Medicare Policies

Medicare Billing Policies Consist of NCD and LCD Guidelines

National Coverage Determination (NCD)

An NCD sets forth the extent to which Medicare will cover specific services, procedures, or technologies on a national basis. Medicare contractors are required to follow NCDs. If an NCD does not specifically exclude/limit an indication or circumstance, or if the item or service is not mentioned at all in an NCD or in a Medicare manual, it is up to the Medicare contractor to make the coverage decision (see LMRP). Prior to an NCD taking effect, CMS must first issue a Manual Transmittal, CMS ruling, or Federal Register Notice giving specific directions to our claims-processing contractors. That issuance, which includes an effective date and implementation date, is the NCD. If appropriate, the Agency must also change billing and claims processing systems and issue related instructions to allow for payment. The NCD will be published in the Medicare National Coverage Determinations Manual. An NCD becomes effective as of the date listed in the transmittal that announces the manual revision.

Local Coverage Determination (LCD)

An LCD, as established by Section 522 of the Benefits Improvement and Protection Act, is a decision by a fiscal intermediary or carrier whether to cover a particular service on an intermediary-wide or carrier-wide basis in accordance with Section 1862(a)(1)(A) of the Social Security Act (i.e., a determination as to whether the service is reasonable and necessary). The difference between LMRPs and LCDs is that LCDs consist only of "reasonable and necessary" information, while LMRPs may also contain category or statutory provisions.

The final rule establishing LCDs was published November 11, 2003. Effective December 7, 2003, CMS's contractors will begin issuing LCDs instead of LMRPs. Over the next 2 years (until December 31, 2005) contractors will convert all existing LMRPs into LCDs and articles. Until the conversion is complete, for purposes of a 522 challenge, the term LCD will refer to both 1.) Reasonable and necessary provisions of an LMRP and, 2.) an LCD that contains only reasonable and necessary language. Any non-reasonable and necessary language a contractor wishes to communicate to providers must be done through an article.

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