state that although the Medicare statute requires laboratories to certify the medical necessity of any tests that it seeks payment for, the laboratory need not make an independent determination of medical necessity and may rely on the ordering physician’s determination.

Notably, like the OIG guidance and Medicare regulations applicable to laboratory services which were referenced by the Boston Heart court, a similar analysis and argument can be readily made for imaging services.

Despite the court’s recent ruling, the Boston Heart case is still ongoing, as the court refused to dismiss the relator’s claims, finding that the relator did sufficiently allege a false claims act violation to maintain the action. The Boston Heart case will be interesting to follow for many providers and suppliers that rely on an ordering physician’s determination of medical necessity when submitting claims for payment.

Conclusion

There have been many investigations, cases, and audits where third-party payors, government agencies, or other parties attempt to inappropriately shift the legal obligation to establish the medical necessity of a test away from the physician to the billing provider or supplier. This case may prove to be very helpful to imaging providers in defending a case, investigation, or audit involving medical necessity determinations.


Adrienne Dresevic, Esq. is a Founding Shareholder of The Health Law Partners, P.C., a nationally recognized healthcare law firm with offices in Michigan and New York. Practicing in all areas of healthcare law, she devotes a substantial portion of her practice to providing clients with counsel and analysis regarding compliance, Stark Law, Anti-Kickback Statute, and compliance related issues. Ms. Dresevic serves on the American Bar Association Health Law Section’s Council, which serves as the voice of the national health law bar within the ABA. Ms. Dresevic also serves as the ABA Health Law Section’s Co-Chair of the Physicians Legal Issues Conference Committee, Vice Chair of the Programs Committee (Executive Leadership), and Vice Chair of the Sponsorship Committee. She is licensed to practice law in Michigan and New York, and can be contacted at adresevic@thehlp.com. 

Clinton Mikel, Esq. graduated from the University of Michigan Law School. Practicing healthcare law, he concentrates in Stark, fraud/abuse, telehealth/telemedicine, compliance, and the corporate and financial aspects of healthcare practice.

The authors are members of The Health Law Partners, P.C. and may be reached at (248) 996-8510 or (212) 734-0128, or at www.thehlp.com.

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