The way medical necessity is currently being reviewed and judged is cause for concern.
We’re sure many of you are looking at the phrase “medical necessity” in the headline and asking yourself several questions. Don’t I already know what medical necessity is? Who would dare question the medical necessity of the services I provide for my patients? Why a discussion on medical necessity now? Is this “medical necessity” something new?
Unfortunately, the payers have changed the game again. And while the topic is not new, the way medical necessity is currently being reviewed and judged is cause for concern.
Ten years ago, no one would have questioned the medical necessity of services you provided your patients unless you were really practicing bad medicine. Sure, we have always gotten “medical necessity” denials on our explanation of benefit statements (the communication you get back from a payer indicating what you were paid or why you were not paid), but these were merely services you provided in which the diagnosis you appended to the service did not meet the requirements of the payer.
In other words, the ICD-9 diagnosis reported was not included in the list of diagnoses programmed in the computer. No one was questioning the medical necessity of the service provided.
Expect increasing scrutiny
Times have changed. The definition of medical necessity has not changed, but Medicare and other payers are questioning the medical necessity of the diagnostic tests and treatments that you are providing your patients. We can expect this to increase. In fact, the Office of the Inspector General has medical necessity in its work plan, and the Centers for Medicare & Medicaid Services has sanctioned recovery audit contractors (RACs) to look at medical necessity.
We think that it is reasonable to expect the federal government, followed by private payers, to rapidly move from no action related to medical necessity to an overreaction. For example, take a look at this RAC letter written to a provider in 2011:
“Right away, it is evident the condition of the patient (in terms of medical necessity) does not warrant an E/M service at the 99204 level. CPT code 99204 describes problems usually of moderate to high severity. Moderate to high severity is defined by CPT as problems for which the risk of morbidity (between this encounter and the next one) without treatment is moderate to high; there is a moderate to high risk of mortality without treatment (the treatment proffered at this time) or a moderate to high probability of severe, prolonged functional impairment (between this encounter and the next one).
“The patient in this case above has a little or no likelihood of mortality or prolonged functional impairment due to conditions described and the patient’s planned management. CPT code 99202 or possibly 99201 seems to adequately describe this patient’s condition. CPT code 99202 describes patients with problems that are low-to-moderate severity. CPT code 99201 describes patients with self-limiting or minor problems.”
We don’t have the documentation nor the details of the patient’s problem, but it is obvious from the RAC letter that there is a major disconnect between the CPT definition of medical necessity as interpreted by the RAC and the documentation guidelines sanctioned by Medicare.
How is medical necessity defined? How do you apply it, and more important, how do we function within the interpretation as determined by the payers?
Policy H-320.953 AMA Policy Compendium defines medical necessity as:
“Health care services or products that a prudent physician would provide to a patient for the purpose of preventing, diagnosing, or treating an illness, injury, disease or its symptoms in a manner that is:
And probably even more important, the Medicare Program Integrity Manual states that no Medicare payment shall be made for expenses incurred for items or services that “are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.”
And the Medicare Claims Processing Manual provides the following instruction:
“Medical necessity of a service is the overarching criterion for payment in addition to the individual requirements of a CPT code. It would not be medically necessary or appropriate to bill a higher level of evaluation and management service when a lower level of service is warranted. The volume of documentation should not be the primary influence upon which a specific level of service is billed. Documentation should support the level of service reported. The service should be documented during, or as soon as practicable after it is provided in order to maintain an accurate medical record.”
The big question is, how should you react to this change in payment process? First and foremost, you should be sure that all diagnostic tests and treatments ordered or provided are medically necessary, for that patient, that day. We would all agree that that’s just good patient care.
Applying medical necessity to coding
Here’s the hard part: Should we apply the medical necessity overlay to our documentation and coding?
For E&M services, you should document completely all services provided as well as issues discussed or considered in your thought process in dealing with the patient’s problems. Coding and billing should be based on “medical necessity.”
There are three things that you should consider in determining medical necessity. First, the level of medical decision making as defined by the documentation guidelines should be determined. Second, the definition of severity of the illness/problem as defined by CPT under each E&M code should be considered. Severity of illness/problem is more subjective and as such much tougher to determine. Severity is “suggested” in the diagnosis part of the risk table in the documentation guidelines; however, the severity level is not specifically referenced within the table. Comorbidities and other presenting problems that impact the treatment course or urgency of treatment should also be considered as contributory in regard to severity. At this time, we have very little hard guidance with regard to severity. This is the area that we should pay closer attention to than we have in the past. Third, there is “standard of care” or “what level of care would your colleagues provide for the same problem.” We would never suggest you code to a curve; however, you will need to make sure that care you provide is appropriate and considered appropriate by a majority of your colleagues.
Modify EHR use
Until matters are more clearly defined, we would suggest that you analyze what you are doing. Our analysis of many records indicates that many services are under documented. However, our analysis also has shown a misunderstanding of electronic health records and how they encourage over-documentation or inaccurate documentation of service provided. Many of you should look strongly at modifying the way you use your EHR. You should not copy the previous encounter; all encounter documentations should have a unique history of present illness to that visit, documentation for all services provided that day, and the diagnosis applied for issues dealt with during that encounter. In the eyes of the payer, each encounter must be judged on its own.
We are still being judged by the documentation guidelines. Therefore, you still have to be sure that your history and physical meet the criteria for the level determined by “medical decision making.” However, it should also be clear that the reason for the services provided that day contribute to the treatment of the patient for that visit.
For diagnostic tests, you should document the order for the tests and include specific reasons for ordering that test, that day, for that patient, and be sure you document the results and how they impact your decision making on the day they are interpreted.
Post-void residual and urinalysis are common tests and are viewed by many payers as over-utilized. Most payers do not pay for routine screening tests and are searching for a clear and medically connected reason for these tests.
These tests as well as others should be ordered specifically for that patient on that visit, either on the day of the visit or at the time the patient is scheduled for the visit if you know you want the tests to monitor the patient’s progress. After the results are read, you should specifically state the residual, results of the UA, and how they impact your decision on treatment.
The bottom line is that you should apply common sense and good medical practice to good patient care. In the end, medical necessity is determined by physicians and judged by standards of care. If you are practicing good medicine with accurate and complete documentation, you will have the support you need to challenge medical necessity denials, and you’ll have a healthy code mix.UT