Local coverage determinations: what are they good for?
By Alexander Miller, MD, FAAD, Dec. 1, 2014
You excise an inflamed, painful, abscessed epidermal inclusion cyst from the back of a Medicare patient. As the cyst is symptomatic, you feel that its excision should be covered by Medicare. You bill the patient’s Medicare contractor for the excision and reference the primary ICD-9 code as 682.2, cellulitis and abscess of trunk, and the secondary code as identifying the “sebaceous cyst,” 706.2. Surprise! You receive a denial of payment. What went wrong?
The answer to the above question may be contained in a Medicare Administrative Contractor’s (MAC’s) Local Coverage Determination (LCD). Each MAC publishes a set of LCDs, which are intended to clarify coverage (or non-coverage) criteria for select diagnostic conditions, surgical procedures or laboratory tests. The Centers for Medicare and Medicaid Services (CMS) also generates coverage determinations, called National Coverage Determinations (NCDs). All LCDs must adhere to the NCD criteria, if such exist. The aim of an LCD is to specify when a service is considered to be reasonable and necessary, and to provide criteria for coverage or non-coverage that are easily interpretable, thus facilitating automated review of claims to determine their qualifications for payment or rejection.
Why are LCDs produced? LCDs are generated principally as a reaction to high-volume utilization of select procedures or tests, high-dollar expenditures for particular items or services, or to clarify criteria for coverage and to facilitate access of beneficiaries to reasonable and necessary services.
How are LCDs generated? In response to a perceived need the MAC may write a new LCD or substantially rewrite coverage criteria of an existing LCD. The LCD is then made public (posted on the contractor’s website) and is subject to a 45-day comment period during which interested parties may submit suggestions to the contractor. Each MAC has a Contractor (or Carrier) Advisory Committee (CAC) comprised of medical professionals who serve their membership as representatives to the committee. This committee advises the medical director of the MAC and facilitates dialogue between practicing medical professionals and the MAC policymakers. Each state has the right to provide dermatology CAC members to the regional MAC. The dermatology CAC members have the opportunity to develop a cooperative working relationship with the medical director of the MAC, and can influence the content of LCDs. The American Academy of Dermatology (AAD) and other dermatology societies will, through their designated staff and physician representatives, review pertinent LCDs and provide comment. Cooperative, coordinated, and formative suggestions have in many instances been integrated into new and evolving LCDs.
What is the structure of an LCD? In general, an LCD will consist of three major sections:
A listing of coverage criteria (indications, limitations, and medical necessity).
An enumeration of the CPT codes pertinent to the LCD.
A listing of ICD-9 (or in the future, ICD-10) diagnosis codes supporting medical necessity.
The ICD code listing will include diagnostic codes that will by themselves qualify for coverage but it may also provide lists of codes that must be paired in order to qualify for coverage. The latter codes would, for billing purposes, have to be presented as a primary code and a secondary code linked to the CPT procedure code. An LCD may also specify chart documentation criteria along with expanded descriptions of coverage criteria.
Each MAC generates its own LCDs based upon regional needs. There are only a few LCDs pertinent to dermatology. Nearly all MACs have an LCD pertaining to the removal of benign skin lesions, and most also tackle premalignant lesions. Mohs surgery is the other prevalent dermatology-specific LCD. Knowing the coverage and billing criteria specified in these LCDs will promote proper billing and appropriate reimbursement.
Where can I find my state’s LCDs? All of the LCDs are readily accessible from your Medicare Administrative Contractor’s website.
Now, let’s return to the vignette at the beginning of this article. Why was a seemingly perfectly legitimate bill rejected? One must carefully interpret the benign lesion LCD for the answer. It turns out that for the physician’s state, which happens to be under the Noridian MAC, the Skin Lesion (Non-Melanoma) Removal LCD provides a list of Group 2 ICD-9 codes that by themselves do not qualify for coverage, but will justify payment when paired with a Group 3 code. The “sebaceous cyst” code, 706.2, is in the Group 2 list, and “cellulitis and abscess of trunk,” 682.2, is in the Group 3 column. Thus, the original billing required a minor yet crucial modification in the order of the diagnoses listing: the primary diagnosis should have been 706.2, and the secondary diagnosis, 682.2. The usual preferred coding sequence is: list the primary lesion diagnosis first, and the diagnosis for the symptom, sign, or pathology that justifies coverage second.
Example 1: You destroy 15 actinic keratoses, including thickly keratotic lesions on the scalp and face and several minimally scaly lesions on the vermilion margin of the lip. Although the lip lesions are not thickly hyperkeratotic you feel confident in billing CPT 17004 to Medicare, as you feel that you have appropriately treated lesions that should be covered.
Answer: Correct. The National Coverage Determination (NCD) for actinic keratoses specifies the following: “Medicare covers the destruction of actinic keratoses without restrictions based on lesion or patient characteristics.”
Example 2: You incise and drain a 2.5-cm wide abscessed epidermal inclusion cyst located on the chest. You then proceed to excise the abscessed cyst. You bill CPT 10060 for the incision and drainage and CPT 11403 for the excision.
Answer: Incorrect. The National Correct Coding Initiative Manual specifies the following: “If removal, destruction, or other form of elimination of a lesion requires coincidental elimination of other pathology, only the primary procedure may be reported.” Thus, an incision and drainage of a cyst that is excised at the same encounter is incidental to the excision and is not separately billable.
Example 3: A patient complains that what appears to you to be a tan seborrheic keratosis catches on clothing, rubs, and irritates. You freeze the keratosis with liquid nitrogen and bill Medicare CPT 17100 for the destruction, referencing ICD-9 diagnostic code 702.11, inflamed seborrheic keratosis.
Answer: Uncertain. The benign lesion LCDs consistently specify potential sign and symptom criteria for medical necessity as any one or more of: bleeding; intense itching; pain, evidence of inflammation, or infection; obstruction of an orifice; or restriction of vision by the lesion. Some LCDs also include rapid or recent enlargement as a qualifying criterion. Additionally, a benign lesion may qualify for coverage if it is in a site subject to recurrent physical trauma, and chart documentation supports that trauma had occurred. In the above example the lesion reveals no clinical evidence of inflammation or bleeding. However, there is a history of rubbing and irritation. Whether that is sufficient to qualify for coverage would be up to the judgment of individual MACs and their reviewers.
