These instructions describe the application of the reasonable and necessary payment exclusion to diagnostic procedures, such as chest x-rays, urinalysis, etc. provided to patients upon admission to a hospital or skilled nursing facility.

The major factors which support a determination that a diagnostic procedure performed as part of the admitting procedure to a hospital or skilled nursing facility is reasonable and necessary, are:

1. The test is specifically ordered by the admitting physician (or a hospital or skilled nursing facility staff physician having responsibility for the patient where there is no admitting physician): i.e., it is not furnished under the standing orders of a physician for his patients;
2. The test is medically necessary for the diagnosis or treatment of the individual patient’s condition; and
3. The test does not unnecessarily duplicate the same test performed on an outpatient basis prior to admission or performed in connection with a recent hospital or skilled nursing facility admission.

Where the Medicare Administrative Contractor has not already done so, consult with the Quality Improvement Organizations (QIOs) to obtain information gathered by the QIOs on a sample basis as to whether x-rays and diagnostic tests are being specifically ordered as described under subsection (A).