Supporting Medical Necessity: Is Your Healthcare Organization Compliant?

Supporting Medical Necessity: Is Your Healthcare Organization Compliant?

 

LUTZ BUSINESS INSIGHTS

 

supporting medical necessity: is your healthcare organization compliant?

amy evanich, healthcare consulting senior

 

Submission of complete and accurate medical records is a top priority for all healthcare organizations. According to the Centers for Medicare and Medicaid Services (CMS), Medically Necessary is defined as services or supplies that:

  • Are proper and needed for the diagnosis or treatment of the medical condition
  • Are provided for the diagnosis, direct care, and treatment of the medical condition
  • Meet the standards of good medical practice in the local area
  • Are not mainly for the convenience for patient or doctor

No hospital, provider, or patient wants to hear that a service is not medically necessary. According to Medicare, this can include services such as:

  • Excessive therapy or diagnostic procedures
  • Hospital furnished services that, based on the beneficiary’s condition, could have been furnished in a lower-cost setting, such as the beneficiary’s home or a nursing home
  • Surgeries that are considered cosmetic
  • Dental services
  • Certain footcare services

As a healthcare organization, some policies and processes can be put into place to ensure medical necessity is being met. Most billing offices struggle to keep up with their day to day work, which can make it challenging to analyze medical necessity; however, this proactive approach should be a priority for your hospital.

So, where do you begin when it comes to looking at medical necessity? First, you can analyze payer websites and the Office of Inspector General (OIG) work plan, which sets forth various projects, including OIG audits and evaluations that are underway or planned to be addressed during the fiscal year and beyond. Secondly, if your healthcare organization has started a new service line or has added a new provider, coder, or biller. Changes such as these are all areas that your hospital should be reviewing to ensure medical necessity is met.

When completing a medical necessity review, the Medicare Coverage Database will have links for Local Coverage Determinations (LCD) and National Coverage Determinations (NCD) to help guide your review including:

  • Indications
  • Limitations of Coverage
  • Documentation Requirements
  • Coding Guidelines
  • Billing Guidelines

Be sure to educate all appropriate team members on the audit findings. Spend time educating the provider regarding what documentation is needed to support the services. Eventually, a re-audit will need to be completed to ensure the necessary changes were made. Understanding and determining medical necessity can be very complex for healthcare team members. Evaluating medical necessity for the services provided on a regular basis is an important safeguard to ensure your healthcare organization is prepared if/when an external audit does occur.

 

References:

Centers for Medicare and Medicaid. (2000). Retrieved on February 11, 2020 from cms.gov

Office of Inspector General. (n.d.). Work Plan. Retrieved on February 11, 2020 from https://oig.hhs.gov/reports-and-publications/workplan/index.asp

ABOUT THE AUTHOR

402.769.7055

aevanich@lutz.us

LINKEDIN

AMY EVANICH + HEALTHCARE CONSULTING SENIOR

Amy Evanich is a Healthcare Consulting Senior at Lutz with over 10 years of professional experience in the Healthcare industry. She specializes in the areas of medical chart reviews, appeal preparation, Medicare regulation guidance, interpretation and education, and healthcare billing policies and procedures.

AREAS OF FOCUS
  • Healthcare Reimbursement
  • Audit Response Assistance and Appeal Preparation
  • Medical Chart Review Including Medical Necessity
  • Healthcare Billing
AFFILIATIONS AND CREDENTIALS
  • Registered Nurse (RN)
EDUCATIONAL BACKGROUND
  • Bachelor of Science in Nursing (BSN), Clarkson College, Omaha, NE
  • Master of Science in Nursing Health Care Administration (MSN), Clarkson College, Omaha, NE
COMMUNITY SERVICE
  • Nebraska Action Coalition, Leadership Team

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HASTINGS

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Hastings, NE 68901

P: 402.462.4154

LINCOLN 

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Lincoln, NE 68508

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GRAND ISLAND

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Grand Island, NE 68803

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Cost Reporting

Cost Reporting

 

LUTZ BUSINESS INSIGHTS

 

cost reporting

KIRK DELPERDANG, HEALTHCARE MANAGER

 

Bad Debts – General

Eligible Medicare bad debts can be claimed for reimbursement through the Medicare cost report. For Critical Access Hospitals (CAHs), the reimbursement percentage was at 100% before FY 2013 – since then, in FY 13, it was reduced to 88%, 76% in FY 14, and 65% in FY 15 (the current rate as of this article).

Certain rules that need to be followed in order to claim Medicare bad debt on the cost report. First, bad debt can only be claimed on a cost report that is deemed “uncollectible,” as defined by CMS. Second, it must be related to covered services derived from the deductible and coinsurance amounts. Lastly, sound business judgement should establish that there was no likelihood of recovery at any time in the future.

A provider must also submit the Medicare bad debt in a specific template (more to come), including all data elements such as:

  • Patient identification
  • Date the first bill was sent to the beneficiary
  • The date collection efforts ceased
  • Deductible or coinsurance amount

 

Bad Debts – Cost Report Documentation Requirements & Templates

On August 17, 2018, a new Federal Register requirement was implemented, impacting bad debts for all cost reporting periods beginning on or after October 1, 2018 – specifically the documentation and submission requirements.

Excerpt from 83 FR 41677 (August 17, 2018)

“Effective for cost reporting periods beginning on or after October 1, 2018, for providers claiming Medicare bad debt reimbursement, a cost report will be rejected for lack of supporting documentation if it does not include a detailed bad debt listing that corresponds to the bad debt amounts claimed in the provider’s cost report.” 

Prior to this new requirement, inappropriate or inaccurate bad debt support “only” resulted in a desk review adjustment.  Now, unreconciled bad debt amounts may lead to a rejected cost report.

 

Home Office/Related Party

Just as Home Offices and management agreements have been around for decades, CMS Pub. 15-I Chapter 10 has been in place, governing the reporting of costs to related organizations.  These related organizations often take the form of a Home Office.  However, these may also be organizations that furnish management services or administrative services, through an agreement between entities.

The evolution of the healthcare industry, specifically with respect to rural healthcare, has forced rural hospitals to find ways to become more efficient and lower overall healthcare costs at their facility.  These advancements, in an ever-changing industry, have some rural facilities engaging in agreements for management and administrative services to save costs.  Medicare is keeping pace with these arrangements in their reviews and cost report submission requirements.

Excerpt from 83 FR 41677 (August 17, 2018)

“Effective for cost reporting periods beginning on or after October 1, 2018, for providers claiming costs on their cost report that are allocated from a home office or chain organization that has a different fiscal year end, a cost report will be rejected for lack of supporting documentation if the home office or chain organization has not completed and submitted to the chain provider’s contractor a Home Office Cost Statement that corresponds to some portion of the amounts allocated from the home office or chain organization to the provider’s cost report. 

Based on these new requirements, it would be prudent to have all related party/home office cost support in order when you file your cost report.

ABOUT THE AUTHOR

402.496.8800

kdelperdang@lutz.us

LINKEDIN

KIRK DELPERDANG + HEALTHCARE MANAGER

Kirk Delperdang is a Healthcare Manager at Lutz with over 25 years of experience. He provides accounting and consulting services to healthcare and related organizations.

AREAS OF FOCUS
AFFILIATIONS AND CREDENTIALS
  • Healthcare Financial Management Association - Nebraska Chapter, Member
  • Nebraska Society of Certified Public Accountants, Member
EDUCATIONAL BACKGROUND
  • BA in Accounting, University of Northern Iowa, Cedar Falls, IA
COMMUNITY SERVICE
  • St. Vincent de Paul, Knights of Columbus, Member
  • Active in various youth sports leagues: Aldrich Elementary, Millard Athletic Association, Millard North Schools, Omaha FC, Skutt Catholic High School and YMCA

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Toll-Free: 866.577.0780  |  Privacy Policy

All content © Lutz & Company, PC

OMAHA

13616 California Street, Suite 300

Omaha, NE 68154

P: 402.496.8800

HASTINGS

747 N Burlington Avenue, Suite 401

Hastings, NE 68901

P: 402.462.4154

LINCOLN 

115 Canopy Street, Suite 200

Lincoln, NE 68508

P: 531.500.2000

GRAND ISLAND

3320 James Road, Suite 100

Grand Island, NE 68803

P: 308.382.7850

Assignment of E/M Levels Emergency Room

Assignment of E/M Levels Emergency Room

 

LUTZ BUSINESS INSIGHTS

 

assignment of e/m levels emergency room

nancy thygesen, healthcare manager

 

The hospital must assign Emergency Room Evaluation and Management codes (E/M) codes for all ER visits. The E/M code is billed in Revenue Code 450 –Emergency Room on the UB-04.

Below are a few of the items we see when reviewing Emergency Room records and levels:

  • Hospital approved ER criteria not applied correctly, and the incorrect E/M level is assigned which results in over coding or under coding
  • Incorrect points assigned and therefore the wrong E/M level is billed; many facilities use a point system to assign levels of care based on the services rendered
  • Incorrect E/M level assigned from the computer-generated ER criteria software
  • Documentation/services do not substantiate the E/M level assigned
  • ER Criteria outlines that a level 5 visit (99285) is automatically assigned if the patient is admitted to the hospital or transferred even if the documentation/services provided do not justify a level 5
  • The discharge status code billed does not substantiate the E/M level assigned (i.e., discharge status 01 to home and E/M level 5 assigned)

We recommend all facilities have an ER matrix, ER criteria, or ER acuity sheet that is used to determine the E/M level assigned for each visit rendered in the ER.

The ER matrix/criteria/acuity sheet must be applied consistently to all hospital ER visits. Suggestions for applying the ER matrix:

  1. The staff who assign the ER E/M levels must understand the criteria and the documentation required to substantiate each level
  2. Require the ER Matrix be completed for each ER visit to substantiate the E/M level assigned
  3. Implement a review process to include:
    • Confirmation that the matrix is applied properly and consistently to all claims and the correct E/M level is assigned; a Pre-bill review is recommended
    • Establish a formal process to change an assigned E/M level based on the pre-bill documentation review. Providers and HIM should be involved in establishing the process.
    • Educate the staff who assign the E/M levels and Providers if changes are made in the criteria
    • Educate the staff who assigned the E/M level when the documentation does not substantiate the E/M level assigned
    • Review the ER matrix annually and make updates to the criteria as needed

It is important to have a process in place to make sure the criteria are accurately applied, the correct E/M level is assigned, and reviews are done to assure the documentation and services substantiate the level assigned. These processes will assist in assuring you are receiving the proper payment, not under or over coding, and supporting medical necessity. if you have any questions, please contact us.

ABOUT THE AUTHOR

402.827.2368

nthygesen@lutz.us

NANCY THYGESEN + HEALTHCARE MANAGER

Nancy Thygesen is a Healthcare Manager at Lutz with over 35 years of experience in Health Information Management Consulting. Her primary responsibilities include performing chargemaster reviews and providing coding, reimbursement and educational services for hospitals, physicians and other healthcare providers.

AREAS OF FOCUS
  • Consulting
  • Health Information Management
  • ICD-10 Coding
  • Chargemaster Reviews
  • Coding
  • Reimbursement
  • Healthcare Educational Services
  • Healthcare Industry
AFFILIATIONS AND CREDENTIALS
  • Nebraska Health Information Management Association, Member
  • American Health Information Management Association, Member
  • Registered Health Information Administrator
EDUCATIONAL BACKGROUND
  • Bachelor’s degree in health information management, College of St. Mary’s, Omaha, NE
COMMUNITY SERVICE
  • Church Volunteer

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Toll-Free: 866.577.0780  |  Privacy Policy

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OMAHA

13616 California Street, Suite 300

Omaha, NE 68154

P: 402.496.8800

HASTINGS

747 N Burlington Avenue, Suite 401

Hastings, NE 68901

P: 402.462.4154

LINCOLN 

115 Canopy Street, Suite 200

Lincoln, NE 68508

P: 531.500.2000

GRAND ISLAND

3320 James Road, Suite 100

Grand Island, NE 68803

P: 308.382.7850

Lutz adds Coleman and Underberg

Lutz adds Coleman and Underberg

 

LUTZ BUSINESS INSIGHTS

 

Lutz adds coleman and underberg

Lutz, a Nebraska-based business solutions firm, recently added Emily Coleman and Maddison Underberg to its Lincoln and Omaha offices.

Emily Coleman joins Lutz’s Lincoln office as a Receptionist. She is responsible for creating an exceptional experience for clients and visitors. In addition, she will manage all client inquiries, coordinate communication, and perform other administrative duties as needed. Coleman received her Bachelor’s degree in marketing from the University of Nebraska-Lincoln.

Maddison Underberg joins the firm’s healthcare department as a Staff Accountant. She will work in Lutz’s Omaha office. Underberg is responsible for providing accounting and consulting services to healthcare organizations with a focus on outsourced CFO services and cost reports. She graduated from Midland University with a Bachelor’s degree in accounting.

 

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Toll-Free: 866.577.0780  |  Privacy Policy

All content © Lutz & Company, PC

OMAHA

13616 California Street, Suite 300

Omaha, NE 68154

P: 402.496.8800

HASTINGS

747 N Burlington Avenue, Suite 401

Hastings, NE 68901

P: 402.462.4154

LINCOLN 

115 Canopy Street, Suite 200

Lincoln, NE 68508

P: 531.500.2000

GRAND ISLAND

3320 James Road, Suite 100

Grand Island, NE 68803

P: 308.382.7850

Lutz adds 14 Staff Accountants

Lutz adds 14 Staff Accountants

 

LUTZ BUSINESS INSIGHTS

 

Lutz adds 14 Staff Accountants

Lutz, a Nebraska-based business solutions firm, recently added 14 staff accountants to its Omaha and Lincoln offices.

Ty Bardsley, Kaylee Hartman, Taylor Hoyt, Justin Oehm and Austin Sabaliauskas join the firm’s tax department. They are responsible for preparing individual and business income tax returns, as well as providing general accounting assistance to clients in a variety of industries. 

Ty Bardsley graduated from Nebraska Wesleyan University with a Bachelor’s degree in accounting and works in Lutz’s Lincoln office.

Kaylee Hartman interned with Lutz during tax season 2019 and now works in both the Omaha and Lincoln offices. She graduated from the University of Nebraska-Lincoln with a Bachelor’s degree in accounting and political science.

Taylor Hoyt graduated from the University of Nebraska-Lincoln with a Master of professional accountancy. Taylor works in Lutz’s Omaha office.

Justin Oehm interned with Lutz during tax season of 2018 and 2019 and works in the Omaha office. He graduated from the University of Nebraska-Omaha with a Master’s degree in business administration.

Austin Sabaliauskas interned with Lutz in the summer of 2017, as well as January 2018 through May of 2019. He graduated from the University of Nebraska-Omaha with a Master’s degree in accounting. Austin works in Lutz’s Omaha office.

Luke Biggs, Haley Carter, Joe Dahir, Matthew Gilg, Nikki Hullinger, Ryan Poppen and Ben Soukup join the firm’s audit department. They are responsible for providing credibility to clients through financial reporting.

Luke Biggs previously interned with Lutz during tax season in 2018 and 2019. He graduated from the University of Nebraska-Lincoln with a Bachelor’s degree in accounting. Luke works in Lutz’s Omaha office.

Haley Carter graduated from Ohio University with a Bachelor’s degree in accounting and business pre-law. Haley works in Lutz’s Omaha office.

Joe Dahir interned with Lutz during tax season in 2017. He graduated from the University of Nebraska-Lincoln with a Bachelor’s degree in accounting. Joe works in Lutz’s Omaha office.

Matthew Gilg interned with Lutz during the summer of 2018. Graduating from Doane University, Matthew received his Bachelor’s degree in accounting and business administration. Matthew works in Lutz’s Lincoln office.

Nikki Hullinger interned with Lutz during the summer of 2018, as well as, tax season 2018 and 2019. She received her Master’s in professional accountancy from the University of Nebraska-Lincoln. Nikki works in Lutz’s Omaha office.

Ryan Poppen interned with Lutz during tax season of 2018 and 2019. He graduated from the University of Nebraska-Lincoln with a Bachelor’s degree in accounting. Ryan works in Lutz’s Omaha office.

Ben Soukup previously interned with Lutz during tax season in 2018 and 2019. He graduated from the University of Nebraska-Lincoln with a Bachelor’s degree in accounting. Ben works in Lutz’s Omaha office.

Tyler Daveline joins the firm’s healthcare department in Omaha. He is responsible for providing accounting and consulting services to healthcare organizations with a focus on outsourced CFO services and cost reports. Daveline graduated from Nebraska Wesleyan University with a Bachelor’s degree in accounting and sport management.

Matt Siedhoff joins the firm’s client accounting services department. He is responsible for providing outsourced accounting services to clients, including QuickBooks and payroll assistance. Matt previously interned with Lutz during tax season of 2019. He received his Bachelor’s degree in accounting from the University of Nebraska-Lincoln. Matt works in Lutz’s Omaha office.

RECENT POSTS

CARES Act Overview

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Congress has officially passed the Coronavirus Aid, Relief, and Economic Security Act, otherwise known as the CARES Act…

read more

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We tap into the vast knowledge and experience within our organization to provide you with monthly content on topics and ideas that drive and challenge your company every day.

Toll-Free: 866.577.0780  |  Privacy Policy

All content © Lutz & Company, PC

OMAHA

13616 California Street, Suite 300

Omaha, NE 68154

P: 402.496.8800

HASTINGS

747 N Burlington Avenue, Suite 401

Hastings, NE 68901

P: 402.462.4154

LINCOLN 

115 Canopy Street, Suite 200

Lincoln, NE 68508

P: 531.500.2000

GRAND ISLAND

3320 James Road, Suite 100

Grand Island, NE 68803

P: 308.382.7850

2019 OPPS + ASC Proposed Federal Registers

2019 OPPS + ASC Proposed Federal Registers

 

LUTZ BUSINESS INSIGHTS

 

2019 opps + asc proposed federal registers

kirk delpeRdang, healthcare manager

 

Summary of Major Provisions

These highlights are by no means a comprehensive listing of all provisions within the OPPS Proposed Rule, but provide a listing of significant items applicable to multiple facilities.

 

General

A. Increasing Price Transparency of Hospital Standard Charges: On the heels of the Executive Order on Improving Price and Quality Transparency in American Health to Put Patients First, CMS has proposed a regulation to implement this order.  In CMS’ opinion, this proposed rule enhances the prior agency guidance requiring hospitals to publicize the standard changes in a machine-readable format effective January 1, 2019.  This rule proposes to 1) clarify the definitions of “hospital”, “standard charges”, and “items and services”; 2) require the machine-readable format for standard charges on all hospital items and services; 3) require making public payer-specific negotiated charges for a limited number of “shoppable” services displayed in a “consumer-friendly” manner and: 4) implement a monitoring mechanism for hospital noncompliance and penalties for noncompliance, including warnings, corrective action plans and civil monetary penalties. 

1. Hospital – An institution in any State in which State or applicable local law provides for the licensing of hospitals and which is licensed as a hospital pursuant to such law, or is approved by the agency of such State or locality responsible for licensing hospitals as meeting the standards established for such licensing

Standard Charge – Hospital’s gross charge and payer-specific negotiated charge for an item or service

Items and Services – All items and services (including individual items and services and service packages) provided by a hospital to a patient in connection with an inpatient admission or an outpatient department visit for which the hospital has established a charge

2. The proposal referencing all standard changes would require that hospitals make public their standard changes (both gross charges and payer-specific negotiated charges) for all items and services online in a machine-readable format.

3. Consumer-friendly – What exactly is “shoppable” and “consumer-friendly”? How does CMS attempt to qualify and quantify these criteria?

Shoppable is defined as a service that can be scheduled by a consumer in advance.

CMS goes on to propose the following requirements of hospitals:

– Display payer-specific negotiated charges for at least 300 shoppable services, including 70 CMS-selected services and 230 hospital -selected services. If the hospital does not provide the 70 CMS services, the hospital-selected services must compensate, such that the total of the listing is 300 services.

– Ensure this information is displayed prominently on a publicly-available webpage

– Updated annually

4. Monitoring and Enforcement

– Monitor

– Warnings

– CAP (Corrective Action Plan)

– Monetary penalty – Up to $300/day; publicized on CMS website; Appealable to the ALJ

B. Supervision of Hospital Outpatient Therapeutic Services: CMS is proposing to change the minimum required level of oversight from direct to general supervision for ALL hospital outpatient therapeutic services, ensuring a standard minimum level of guidance. This change is based on studies conducted with respect to the level of service provided between acute-care hospitals and critical access hospitals, which have recently had different levels of enforcement requirements, based on the moratorium on enforcement of this requirement for CAHs.

Prospective Payment System (PPS) Specific

  • Payment Differentials: CMS is proposing to increase the policies to reduce the payment differentials between certain outpatient sites, with the goal of improving the quality of patient care while lowering costs.
  • Changes to the Inpatient Only List: There are proposed changes to the procedures covered by this listing.  For example, CMS is proposing to remove total hip arthroplasty from the inpatient-only list.  However, please review for the proposed Federal Register for a comprehensive listing.
  • Wage Index: CMS is proposing to use the FY 2020 IPPS wage index as the wage index for OPPS.  This includes the IPPS adjustment to address the wage index variations between high and low wage index value hospitals – increasing the wage index for certain low wage index hospitals.

ABOUT THE AUTHOR

402.496.8800

kdelperdang@lutz.us

LINKEDIN

KIRK DELPERDANG + HEALTHCARE MANAGER

Kirk Delperdang is a Healthcare Manager at Lutz with over 25 years of experience. He provides accounting and consulting services to healthcare and related organizations.

AREAS OF FOCUS
AFFILIATIONS AND CREDENTIALS
  • Healthcare Financial Management Association - Nebraska Chapter, Member
  • Nebraska Society of Certified Public Accountants, Member
EDUCATIONAL BACKGROUND
  • BA in Accounting, University of Northern Iowa, Cedar Falls, IA
COMMUNITY SERVICE
  • St. Vincent de Paul, Knights of Columbus, Member
  • Active in various youth sports leagues: Aldrich Elementary, Millard Athletic Association, Millard North Schools, Omaha FC, Skutt Catholic High School and YMCA

SIGN UP FOR OUR NEWSLETTERS!

We tap into the vast knowledge and experience within our organization to provide you with monthly content on topics and ideas that drive and challenge your company every day.

Toll-Free: 866.577.0780  |  Privacy Policy

All content © Lutz & Company, PC

OMAHA

13616 California Street, Suite 300

Omaha, NE 68154

P: 402.496.8800

HASTINGS

747 N Burlington Avenue, Suite 401

Hastings, NE 68901

P: 402.462.4154

LINCOLN 

115 Canopy Street, Suite 200

Lincoln, NE 68508

P: 531.500.2000

GRAND ISLAND

3320 James Road, Suite 100

Grand Island, NE 68803

P: 308.382.7850