Medical Necessity: Why All the Denials?

Make sense of guidelines and be sure provider services are necessary.

By Jacqueline Baer, RN, MSN, CPC-H

Is your provider or facility receiving multiple denials for claims that, according to the remittance advice from the payer, fail to show medical necessity? A clear understanding of Medicare guidelines, and what is required to show medical necessity, will help you make sense of the situation and ensure proper claims payment for your office.

Medical necessity is defined by the Centers for Medicare & Medicaid Services (CMS) under the Social Security Act, sec. 1862 [42 U.S.C 1395y]:

(a) Not withstanding any other provision of this title, no payment may be made under part A or part B for any expenses incurred for items or services which, except for items and services described in a succeeding subparagraph, are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.

What does that mean in plain English? Basically, CMS wants proof of why the patient required the service(s) to retain or regain his or her health.

For example, John Doe comes in to the hospital for a chest X-ray ordered by his physician with nothing but a requisition with a diagnosis of chronic obstructive pulmonary disease (COPD). As the facility providing the X-ray, the hospital is responsible for proving medical necessity. This case will be denied, however, because the diagnosis alone won’t satisfy medical necessity requirements. CMS wants to know why the test is being performed, and what evidence exists to back it up.

“Suspected” Must Be Documented, but Not Coded

For years, CMS has said that in the outpatient setting you cannot use the terms: “probable,” “likely,” “rule out,” or “suspected.” Now, CMS wants you to document the diagnosis AND what the provider thinks is “probable,” “likely,” “rule out,” or “suspected,” along with the key clinical indicators. This does not mean you should code “probable,” “likely,” “rule out,” or “suspected” conditions. This information should be documented only to support medical necessity.

To adjust the preceding example to support medical necessity, the physician could have written on the requisition: “DX: COPD; suspect exacerbation, wheezes bilaterally in all lung fields.” The “suspect exacerbation” explains why the X-ray is medically necessary; and “wheezes bilaterally in all lung fields” explains what has led the provider to this conclusion. Do not code the exacerbation, however, unless it is confirmed by a subsequent service.

Solutions to Ensure Documented Medical Necessity

Getting claims paid requires teamwork. Physicians, coders, and billers must work together to ensure all the elements necessary for proper claims payment are in place. You might, for example:

  • Become familiar with your CMS contractor or fiscal intermediary (FI). Take advantage of all they offer on their websites, and sign up for automated email alerts for updates. Medicare builds guidelines into local coverage determinations (LCDs) and national coverage determinations (NCDs), which you can access on the Medicare Coverage Center website (www.cms.gov/center/coverage.asp). Your area’s FI also has guidelines. Noridian, Highmark, and Trailblazer also have great websites where you can search for documentation requirements.
  • Review all CMS widespread notifications. Don’t just sign up for Part B because your provider or facility is an outpatient facility or physician office. Often, Medicare Part A notifications will apply to Part B.
  • Make sure your coding books are up to date.
  • Use resources provided to you as a member of your professional organizations, such as AAPC.
  • Sit down with your provider and talk about denials. Research and have the facts ready. For instance, if you are getting denials on hemoglobin A1C testing, look at the Medicare Benefits Policy Manual, the medically unlikely edits tables, and any related LCDs and NCD to make sure you are familiar with how many tests are allowed.
  • Conduct internal audits to be sure documentation supports treatment and testing.

Medical Necessity is an Issue for All Payers, POS

To save money and make sure providers are compliant, major insurance companies have hired auditors to scrutinize claims. Recovery Audit Contractors (RACs) post medical necessity issues on their websites. To survive, providers and facilities will have to document medical necessity in every aspect of the treatment and testing of patients. This includes diagnostic tests, labs, procedures, and inpatient admissions.

Why inpatient admissions? Medical necessity has to be proven to admit a patient to the hospital. The following is an example of an IP admission lacking medical necessity:

John Doe goes to the emergency room (ER) for chest pain. He has had this pain for two days intermittently. The chest pain radiates to the patients left arm. All vital signs are within normal limits. Cardiac enzymes are ordered and the first set comes back normal. In the ER the physician orders a chest X-ray on his patient—even though the patient recently had a chest X-ray. The physician does not document what he thinks is probable, likely, ruling out, or suspected. The patient has no clinical indicators for pulmonary issues. The physician decides to admit the patient to IP to do further testing as nothing is relieving the patient’s chest pain. The patient is admitted with a diagnosis of chest pain, rule out myocardial infarction (MI). A hospitalist is assigned to follow the patient in the hospital. The patient is receiving all medications by mouth. Electrocardiograms (EKGs) come back with normal sinus rhythm and no ST elevations. The rest of the patient’s cardiac enzymes are within normal limits and the patient’s symptoms dissipate. The patient is discharged home the next morning with a diagnosis of atypical chest pain.

In this example, a chest X-ray was done in the ER with no proven medical necessity (the patient had recently had a chest X-ray). The second issue is that the patient was admitted as an IP to the hospital, but should have been referred to observation. CMS states in Transmittal 107, Change Request (CR) 6492, “Observation services are commonly ordered for patients who present to the emergency department and who then require a significant period of treatment or monitoring in order to make a decision concerning their admission or discharge.” This care usually is provided in less than 24 hours, and no more than 48 hours.

The following example shows proper patient placement:

John Doe goes to the ER for chest pain. John Doe has had this pain for two days intermittently. The chest pain radiates to the patients left arm. All vital signs are within normal limits. Cardiac enzymes are ordered and the first set comes back normal. In the ER, the physician reviews a chest X-ray on his patient that he recently had done. He documents that he is ruling out mediastinal widening due to patient’s history of hypertension. The physician decides to do further testing because nothing is relieving the patient’s chest pain. The patient is referred to observation with a diagnosis of chest pain, rule out MI. A hospitalist is assigned to follow the patient in the hospital. The patient is receiving all medications by mouth. He is treated with nitro and an aspirin, in addition to his regular blood pressure medication of Lisinopril and diuretics. EKGs come back with normal sinus rhythm and no ST elevations. The rest of the patient’s cardiac enzymes are within normal limits and the patient’s symptoms dissipate. The patient is discharged home the next morning with a diagnosis of atypical chest pain.

As always, education is the key to proper claims payment. Learning how to document medical necessity is just one more class in the grand scheme of things. The resources for learning this essential information are out there; it’s up to you to put them to good use.

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Jacqueline K. Baer, RN, MSN, CPC-H, is a corporate compliance auditor/coordinator for Yuma Regional Medical Center in Yuma, Ariz. She has more than 15 years of clinical experience, with over six years in clinical documentation and coding. She serves as the education officer for the AAPC Flagstaff, Ariz. Local Chapter.

 

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One Response to “Medical Necessity: Why All the Denials?”

  1. Eugenia Randler says:

    The example for proper medical necessary documentation is helpful. It is unfortunate we are not able to code for rule outs during the initial coding phase – this information is shared after a denial hits.

    Thank you.

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