Category Archives: Medical Necessity

Providers Dodge a Bullet: Reimbursement Might Have Been Tied to Hospital Medical Necessity Denials

Doctors, nurse practitioners, nursing homes, lab, ambulance, and home health providers dodged a major bullet.

While it’s still freezing cold on the East Coast, CMS released Transmittal 505, Change Request 8425 on a very hot topic – extending record requests for medical necessity audits of admissions. The subject of the CR “Removing Prohibition” means (according to CMS) “allow(ing) the contractors to make a decision or take action on claims that are not currently being under review.”

But on March 19, 2014 CMS rescinded the transmittal citing “the need to clarify CMS’s policy” regarding removing prohibition. They also said the policy will not be replaced at this time. Let this be a warning: CMS came very close to denying collateral provider claims for medically unnecessary admissions. This is something they are obviously serious about. Continue reading

Improve Medical Necessity Compliance in 2014

Welcome to 2014; did you make any resolutions? I did and I hope to have the dedication to reach the goals I’ve set for myself this year. Speaking of goals, I wrote about changes to compliance efforts in my final post of 2013. In this post, I would like to share a few thoughts on how to reach improved compliance in 2014.

Sell compliance upstairs: I know – I know, but support is essential. Remind the C-Suite or practice owner that due to sophisticated data more is known about what the organization/practice does and does not do. Information increases visibility and the likelihood of notice. Gaining support from leadership is an essential ingredient in accessing resources needed for improved outcomes. Providing examples of real monetary losses suffered by other providers can help support the need for action.

Don’t rely on “we’ve always done it that way before so it must be good enough” thinking: Continue reading

Medical Necessity: 2013 Year-in-Review

Can you believe it? We are saying farewell to another year. And a busy one it’s been from the medical necessity coding and compliance perspective.

The Feds were engaged in 2013 – at least three cardiologists were sentenced to jail time for issues such as placing stents in patients who did not meet criteria even though the physicians believed they were necessary. I recall that in once case the physician misrepresented the diagnosis in the record in order to meet medical necessity criteria. Continue reading

Understanding Medical Necessity Data vs. Software Tools

I was asked recently if the medical necessity data files that 3M calls ‘medical necessity dictionaries’ are the same as products that have medical necessity checking capabilities. It’s really a great question and if you are not in the software or data creation business it certainly can be confusing.

The medical necessity dictionaries are data files that 3M creates to mirror the CMS National Coverage Determinations (NCD) policies. Data is also created to represent Local Coverage Determination (LCD) policies created by the MAC (Medicare Administrative Contractors) vendors. The data files are content used in vendor, payer and hospital software systems. Continue reading

OIG: Medical Necessity – It’s All About Statistics

I don’t like math; numbers are not my friends. And statistics? Let’s not even go there – but Office of Inspector General (OIG) is already barreling down that road leaving hospital administrators shaking their heads.

Consider: In October, OIG fined the University of Miami Hospital $3.7+ million for extrapolated (assumed) medically unnecessary short stay admissions. To determine the fine, OIG used data mining techniques coupled with ‘statistical sampling ‘methodology. They then extrapolated to determine a total likely error rate. It works something like this: If Hospital A has X number of errors identified on Y number of claims, then Z likely represents the total number of medical necessity errors in their entire universe of short stay claims for a given date range. Using statistics, OIG determined a number of claims they believe were likely to have contained errors. This technique – according to OIG – is not new: Continue reading

Feds Focus on Physicians and Medical Necessity

For years, it seemed the Feds focused primarily on hospitals when looking at medical necessity issues. Even if an admission was determined to be a medically inappropriate site of service, the hospital got dinged, and the admitting physician got a pass. Hospital compliance officers have bemoaned this for years, not because they wanted to see the physician sanctioned, but because they felt alone on the medical necessity iceberg. The docs didn’t seem to mind since it did not impact their bottom line. Boy, are things changing: I was reading recently in Report on Medicare Compliance of the third cardiologist to be sentenced to jail time for inserting a stent in a patient whose blockage was less than the required 70 percent to support performance of the procedure. Even though the physician believed the stent placement was appropriate in this individual, he was convicted of misrepresenting the diagnosis in the record in order to support medical necessity.

To make this scenario even worse, only one patient’s stent procedure was misrepresented in the medical record, but the hospital had to refund all cases of stents placed by this physician for the past two years. Medicaid paid $6.088.45 for the one case that was found to be inappropriate, but the hospital had to repay the Feds $256,800! Continue reading

A New Team: Utilization Review and Coding for Medical Necessity?

On March 21, I told you about the new regulation from CMS – 1455R, which is an exciting opportunity for hospitals to recoup some dollars otherwise lost on denied inpatient stays.  Specifically, CMS says,

The hospital may submit a Part B inpatient claim for payment for the Part B services to the extent the services furnished were reasonable and necessary,  that would have been payable to the hospital had the beneficiary originally been treated as an outpatient rather than admitted as an inpatient, except when those services specifically require an outpatient status.

The hospital could re-code the reasonable and necessary services that were furnished as Part B services, and bill them on a Part B inpatient claim. This proposed policy would only apply to denials of claims for inpatient admissions that are not reasonable and necessary, and would not apply to any other circumstances in which there is no payment under Part A, such as when a beneficiary exhausts Part A benefits for hospital services or is not entitled to Part A. Continue reading

Medical Necessity is Not the Enemy

I’ve been reading various “Top Stories of 2012 in Healthcare” articles; this past year has really been a wild ride. The more I reread all the changes, the more I think of the great, reliable constant—medical necessity. It’s the cornerstone of the third-party reimbursement system, yet it remains a challenge that both providers and payers continue to struggle with. Believe it or not, CMS is greatly concerned with writing clear, accurately coded policies, and I’m sure other payers are as well.  I know: some of you are thinking, ‘’Ugh, I hate medical necessity.” So let’s take a closer look. According to CMS, “A service may be covered by a Medicare Contractor if it meets all of the following conditions:

  • It is one of the benefit categories described in Title XVIII of the Social Security Act
  • It is not excluded by Title XVIII of the Social Security Act other than 1862 (a) (1); and
  • It is reasonable and necessary under section 1862 (a) (1) of the Social Security Act. Continue reading

CMS: Moving Forward on Medically Questionable Admissions

It appears CMS is mounting a two pronged crusade against medically inappropriate admissions. On August 3, 2012 the agency announced the beginning of the prepayment reviews for hospitals in troubled states. Those with higher rates of improper claims payments include California, Florida, Illinois, Louisiana, Michigan, New York, and Texas. They are also targeting four states with historically high claim volumes of short stays including Missouri, North Carolina, Ohio, and Pennsylvania.  The go-live date for this initiative is August 27, 2012.

The second prong was discussed on the July 18 open-door forum call-in regarding the latest in OPPS rulings. CMS is not so much questioning the medical necessity of care provided as they are the appropriateness of the site- of- service. They are aware that determining inpatient versus observation status is challenging, especially for those hospitals that do not have 24/7 case managers or utilization review access. And Condition Code 44 with its accompanying compliance requirements has never been user friendly. CMS is looking to the industry for suggestions on how to simplify compliance, reduce extended ‘observation’ stays, and protect beneficiaries from the financial burden of unexpected Part B charges for care not covered under Part A. Continue reading

ICD Patient Reason for Visit Codes and Medical Necessity

Recently, a customer service rep asked me to help with a question from a client regarding medical necessity and “patient reason for visit code(s)” also known as “reason for visit” code(s)—PRV or RFV. Whatever you prefer to call it, in the outpatient world the code represents the reason the patient sought urgent treatment. There is debate and confusion regarding these diagnosis codes: must the provider check them for medical necessity? Do claim adjudication systems consider them when running their medical necessity checks? Must they be reported on the claim? Why is my payer denying my claim when my reason for visit code is included on the NCD (National Coverage Determination) or LCD (Local Coverage Determination)? Why does my medical necessity software pass the claim with the PRV code and my back end scrubber fails the same claim? Who’s right? Continue reading