Clinical Microbiology Newsletter 29:22,2007 © 2007 Elsevier 0196-4399/00 (see frontmatter) 169

As providers, beneficiaries, devicemanufacturers, and other stakeholdersstrive to more fully understand theworking parameters of the Medicarereimbursement process, it is importantto first understand the two pathways bywhich decisions by contractors can bemade. The pathways under which labo-ratory services may be granted coverageunder the Medicare program include (i)local coverage determinations (LCDs),formerly known as local medical reviewpolicies (LMRPs), and (ii) national cov-erage determinations (NCDs). Twenty-seven NCDs were developed in the late1990s, as mandated by Congress, inwhich the Centers for Medicare &Medicaid Services (CMS) used aNegotiated Rulemaking process.Emerging, often high-impact techno-logies typically find themselves in therealm of the NCD evaluation process.However, the overwhelming majority of decisions are made at the local level.

The Negotiated Rulemaking process

demonstrated that there is considerablevalue in instituting a more global, inte-grated approach. There are three major,defining forces that provide such aframework, and they can be clearly illu-strated by walking through the develop-ment of an LCD for infectious-diseasemolecular diagnostic assays. Thesethree forces are (i) specific regulatorymandates of the Medicare program, (ii)the creation of stakeholder partnerships,and (iii) the need to properly utilizemedical evidence. Most coverage poli-cies represent a combination of theseforces. In fact, there is only the occa-sional local coverage scenario that ischaracterized by the pure expression of any solitary element.

The provision of services by theCMS to its Medicare beneficiaries ispredicated upon the determination ofmedical necessity. However, prior tothis medical-necessity determinationstep, any service must have a provenbenefit category within the statutorilydefined parameters of the program.Title XVIII of the Social Security Act,Section 1862 (a) (1) (A) (1), states “Nopayment may be made under Part A orPart B for any expenses incurred foritems or services which are not reason-able and necessary for the diagnosis or treatment of illness or injury or to

improve the functioning of a malformedbody member.”

Although linked by the overridingneed to establish medical necessitybefore coverage may be granted, theNCD and LCD processes differ in somefundamental ways, as summarized inTable 1. Perhaps most importantly,LCD requests for coverage originatelargely within the context of the Med-icare contractor (that is, either Part Afiscal intermediaries or Part B carriers)interactions with provider stakeholders,whereas NCDs can be generated from a much broader base of requestors,

A Medicare Contractor’s Approach to Developing Local CoverageDeterminations for Infectious-Disease Molecular DiagnosticsMitchell I. Burken, M.D., MPP, Medicare Medical Director, TrailBlazer Health Enterprises LLC, Timonium, Maryland

AbstractThis article attempts to present the backdrop against which Medicare carriers are chartered to make local coverage decisions,

and it provides a triangular paradigm for expressing the regulatory, collaborative and evaluative boundaries within which thisdecision-making takes place. Although infectious disease molecular diagnostic testing will be underscored, this model can beextrapolated to the full complement of Medicare policy issues.

Vol. 29, No. 22 www.cmnewsletter.com November 15, 2007

Mailing Address: Mitchell I. Burken, M.D., Medicare Part B Medical Director,TrailBlazer Health Enterprises, LLC, Suite 600, 1954 Greenspring Dr., Timonium, MD 21093. Tel.: 410-683-2610.Fax: 410-683-2939. E-mail:Mitchell.Burken@trailblazerhealth.com

ClinicalMicrobiologyNewsletter

including but not restricted to man-ufacturers, beneficiaries, providers,legislators, and even contractors them-selves (2). Since local Medicare con-tractors tend to partner with localproviders, often through local (as wellas national) medical or laboratory sci-ence societies, requests from manufac-turers are often expressed through localproviders who have embraced emergingtechnologies (drugs, devices, etc.) withintheir practices and, in turn, contactcontractors about coverage.

The core of an LCD is the delinea-tion of medical necessity, which can betranslated into specific CPT/ICD-9-CMcode pairings for the predominatelyelectronic auto-adjudication of claims.Except under limited circumstances,such as the November 2001 rule regard-ing laboratory NCDs (3), the NCDprocess defers the actual formulation of code pairings to local contractors.

There is a mandated review (4) of all proposed LCDs by contractor-basedCarrier Advisory Committees (CACs).In contrast, at the national level, there isan elective referral of pending requests

for either contract technology assess-ments, via its partnership with theAgency for Health Research andQuality (AHRQ), and/or deliberationsby the Medicare Coverage AdvisoryCommittee (MCAC). Re-referralsthrough the CAC/comment process are only required under the scenario of possible restricted coverage. In addi-tion, in accordance with the implemen-tation of recent legislative mandates(5-6), the new LCD format requires thepublication of companion documenta-tion, including coding guidelines, whichmust be separate from the expression of medical-necessity language in theLCD itself.

In the case of my company,TrailBlazer Health Enterprises, LLC(TrailBlazer), policy making at the con-tractor level, with respect to physicianor laboratory services under Part B, isdescribed by a complex set of forces inwhich resources are allocated so thatwell over 100 million claims per annumcan be properly adjudicated within itsfive jurisdictions (Delaware, Districtof Columbia, Maryland, Texas, and

Virginia). Whereas the LCD is a work-ing document designed to enable elec-tronic edits to auto-adjudicate claimsvia the assignment of limited diagnostic(7) codes to specific procedural (8)codes, many other coverage decisionsand related activities occur outside theLCD process described above, andthese are generally beyond the scope of this brief article. However, it must be emphasized that local coverageexpansions can be implemented at anytime, outside the realm of the notice-and-comment process, which is nec-essary for the application of morerestrictive electronic edits.

Before describing the infectious-disease molecular diagnostics LCD in greater detail, it is of consummateimportance to describe the interplay ofregulatory, collaborative, and evaluativeforces in local policy development.

Regulatory Forces Regulatory forces comprise those

mandates under which Medicare con-tractors must craft policy. These aremultifaceted, ranging from instructionsin the Program Integrity Manual and

170 0196-4399/00 (see frontmatter) © 2007 Elsevier Clinical Microbiology Newsletter 29:22,2007

Table 1. Differences between Local Coverage Determinations (LCDs) and National Coverage Determinations (NCDs)

Characteristic LCD NCD

Binding to an administrative-law judge No Yeson appeal

Use of Notice-and-Comment Yes Yes

Procedure-to-Diagnosis code pairings Common (these type of edits are Uncommon (but with laboratory “Reg Neg”specified (“Limited Coverage”) required for electronic adjudication as an exception)

of medical necessity)

Use of advisory committee Mandatory (Carrier Advisory Elective (Medicare Coverage Advisory Committees): focus on provider Committee (MCAC): focus on evidencecommunity perspectives

Standards of medical evidence Variable High

the NCD Manual of the Internet OnlyManual language to Change Requestsand Federal Register notices in tandemwith management directives from CMSstaff. The appropriate and timely assim-ilation of such diverse information pro-vides the fundamental backdrop againstwhich all other coverage activities musttake place.

Collaborative ForcesCollaborative forces, in the context

of Medicare Part B, characterize therelationship which contractors (carriers)develop with their local provider com-munities across all their state juris-dictions, noting that parallels can beformulated with respect to fiscal inter-mediaries and their institutional pro-viders. Although periodic meetings ofCACs may symbolize the expression ofthis ongoing partnership, it is really themuch wider array of local practitionerswho usually request new covered ser-vices, either independently or in concertwith additional stakeholders, such asmanufacturers. In fact, the website post-ing of draft LCDs is ultimately intendedfor the medical community at large, notin any way restricted to CAC partici-pants only.

Evaluative ForcesEvaluative forces modulate the above-

mentioned regulatory and collaborativeforces by enabling the “reasonable andnecessary” application of covered ser-vices to illnesses and injuries that arebased upon adequately documentedsupport in the published medical liter-ature. Although this paradigm of evi-dence-based medicine (EBM) cannotalways apply to every local decisionwhere coverage determinations must be made, it remains an overriding themein this admixture of policy development.In practice, EBM represents a spectrumof evaluative endeavor that, in its purestform, involves the systematic search for improved health outcomes resultingfrom the medical device, drug, proce-dure, etc., under examination. There is ahierarchy of medical evidence in whichcertain types of study designs (e.g.,randomized controlled trials) are morerobust than their less rigorous counter-parts, such as epidemiological studiesand case series analyses, in demonstrat-ing such improved outcomes. Thus, thesystematic review of the published liter-ature on a given service can maximize

the opportunity for Medicare contrac-tors to properly evaluate services duringpolicy development.

There are several practical consider-ations at the local level. First, in theevent that abundant published literatureis available, such complex systematicreviews may be beyond the usual scopeof contractor-based abilities. In suchsituations, any available systematicreviews (or technology assessments),such as those published by the BlueCross Blue Shield Association Techno-logy Evaluation Center or other AHRQ-designated Evidence-Based PracticeCenters, can be extremely helpful.

Second, by way of contrast, therecan be a persistent dearth of publishedevidence, particularly about new devicesthat have not had the opportunity toundergo extensive trials. To illustrate,whereas large-scale randomized clinicaltrial designs for new drugs often providebenchmarks of adequate rigor, suchresource-consuming efforts may oftennot be feasible in the context of medi-cal devices, such as laboratory tests.

Third, there are most often someinherent shortfalls in the ability of thepublished literature to demonstrate that diagnostic tests have “reasonableand necessary” clinical utility via theimprovement in measurable healthoutcomes. In contrast, median overallsurvival is a type of health outcome that might be used to assess a newchemotherapeutic agent, with resultingincreases in survival being used as thebenchmark for prescribing this drug.Although a new diagnostic test maystrengthen the ability to detect a parti-cular disease (i.e., test sensitivity), as

well as minimize the occurrence offalse-positive diagnoses (i.e., test speci-ficity), such studies of test performance(9) are not configured to determinewhether patients will ultimately haveimproved health outcomes. However,one might infer that improved diagnosiscan, in pertinent situations, lead to more timely and effective subsequenttreatment.

Thus, one can envision a triangle(Fig. 1) bounded by these three metrics.In a theoretical local policy milieu pur-ported to be in optimal balance or sym-metry, one might further suppose thatpolicy is developed in the context ofnearly equal regulatory, collaborative,and evaluative components. However,this is rarely or never the case, as infec-tious-disease molecular diagnostics will aptly demonstrate.

Molecular diagnostic laboratory test-ing, which includes nucleic acid-based(DNA/RNA) analysis, often providessensitive, specific, and timely (i.e.,relative to conventional, non-nucleicacid-based methods) identification ofdiverse biological entities, includingmicroorganisms (and tumors). Obtain-ing various types of molecular signa-tures is assuming a prominent role indiagnostic medicine.

Consequently, it is incumbent uponthe Medicare program to be able toadjudicate claims for such services in a manner commensurate with both theclinical and scientific state of the art.Various infectious-disease moleculardiagnostic assay platforms, such asnucleic acid amplification testing(NAAT), are relatively well delineatedby the current CPT coding structure.

Clinical Microbiology Newsletter 29:22,2007 © 2007 Elsevier 0196-4399/00 (see frontmatter) 171

Figure 1. General paradigm of local coverage elements

Evaluative

Regulatory Collaborative

172 0196-4399/00 (see frontmatter) © 2007 Elsevier Clinical Microbiology Newsletter 29:22,2007

The need to craft new local policiesfor molecular diagnostics was a resultof previous unmet needs in existingpolicies. The TrailBlazer non-coveredservices policy (10) is a broad compen-dium of procedural codes pertaining to diagnostic and therapeutic servicesthat have failed to satisfy the requisitedegree of medical necessity. For instance,NCD coverage exclusions provide onecomponent of this master list. Duringrelease of a revised LCD, as part of thefirst CAC cycle during calendar year2003, multiple commenters wrote thatmany molecular diagnostic codes spe-cific to selected bacteria, viruses, etc.should not have been included on thislist. The primary reason for the originalinclusion of such codes in this non-covered services policy was the lack ofclaims track records. As a result, it wasnecessary to focus upon the potentialuse of such codes in the future, sincesuch diagnostic techniques had beenrapidly gaining a foothold in routinepatient evaluation and management.

In fact, during the 90-day commentperiod, a considerable amount of lit-erature, letters of support, etc., werereceived from various stakeholders,including local pathology practices,national specialty and trade organiza-tions, diagnostic test manufacturers, and academic medical centers. Afterreviewing this material, in tandem withmedical director calls to some of thesestakeholders, it became abundantlyclear that the most prudent course ofaction would be the development of anew infectious disease molecular diag-nostic testing LCD (11) specificallycrafted to address these complexities.The current policy of treating suchcodes in “reverse fashion,” (i.e., simplycontinuing to delineate non-coverageonly) was deemed unsatisfactory. Thus,there was a reason for such new policydevelopment.

However, the necessary work hadjust begun, as there were a host of indi-vidual coverage decisions that neededto be made. According to the CPTmanual, which listed 23 separate micro-organisms, under the pertinent molecu-lar diagnostic codes, there was a need todetermine assay-specific coverage foreach microorganism. Twenty-two of the23 microorganisms have three repeatingprocedural codes, which correspond to the following: (i) direct probe tech-

nique, where the nucleic acid signatureof a suspected microorganism can bedetected in a relatively straightforwardmanner; (ii) amplified probe technique(NAAT), where the nucleic acid contentneeds to be replicated (or amplified) sothat a sufficiently powerful signal canbe generated to detect the microorgan-ism; and (iii) quantitative technique, inwhich numeric data on the nucleic acidcontent are measured (for example,monitoring “viral load” response inpatients undergoing treatment forhuman immunodeficiency virus [HIV]infection).

Given that CPT, as well as ICD-9-CM limited coverage, was specified inthe laboratory NCD for both HIV-1 andHIV-2, this left approximately 60 diag-nostic categories where individual localcoverage determinations would be nec-essary. Given the above limitationsregarding TrailBlazer staff resources, intandem with the lack of outcome-basedstudies on the use of such emergingtechnologies, an appropriate pathway of stakeholder collaboration was under-taken with some degree of evaluation,as well. In addition to reviewing perti-nent practice guidelines where availableand some relevant diagnostic test perfor-mance (i.e., sensitivity and specificity)studies, considerable focus was placedupon consultations with expert mem-bers of the laboratory community, mostnotably the Association for MolecularPathology and the American Society for Microbiology. Furthermore, thispartnership enabled a working list ofapplicable ICD-9-CM codes to be devel-

oped, which corresponded to those clin-ical presentations associated with notonly the current CPT-specified micro-organisms, but also those yet unlistedmicroorganisms (e.g., polyomavirus-JC/BK virus) that might otherwise haverequired claim submissions using not-otherwise-classified codes.

It is essential to once again empha-size the dynamic nature of the LCDprocess by using this illustrative policy.A basic underlying assumption is that as new specific molecular assay-micro-organism pairings cross over into therealm of medical necessity, the medicalpolicy team is able to convert such newinformation into timely upgrades of the policy, and this has periodicallyoccurred since the initial publication of this LCD.

Finally, Fig. 2 illustrates how thedevelopment of this particular LCDfalls closer to the collaborative bound-ary of the paradigm triangle, since themajority of local coverage was drivenby the presence of reasonable clinicaland laboratory practice. Furthermore,the absence of more systematic, rigor-ous review of the literature and/or spe-cific mandates from CMS regardingthese assay platforms minimized therelative roles of the evaluative andregulatory components.

DisclaimerAny opinions expressed above are

those of the author and do not neces-sarily reflect the views of TrailBlazerHealth Enterprises, LLC, or BlueCrossBlueShield of South Carolina. Further,

Figure 2. General paradigm with molecular diagnostics example

Evaluative

Regulatory

X Infectious disease molecular diagnostics

Collaborative

Clinical Microbiology Newsletter 29:22,2007 © 2007 Elsevier 0196-4399/00 (see frontmatter) 173

any statements made concerning anidentifiable product are those of theauthor and are not intended to be con-strued as either a favorable or an unfa-vorable recommendation of the productby TrailBlazer Health Enterprises, LLC,or Blue Cross Blue Shield of SouthCarolina.

References1. 42 U.S.C. §1395y(a)(1)(A) (2000); see

also Centers for Medicare & MedicaidServices, U.S. Department of Healthand Human Services. Pub. No. 100-2,Medicare Benefit Policy Manual, ch.16, §20. http://www.cms.hhs.gov/manuals/102_ policy/bp102c16.pdf.

2. 68 Fed. Reg. 55,634 (2003).

3. Centers for Medicare & Medicaid

Services, U.S. Department of Healthand Human Services. Pub. No. 100-4,Medicare Claims Processing Manual,ch. 16, §120. http://www.cms.hhs.gov/manuals/ 104_claims/clm104c16.pdf.

4. Centers for Medicare & MedicaidServices, U.S. Department of Healthand Human Services. Pub. No. 100-8,Medicare Program Integrity Manual, ch.13, §13.8.1. http://www.cms.hhs.gov/manuals/108_pim/pim83c13.pdf.

5. Medicare, Medicaid, and SCHIPBenefits Improvement and ProtectionAct of 2000. Pub. L. No. 106-554, §522, 114 Stat. 2763 (hereinafter“BIPA”), §522 (2000).

6. Centers for Medicare & MedicaidServices, U.S. Department of Healthand Human Services, Pub. No. 100-8,Medicare Program Integrity Manual, ch.

13, §13.1.3. http://www.cms.hhs.gov/manuals/108_pim/pim83c13.pdf.

7. Practice Management InformationCorporation. 2004. InternationalClassification of Diseases, 9th revision.Clinical Modification, 6th ed.

8. American Medical Association. 2004.Current procedural terminology.American Medical Association,Washington, DC.

9. Sox, H.C. et al. (ed.). 1988. Medicaldecision making. Butterworth-Heinemann, Stoneham, MA.

10. Non-covered services local coveragedetermination. http://www.trailblazer-health. com.

11. Infectious disease molecular diagnostictesting local coverage determination.http://www.trailblazerhealth.com.