Lab Medical Necessity and ABNs
Lab medical necessity means a test is reasonable and necessary for the patient's condition, as shown by the ordering practitioner's diagnosis codes and documentation. When Medicare may not cover a test, an Advance Beneficiary Notice (ABN) lets the patient decide in advance. Sound Lab Consultants (SLC) supports labs with these rules in its nationwide RCM services.
How medical necessity works for lab tests
Medicare covers tests that are reasonable and necessary and ordered by the treating practitioner (CMS MLN006270: CLIA Program & Medicare Lab Services)
NCDs and LCDs list covered diagnoses for many tests (CMS: Coverage determination basics; CMS Medicare Coverage Database)
ICD-10-CM codes on the order must support coverage (CMS: ICD-10 codes)
ABN basics
The ABN (Form CMS-R-131) notifies a Medicare patient that a test may not be covered (CMS: Beneficiary Notices Initiative (ABN))
The notifier is generally the provider or supplier that furnished or ordered the service; when an ordering physician gives the ABN and a lab bills, the notifier should send the billing lab a copy, and the billing entity remains responsible for effective delivery (CMS Claims Processing Manual, Chapter 30 (ABN))
It must be given before the service
Routine use for every test is not appropriate; use it when non-coverage is expected
Related claim modifiers apply; confirm current instructions with CMS and your MAC
How Sound Lab Consultants helps
SLC provides laboratory revenue cycle management and billing services, from coding and claims to denials and payment posting, backed by CLIA, CAP and COLA compliance consulting. See the lab revenue cycle management guide and clinical lab billing.
FAQ
What is medical necessity for lab tests? A test is reasonable and necessary for the patient's condition, supported by diagnosis and documentation.
What is an ABN? A CMS notice (Form CMS-R-131) given before a service Medicare may not cover.
Where do I find coverage rules? In NCDs and LCDs in the Medicare Coverage Database.
Who gives the ABN for a lab test, the lab or the ordering office? Either can be the notifier when a physician orders and a lab performs the test. If the ordering office gives it, it should send the billing lab a copy, and the billing entity stays responsible for effective delivery (CMS Claims Processing Manual Ch. 30).
Does SLC help with medical necessity? Yes, as part of its lab RCM and billing services.
Related guides
Sources
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