Medical Necessity Guidelines: Streamline the Physician-to-Payer Process

You risk ICD-10 coding inaccuracies if you don’t properly address ‘medical necessity’

Want to know one of the easiest ways to prevent payment denials? Here’s a trick: Understand “medical necessity” inside and out, especially with respect to ICD-10 coding, and you’ll be on your way to spotless claims.

Not only that, but you’ll be able to confidently explain issues like “not medically necessary” versus “not covered” to physicians, patients, and payers, notes coding and reimbursement consultant Kim Garner-Huey in her AudioEducator webinar, “Medical Necessity: Defining and Documenting.”

Learn Various ‘Medical Necessity’ Meanings

As you know, one of the reasons why the topic of medical necessity is confusing is because its very definition changes based on who you are. As outlined in Cigna’s explanation of medical necessity for physicians versus for other providers, the criteria vary based on who’s giving the care and what services are being provided. So: Role is critical to a proper definition.

To simplify things for a second, look at medical necessity this way: Under the Social Security Act, medically necessary services or treatments are typically those that are both reasonable and necessary to treat a disease or illness or to improve the functioning of a “malformed body member” – although you do need a careful reading of Section 1862 to understand the various exceptions.

Walk Physicians through ‘Not Necessary’ vs. ‘Not Covered’

When it comes to submitting claims, however, you must understand the distinction between “not medically necessary” and “not covered.”

It’s vital that coders and billers know what treatment options the provider will reimburse for because the physician may order a service or treatment that the patient does indeed need to evaluate or manage his or her disease, illness, injury, or condition, but the provider will not cover that service for whatever reason. And you know what happens next: Physicians don’t communicate to the patient the patient’s obligation to pay, coders bill for services the provider won’t cover, and confusion ensues.

Bottom Line: Ensure smooth communication between physicians, patients, coders, and billers so everyone is clear on the difference between “not medically necessary” and “not covered.”

Never Submit an ABN Without One of These Modifiers

Physicians may provide uncovered services to patients as long as they also submit an Advanced Beneficiary Notice (ABN). Discussed in an earlier post, ABNs come with a set of requirements, one of which is the use of an appropriate modifier based on a few different scenarios:

  • GA – Tells Medicare an ABN is on file and allows the provider to bill the patient if Medicare will not reimburse.
  • GY – Tells Medicare the physician knows the service to be provided is excluded.
  • GZ – Informs Medicare that, although an ABN may have been required, the physician did not get one from the patient.

Essentially, all three modifiers above provide physicians a way to cover their tracks, allowing them to provide uncovered services or treatment to the patient without expecting Medicare to pay. Using these modifiers correctly will make the reimbursement process flow much more smoothly.

Explain Medical Necessity Like a Pro

To understand the full scope of “medical necessity” and your obligations to document it, you’ll need to upgrade your knowledge for 2019, notes in Kim Garner-Huey. You’ll want to understand how the definition of medical necessity has changed, how it will impact your ICD-10 coding, and how best to explain medical necessity to relevant parties—especially to payers in the appeals process. That’s exactly what Garner-Huey teaches you to do in her webinar, “Medical Necessity: Defining and Documenting.”

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

Leave a Reply

Your email address will not be published. Required fields are marked *