Payment will be made only for tests, including automated multichannel tests, that meet Medicare coverage rules. Tests are considered covered by Medicare if the beneficiary is eligible and presents with indications of a disease or other clinical problem. For example, screening or preventive care tests are not covered except in specific cases determined by Congress.

Starting January 1, 1998, annual mammograms (annually after age 40) and screening pelvic exams (every 3 years) will be covered, as well as annual fecal occult blood tests (beginning at age 50). As of July 1, 1998, coverage begins for expanded diabetes self-management training and bone mass measurement. Coverage for prostate cancer screening using prostate-specific antigen and a digital rectal examination begins January 1, 2000.

Medicare requires a diagnosis code (ICD-9) (2) for all laboratory tests as a means of verifying medical necessity.

Carriers have been instructed to review claims for patterns of high utilization of profiles with large numbers of tests and, if documentation (i.e., patient records and chart notes) does not support Medicare coverage, to recoup payments made in the past. Such actions can also put a provider at risk of prosecution by the Medicare Office of Inspector General under the False Claims Act for submission of medically unnecessary claims.

However, HCFA has stated that for automated, multichannel tests only: “When a physician orders automated tests on a test-by-test basis, that is, not as a part of a custom panel, each of the tests is to be considered medically necessary.”

When more than one automated, multichannel test is ordered individually, documentation supporting the medical necessity for every individual test is not required. In other words, a single valid medically necessary diagnosis can be used for all automated, multichannel tests ordered and performed on the same date of service so long as the tests are ordered individually by the physician.
HCFA has also stated that the new automated, multichannel test panels as well as organ and disease panels are to be considered to be individual tests for medical necessity documentation purposes.
A special QP modifier is used to indicate that automated, multichannel tests were individually ordered and as such are not subject to individual documentation of medical necessity.
Carbon dioxide, chloride, potassium, sodium, BUN, and creatinine are ordered on the same date of service. If ordered as and billed as: Electrolyte Plus Profile 80059 Electrolyte Panel 84520 BUN 82565 Creatinine

Documentation of medical necessity is required for each of the six tests performed. If ordered as: and billed as: Electrolyte Panel, 80059 BUN, 84520 Creatinine, 82565 80059QP Electrolyte Panel 84520QP BUN 82565QP Creatinine

Medical necessity is assumed and only one diagnosis code is required for all of the tests (unless local medical review policy requires specific ICD-9 codes for these tests). If ordered as: and billed as: Carbon dioxide Chloride Potassium Sodium BUN Creatinine 82374QP Carbon dioxide 82435QP Chloride 84132QP Potassium 84295QP Sodium 84520QP BUN 82565QP Creatinine
Medical necessity is also assumed, and only one diagnosis code is required for all of the tests (unless local medical review policy requires specific ICD-9 codes for these tests). Note that this panel cannot be coded as a Liver panel, 80058, because it does not include direct bilirubin.

A number of tests commonly included in chemistry profiles or general health panels do not appear on the automated multichannel chemistry list in the CPT. For example: Amylase Magnesium Lipase Ferritin Iron TIBC HDL-cholesterol Apolipoproteins

These tests can be submitted to Medicare for individual payment. Because the average reimbursement level per test for automated tests is lower than the individual payment for each test, panel reimbursement increases dramatically when nonautomated tests are added to the panel and billed separately. Medical necessity is always required when such “add-on” tests are performed. If appropriate diagnosis codes are not submitted showing the necessity for performing such tests, payment may be denied by Medicare.