Medicare audits on CTPs/skin substitutes are ubiquitous and the audits all seem to follow the pattern that Michael Crouch described in his articles The Incredible Journey: Lessons Learned from a “Skin Substitute Graft” Audit – Part One and Here Comes the Judge! Part 2 of the Incredible Journey of a Skin Substitute Audit regardless of what Medicare Administrative Contractor (MAC) is involved. Only 3 MACs have active Local Coverage Determinations (LCDs) pertaining to CTPs/skin substitutes:
I asked Michael Crouch to explain how it was possible for any MAC to use those criteria. Read on!
Caroline
Use of Active LCDs for CTP Audits Across MAC Jurisdictions
Following the withdrawal of the most recent Local Coverage Determinations (LCDs) addressing cellular and tissue-based products (CTPs) / skin substitutes, only three Medicare Administrative Contractors (MACs) currently maintain active LCDs governing these services. Notwithstanding the limited number of active policies, some interpretations of regulations could conclude that Medicare auditors are authorized to apply the medical-necessity criteria articulated in any active LCD when reviewing claims from providers practicing outside the issuing MAC’s jurisdiction. This authority is grounded in statute, regulation, and CMS program integrity policy, rather than in any requirement that LCDs apply nationally by default.
Statutory / Regulatory Authority
Section 1862(a)(1)(A) of the Social Security Act limits Medicare payment to items and services that are “reasonable and necessary for the diagnosis or treatment of illness or injury.” (1) This statutory standard applies uniformly nationwide. LCDs represent CMS-approved contractor interpretations of how this national standard is operationalized in specific clinical contexts, including wound care and CTP utilization. Regulatory authority is found at 42 CFR 405.1062, which recognizes LCDs as valid policy instruments used by Medicare contractors to define medical necessity in the absence of a National Coverage Determination (NCD).(2) The regulation does not restrict the clinical reasoning or evidentiary value of an LCD solely to the geographic jurisdiction of the issuing MAC when used for audit, medical review, or appeals adjudication.
Audit and Program Integrity Authority
CMS audit authority is further established in the Program Integrity Manual (PIM), Pub. 100-08, Chapter 13, which authorizes Medicare auditors to determine overpayments based on national and local coverage policies, CMS manuals, and generally accepted standards of medical practice.(3) When no local LCD exists, or when assessing whether services meet the statutory “reasonable and necessary” standard, auditors may rely on LCDs from other jurisdictions as evidence of CMS’s accepted clinical framework. CMS policy requires consistent application of medical-necessity principles across jurisdictions. Accordingly, the absence of a local LCD does not preclude denial if the medical record fails to meet accepted coverage standards reflected in active LCDs issued by other MACs. For this reason, LCDs issued by contractors such as Novitas, CGS, and First Coast are routinely used as benchmarks during audits nationwide, even when the audited provider is located outside the issuing MAC’s jurisdiction.
Key Limitations
While auditors may reference another MAC’s LCD as persuasive authority, CMS may not:
- Deny a claim solely for failure to comply with another MAC’s LCD absent a medical-necessity deficiency;
- Retroactively apply new LCD requirements; or
- Disregard contemporaneous documentation supporting medical necessity based on accepted standards of care.
LCDs function as interpretive guidance for applying the statutory “reasonable and necessary” standard and must be evaluated in the context of the totality of evidence, including the medical record and prevailing clinical practice.
References
- Social Security Act 1862(a)(1)(A); 42 U.S.C. 1395y(a)(1)(A)
- 42 CFR 405.1062
- CMS Program Integrity Manual (Pub. 100-08), Chapter 13
Michael J. Crouch, CPC, CPMA, CHT-ADMIN
michaelcrouch@cplushealthcareconsulting.com
www.cplushealthcareconsulting.com
Dr. Fife is a world renowned wound care physician dedicated to improving patient outcomes through quality driven care. Please visit my blog at CarolineFifeMD.com and my Youtube channel at https://www.youtube.com/c/carolinefifemd/videos
The opinions, comments, and content expressed or implied in my statements are solely my own and do not necessarily reflect the position or views of Intellicure or any of the boards on which I serve.
