CLC Laboratory Financial Management & Reimbursement 1 — Questions and Answers
Question 1: Which coding system is primarily used for billing laboratory tests to Medicare?
- ICD-10-CM diagnosis codes
- Current Procedural Terminology (CPT) codes (Correct answer)
- DRG (Diagnosis-Related Group) codes
- HCPCS Level III local codes
Correct answer: Current Procedural Terminology (CPT) codes
CPT codes, maintained by the AMA, are the primary coding system used to bill clinical laboratory procedures to Medicare and other payers.
Question 2: What document must a laboratory provide to a Medicare patient BEFORE performing a test that may be denied as not medically necessary?
- Certificate of Medical Necessity (CMN)
- Advance Beneficiary Notice (ABN) (Correct answer)
- Notice of Non-Coverage (NONC)
- Denial of Coverage Letter (DCL)
Correct answer: Advance Beneficiary Notice (ABN)
An Advance Beneficiary Notice (ABN) must be issued before rendering the service so the patient can decide whether to proceed and accept financial responsibility.
Question 3: Under the Protecting Access to Medicare Act (PAMA), Medicare payment rates for clinical diagnostic laboratory tests are based on:
- Annual CMS negotiations with laboratory trade associations
- The weighted median of private payer rates reported by applicable laboratories (Correct answer)
- Historical Medicare fee schedule with CPI inflation adjustments
- State-level rate-setting by Medicare Administrative Contractors
Correct answer: The weighted median of private payer rates reported by applicable laboratories
PAMA requires that Medicare CDLT payment rates reflect the weighted median of private payer rates collected from applicable laboratories, shifting to market-based pricing.
Question 4: A Local Coverage Determination (LCD) is primarily used in laboratory billing to:
- Set geographic payment rates for laboratory tests
- Specify ICD-10 diagnoses supporting medical necessity for covered tests (Correct answer)
- Establish the maximum number of tests per patient visit
- Define CLIA certificate requirements by laboratory type
Correct answer: Specify ICD-10 diagnoses supporting medical necessity for covered tests
LCDs issued by Medicare Administrative Contractors specify which ICD-10-CM diagnosis codes support medical necessity, determining when Medicare will cover a given test.
Question 5: Which modifier is used on a Medicare claim to indicate that an Advance Beneficiary Notice was issued because the service may be denied as not medically necessary?
- Modifier 22
- Modifier 59
- Modifier GA (Correct answer)
- Modifier 25
Correct answer: Modifier GA
Modifier GA is appended to a claim line to indicate that a valid ABN was on file, documenting that the patient was notified of potential non-coverage.
Question 6: The 'Anti-Markup Rule' in laboratory billing prohibits:
- Laboratories from charging above the Medicare fee schedule
- Marking up the cost of tests referred to outside laboratories when billing Medicare (Correct answer)
- Applying discounts to laboratory tests without CMS approval
- Billing for more than one specimen collection per patient encounter
Correct answer: Marking up the cost of tests referred to outside laboratories when billing Medicare
The Anti-Markup Rule prohibits the entity billing Medicare from marking up the price of laboratory tests performed by an outside entity under the billing entity's reassignment.
Question 7: Which of the following best describes a 'National Coverage Determination' (NCD) compared to a Local Coverage Determination (LCD)?
- NCDs are issued by state health departments; LCDs are issued by CMS
- NCDs apply nationwide and are issued by CMS; LCDs apply to specific MAC jurisdictions (Correct answer)
- NCDs cover outpatient services only; LCDs cover inpatient laboratory tests
- NCDs set payment rates; LCDs set quality standards
Correct answer: NCDs apply nationwide and are issued by CMS; LCDs apply to specific MAC jurisdictions
NCDs are issued by CMS and apply uniformly across all Medicare jurisdictions, while LCDs are issued by individual MACs and apply only within their geographic jurisdiction.
CLC Laboratory Financial Management & Reimbursement 1
Which coding system is primarily used for billing laboratory tests to Medicare?