Supporting Medical Necessity: Is Your Healthcare Organization Compliant?

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