Medically Unlikely Edits Are Back–and a Problem!

CMS instituted 100 new MUEs on January 1, then carriers began rejecting laboratory claims

CEO SUMMARY: On January 1, 2009, CMS implemented Phase VIII of its policy on medically unlikely edits (MUEs) involving about 100 laboratory CPT Codes. It also began to deny whole claims, not just the “medically unlikely” parts of claims. After hearing of the problem in early March, ACLA, CAP, and other lab groups stepped in to work closely with CMS officials to resolve the problem. Claims are expected to be paid in full until new revisions to MUE rules are implemented.

UNUSUALLY HIGH RATES of Medicare claim denials have been experienced by some labs since the first of this year. The cause is the implementation of as many as 100 MUEs (Medically Unlikely Edits) involving laboratory CPT codes.

“It was on January 1 that the federal Centers for Medicare & Medicaid Services (CMS) instituted Phase VIII MUEs,” stated Alan Mertz, CEO of the American Clinical Laboratory Association (ACLA) in Washington, DC. “This resulted in denials for claims that incorporate any of 100 laboratory CPT codes. In particular, our member labs noticed MUEs related to claims for fluorescence in situ hybridization (FISH), flow cytometry, and immunohistochemistry (IHC).”

Resolution Takes Weeks

As this pattern of unexpected claims denials was recognized, professional lab organizations, including ACLA, worked closely with CMS officials to resolve this issue. “ACLA learned on March 13 that CMS would no longer deny the laboratory-related MUEs in question,” noted Mertz. “From that date, it would take about two weeks for all Medicare contractors to begin paying these claims normally again. That doesn’t change the fact that some labs will have experienced an unusually high rate of denials for about three months—from January 1 through the end of March.”

While the current MUE problem may be ended for the moment, pathologists and lab directors are well aware of the potential for inappropriate MUEs to cause havoc. Back in early 2006, THE DARK REPORT was first in the lab industry to call attention to the CMS proposal to limit CPT 88305 (Level IV—Surgical Pathology, Gross and Microscopic Exam) to two units of service per day. At that time, a Medicare contractor had developed a list of MUEs that targeted 1,100 laboratory CPT codes for restriction of service! (See TDR, January 16, 2006, and June 12, 2006.)

Since that time, officials from laboratory organizations, including ACLA and the College of American Pathologists (CAP) have worked with CMS to institute an MUE program that is fair to labs, while allowing CMS to use electronic claims editing systems that flag medically unlikely events, such as a hysterectomy involving a male patient.

“The most recent snag developed when some lab directors noticed higher than usual claim denials in the first three months of the year,” said Mertz. “Many labs did not know the extent of the problem at first because the CMS contractors did not explain the denials.”

No Prior Announcement

“There was no opportunity to meet with CMS before this big batch of MUEs hit in January,” Mertz explained. “So, it was not until late February and early March before our members notified us that, not only were the Medicare carriers denying payment for the units of service in excess of the MUE, but the carriers were actually denying whole line items in the claims if the claim had exceeded the MUE!

“We asked our members to quickly survey about one month’s worth of claims,” he added. “In a single month, we had eight laboratories report about $1 million in denials. These centered around 23 codes, particularly claims for FISH, flow cytometry, and IHC tests.

“Fortunately, during a conference call about this matter, CMS agreed to suspend the implementation of Phase VIII MUEs until we have an opportunity to meet with them to discuss what went wrong and identify ways to rectify this problem,” Mertz stated. “It will take CMS about two weeks to implement suspension of these MUE denials, which they did pledge to do until this can be resolved.”

During the conference call, those representing the labs raised a number of issues in addition to the denial of claims, said David A. Mongillo, ACLA’s Vice President for Policy and Medical Affairs. “Labs were concerned about a lack of transparency, the criteria used for establishing the MUEs, and the processes CMS followed in implementing the Phase VIII revisions,” he said. “CMS’ positive response is welcome and we will continue to work with CMS to resolve these issues.”

Recent MUE Implementation Meant Entire Claim Was Denied

Medicare’s policy of having carriers follow a procedure to deny the entire claim for tests subject to medically unlikely edits (MUEs), was clearly unjustified, said Alan Mertz, CEO, of the American Clinical Laboratory Association (ACLA).

“The federal Centers for Medicare & Medicaid Services (CMS) could have limited the denial to those units of service that exceed the MUE,” Mertz observed. “But to deny the entire claim was arbitrary and capricious. It was also harmful to both patients and providers.

“The tests at issue,” he continued, “including but not limited to procedures in flow cytometry, histology, immunohistochemistry, and fluorescent in situ hybridization, are medically necessary and supported by appropriate diagnosis codes. These tests are being ordered by physicians to determine treatment for Medicare beneficiaries who are often critically ill.”

“Further, CMS exacerbated the effect of such denials on patients and providers by not publishing the exact number of approved MUEs, and by not disclosing this information to ACLA and other laboratory organizations,” stated Mertz.

“This new and unsubstantiated policy runs counter to the multitude of input on full disclosure of the MUEs,” added Mertz. “The laboratory or pathologist performs those tests deemed medically necessary by a provider but have no idea whether they will be paid at all for the markers or stains deemed medically necessary. This is an untenable position for the laboratory community.”


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