Defining and Documenting Medical Necessity to Support Proper Billing and Coding

“Medical necessity” is generally understood to refer to the requirement that medical services be justifiably reasonable, necessary and appropriate and is inextricably linked to the modern phenomenon of payer-based healthcare. But there’s no universally accepted definition of the term, and providers, private payers, CMS and patients alike struggle with the concept on a daily basis in the United States’ healthcare system.

Necessarily Hairy?

Definitions of medical necessity vary depending on your role in the healthcare system – physicians, employers, coders, billers, Medicare and private insurers all define this crucial term differently. Add to that the facts that the definition keeps changing, and that medical necessity documentation guidelines most certainly changed in ICD-10. Learning about managing the change to ICD-10-CM without jeopardizing medical necessity documentation has become a required trick of the trade for good coders and billers.

Simply understanding medical necessity from a coding, documentation and appeals perspective can seem like a constantly moving target. Advanced Beneficiary Notification (ABN) forms and waivers, as well as what sort of language to include in appeals, also present challenges when it comes to medical necessity.

And don’t even think that Medicare’s definition of medical necessity helps. Try this double-negative definition under Title XVIII of the Social Security Act, Section 1862 (a) (1) (a) on for size: “No payment may be made under Part A or Part B for expenses incurred for items or services which are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.”

Have you (or your doctors) read a CMS-1500 claim form recently? Signing that form certifies that the services were medically necessary and exposes the person who signs it to civil penalties for a criminal act if it includes false, incomplete or misleading information.

The Coder’s Dilemma(s)

Correct, appropriate and specific diagnosis coding is critical, but many diagnosis codes are not specific enough in themselves. The result is that proving medical necessity – and thus getting paid – can prove difficult. Also keep in mind that medical necessity and medical decision making are not the same thing. Furthermore, does medical necessity apply to services performed – or services billed? And who is qualified to judge the medical necessity of a service?

ICD-10 presents specific issues: A practice should know whether all its payer policies have been updated to reflect the new codes. What about 2017 ICD-10-CM changes? Is your practice proficient with ICD-10-CM – proficient enough to spot issues in payers’ policies? What about nuances in code descriptions? There are still unspecified codes – and it’s unclear whether payers even recognize them. Just because it is medically necessary in your physician’s eyes does not mean it is a covered service.

Find the Sweet Spot

Teaching your providers how to handle this topic can be a delicate issue. AudioEducator’s recent conference “Medical Necessity – Defining and Documenting to Support Billing” with coding and reimbursement consultant Kim Garner-Huey, MJ, CHC, CPC, CCS-P, PCS, CPCO, COC, explored and applied the definitions of this tricky term to common scenarios that medical practices deal with every day.

Kim’s ideas can help your physicians in documenting appropriately to support why they did what they did, assigning the right codes and modifiers, and appealing effectively to receive the payment deserved.

To join the conference or see a replay, order a DVD or transcript, or read more

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