Pediatric Coding Alert

But be prepared for provider-payer disagreements.

Medical necessity is one of those terms that everyone thinks they know, but no one can really define. That can create plenty of problems for coding, as differences in understanding can put your pediatrician at odds with your payers.

Even so, it’s important that you know what the concept means, how it informs the decisions your pediatrician makes for diagnosing and treating a patient, and how you should go about documenting those decisions.

What Is Medical Necessity?

Definitions of the term are, unsurprisingly, varied and vague. However, there is some consensus among various medical institutions, according to Kim Huey, MJ, CPC, CPCO, COC, CHC, CCS-P, PCS, president, KGG Coding and Reimbursement Consulting and Sandy Giangreco Brown, BS, RHIT, CHC, CCS, CCS-P, CPC, CPC-1, COBGC, COC, PCS, director of coding and revenue integrity at CLA in their HEALTHCON 2021 presentation “Medical Necessity: Defining and Documenting to Support Billing.” To meet the criteria of medical necessity, services should be:

• In accordance with “accepted standards of medical practice” (AMA);
• “Reasonable and necessary for the diagnosis or treatment of illness or injury” (Medicare);
• “Neither more nor less than what the patient requires at a specific point in time” (American College of Medical Quality); and
• Not for the economic benefit of the health plan, purchaser, provider, or even the patient (AMA).

How Does Medical Necessity Impact E/M Coding?

The Centers for Medicare & Medicaid Services (CMS) has always maintained that medical necessity is the fundamental basis of payment, which partly explains the recent changes to the office/outpatient evaluation and management (E/M) services. “As of January 1, 2021, CMS removed the bullet-counting system for history, exam, and medical decision making [MDM] to a medical necessity-based system,” said Kathy Rowland, BSN, RN, CPC, CEMC, CHC, CPC-I, a healthcare compliance consultant in Franklin, Tennessee, during her HEALTHCON 2021 presentation “Ready, Aim, Fire: Understanding the Strategy of Medical Necessity.”

Even so, some things have not changed with the 2021 office/outpatient E/M revisions, and the medical necessity of an E/M service is still expressed by the “frequency of services and the intensity, or CPT^® level, of services,” Huey and Brown explained. More, the new wording of the descriptors for 99202-99215 (Office or other outpatient visit for the evaluation and management of a new/established patient which requires a medically appropriate history and/or examination and … medical decision making…) serves as a reminder that the history and exam portions of the service, while they are no longer used in determining the service level, should remain “medically appropriate” in all encounters.

These changes may have actually created some confusion, in that medical decision making (MDM) and medical necessity are sometimes seen as interchangeable terms. However, it is important to remember that “MDM is the complexity involved in providing services, including the complexity of the presenting problem(s), management options, and overall risk to the patient. Medical necessity demonstrates why the provider performed the services,” Rowland clarified.

How Does Medical Necessity Affect Procedure and Dx Coding?

“Medical necessity denials have always been on our radar. They were tied to ICD-10 codes, though medical necessity of services has now risen to the top as a focus for reimbursement,” Rowland explained. Part of the reason for that lies in the fact that the diagnosis codes themselves may not be specific enough or do not convey enough information for treatment modalities, Huey and Brown elaborated.

For example, a patient presents with a sore throat and headache. During the exam, the provider finds the patient is having some issues with their ears, so the provider orders tympanometry to rule out hearing loss, even though the patient has no complaint of hearing loss and has never failed a hearing test.