A Radiologist’s Boundaries

Who is responsible for determining medical necessity: radiologists or referring providers?

RADLAWJune

Medicare and many other payers require that services rendered to beneficiaries must be “reasonable and necessary”1 in order for a physician to be paid for them. Thus, despite what many radiologists believe, medical necessity must be a key part of their professional judgment. Will an imaging study or the procedure that a patient undergoes help the physician diagnose or treat illness or injury?

This issue also influences whether a judge or jury may find a member and her or his practice liable for negligence. For instance, a patient may allege that a radiologist or radiation oncologist performed a study or delivered treatment that caused harm by exposing the patient to excessive radiation. Did the radiologist meet the applicable standard of care if she or he failed to determine that the study would benefit the patient? Not establishing medical necessity may constitute a breach of the radiologist’s duty to the patient and result in liability. But what is your responsibility for confirming a study or procedure is medically necessary?

A recent state court ruling emphasizes that medical necessity matters to you and your practice. A New Jersey trial court refused to dismiss a payer’s lawsuit against a radiologist for not determining the medical necessity of MRI and x-ray studies on patients who claimed personal injuries.2 The insurer, Allstate Insurance, sought to recoup almost $200,000 from the radiologist and imaging center.

Allstate asserted that the radiologist served as the center’s medical director and was obligated to follow New Jersey regulations that governed diagnostic tests. Those regulations required practitioners to implement a procedure to “assure that sufficient clinical data has been provided to justify” a requested study.3 The radiologist testified in court that he did not examine patients referred to his facility by chiropractors “to verify the necessity and appropriateness of the diagnostic test administered.”4 He acknowledged that he did not review a patient’s file “to determine necessity.” Facility technologists testified that the center did not screen patients for medical necessity but only checked whether patients had any contraindications for MRI studies, such as metal in their bodies.5 Another center representative confirmed that the center’s physicians did not examine patients or reviewed their files before they had MRI studies.

However, the radiologist and center argued that a chiropractor who refers patients for tests and otherwise meets state regulations satisfies the “verification” standard. They noted that the radiologist would have violated his own medical licensure rules had he rejected a chiropractic referral.6 Additionally, defendants maintained that prior case law placed legal burden on a referring chiropractor to advise a radiologist of any prior testing. If the referral does not indicate any such studies, no relevant studies exist.7 Yet Allstate countered that New Jersey’s regulations and case law do not mandate that a radiologist accept a referral without question. It also cited state medical board commentary that a physician must implement a process to ensure that “sufficient clinical data has been provided to justify the test provided.”

The court dismissed the lawsuit against the imaging center because it found state facility regulations about verifying tests to be impermissibly vague.8 However, it ruled against the radiologist. It found that he failed to follow applicable licensure regulations to verify a diagnostic test’s necessity and appropriateness.9 The court rejected the radiologist’s position that he could not question a chiropractor’s referral or risk a medical board inquiry. Instead, the court distinguished prior case law, finding that it did not “relieve the practitioner of his/her duty to verify … referrals.” The defendants and the Radiological Society of New Jersey planned to seek a stay of the decision and request reconsideration.

They believe that the judge misapplied the regulations to impose a duty that should belong upstream to a referring practitioner such as a chiropractor.10 At press time, the judge had denied an expedited request to reconsider his decision. The radiologist very likely will appeal that ruling.

Many radiologists believe that they simply cannot make an independent evaluation of medical necessity because insufficient information is provided with a referral. Alternatively, some radiologists feel that they should be able to rely on the judgment of the referring provider. As electronic medical records make greater inroads, the first argument may be less and less persuasive, while the second argument awaits judicial or legislative/regulatory acceptance. Not all states or payers currently take the same position as New Jersey and Allstate. But it is now likely that Allstate and other payers or fiscal intermediaries will push this issue nationwide in the never-ending drive to avoid or reduce payment for imaging services.

Members should stay alert for these efforts in their own states. How far must you extend your boundaries to determine medical necessity? You have to place reasonable markers. Be prepared to respond to payer and law-enforcement inquiries about necessity. Work with your staff to ensure that you have sufficient clinical information before performing a study or procedure. Although reaching a referring physician is difficult at best, you must persist. Review all medical records carefully and document claims before submitting them.


By Bill Shields, JD, LM, CAE, and Tom Hoffman, JD, CAE


Endnotes
1. 42 Code of Federal Regulations sections 410.32(a); 411.15(k)(1).
2. Allstate Insurance Co. of New Jersey, Et Al. v. Lajara, Et Al.; Superior Ct. of New Jersey (Union Cty.); Dec. 8, 2015.
3. Allstate Insurance Co. of New Jersey, Et Al. v. Lajara, Et Al.; Superior Ct. of New Jersey (Union Cty.); Dec. 8, 2015.
4. Allstate Insurance Co. of New Jersey, Et Al. v. Lajara, Et Al.; Superior Ct. of New Jersey (Union Cty.); Dec. 8, 2015 at 2.
5. Allstate Insurance Co. of New Jersey, Et Al. v. Lajara, Et Al.; Superior Ct. of New Jersey (Union Cty.); Dec. 8, 2015.
6. Allstate Insurance Co. of New Jersey, Et Al. v. Lajara, Et Al.; Superior Ct. of New Jersey (Union Cty.); Dec. 8, 2015, at 5.
7. Allstate Insurance Co. of New Jersey, Et Al. v. Lajara, Et Al.; Superior Ct. of New Jersey (Union Cty.); Dec. 8, 2015, at 7.
8. Allstate Insurance Co. of New Jersey, Et Al. v. Lajara, Et Al.; Superior Ct. of New Jersey (Union Cty.); Dec. 8, 2015 at 11.
9. Allstate Insurance Co. of New Jersey, Et Al. v. Lajara, Et Al.; Superior Ct. of New Jersey (Union Cty.); Dec. 8, 2015, at 12.
10. Personal communication with counsel for radiologist and Radiological Society of New Jersey, December 16, 2015.

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