Medical Necessity: A Radiologist’s Boundaries

The post was contributed by Gregory Nicola, MD.

Nicola_GACR members have expressed significant interest in a pending New Jersey legal case about medical necessity.  In December 2015, a state court judge allowed Allstate to pursue a lawsuit against a radiologist and an imaging center for failing to determine the medical necessity of MRI and x-ray studies referred by chiropractors on patients who claimed personal injuries.

In its rulings, the court cited New Jersey Board of Medical Examiners regulations stating:

Any practitioner, in any location, …., accepting a referral for the performance of a diagnostic test, …. shall:

 3) Institute a procedure to assure that sufficient clinical data has been provided to justify the requested test; …

6) Verify the indications for and appropriateness of diagnostic testing, if the referral has been made by a practitioner with a limited license to a plenary licensee;

This case involved unfavorable facts that may have caused the judge to rule for the insurer.  For example, the center’s technologists testified that the center did not screen patients referred by chiropractors for medical necessity but only checked whether those patients had contraindications for MRI studies (e.g., metal implants).  Additionally, the radiologist testified that he did not examine patients to assess the medical necessity of studies that chiropractors referred. (Note: Chiropractors are limited license practitioners under the relevant regulations.)

The case is only at the lowest trial level and is not binding unless and until it is upheld by an appeals court. For now, however, New Jersey members should consider documenting the medical necessity of any referral they receive for an imaging study.

How far must you go to determine medical necessity? You should act reasonably. Be prepared to respond to payer and law-enforcement inquiries about necessity. Work with your staff to ensure that you have acquired sufficient clinical information before performing a study or procedure. Although reaching a referring physician can be difficult at best, you must persist and document your efforts. Review all medical records carefully and document claims before submitting them.  Given the regulatory language about verifying the indications for, and appropriateness, of diagnostic testing, use of a computerized decision support system might help meet this requirement.  ACR is monitoring this case closely because payers in other states may assert this position nationally to avoid or reduce payment for imaging services.

For more information, please read the RADLAW article in the June Bulletin.