Medical Necessity: Thin Line between Not Knowing Coverage and Fraud

Overview:

Determining what is “medically necessary” can be confusing since medical coverage policies are constantly changed by payers and health plans. What a physician defines as medically necessary may not be consistent with a health plan’s coverage policies. A physician who knowingly bills for services which are not medically necessary can be prosecuted for fraud by the Office of Inspector General (OIG). Violators face penalties of up to $10,000 for each service, an assessment of up to three times the amount billed, and exclusion from federal and state health care programs.¹

The Centers for Medicare and Medicaid Services (CMS), pays for medical items and services that are "reasonable and necessary" for a variety of purposes. By statute, CMS may only pay for items and services that are "reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” CMS has numerous  policies, including National coverage determinations (NCDs) and Local Coverage Determinations (LCDs),  that describe coverage criteria.² These policies may include a combination of CPT, HCPCS, and ICD codes, along with modifier usage and utilization guidelines. Other payers have their own coverage policies that may or may not follow CMS guidelines and depending on a patient’s coverage, multiple payer policies may need to be reviewed to determine medical necessity. 

Even if a service is determined to be "reasonable and necessary," coverage could be limited if the service is provided more frequently than allowed under a CMS coverage policies and its utilization guidelines.² Not only do providers have to determine the medical necessity requirements but they must also determine the frequency of the services or supplies and pharmaceuticals that are included in the policy and make an accounting of such services or supplies.

Claims for services which are considered not medically necessary will be denied by CMS. However, if CMS determines through an audit that services were medically unnecessary after payment has already been made, it is deemed an overpayment and the billed amount must be refunded with interest. Moreover, if a pattern of such claims are established and the physician knows or should know that the services are not medically necessary, the physician may face large monetary penalties, exclusion from the CMS program, and criminal prosecution.

Options

Your best option is to know your coverage policies but with ever changing codes and requirements this self service approach can be a daunting task. The office manager, biller and ancillary staff are already overwhelmed with administrative tasks. Accessing coverage policies for multiple payers may be impossible before a patient’s office visit or procedure is performed and determining medical necessity afterwards would leave a physician or patient paying for a potentially expensive service.

Solution

ClaimsEditor®  a medical claims editing solution offers Medical Necessity code combinations and utilization edits that  can assist your practice not only in being compliant with coverage policies but to proactively assist in pre-audit checking for fraud. Avoiding fraudulent claim patterns will not flag your practice in payers’ system, however with ClaimsEditor® you can easily see your error patterns using: interactive dashboards, reporting, sorting and triggers such as by provider, cost or edits.

Medical Necessity data can also be used to identify potential patterns of billing errors and overpayments in post-payment claims also. Both pre and post-payment claims can be run through Context’s claims editing software. Our solution flags a claim if a service is not medically necessary. The “edits” include overutilization, incorrect ICD/CPT &HCPCS combinations based on policies.

Medical Necessity information for payers can be accessed through Context’s online solution or by incorporating our data files into your own billing or EHR software. Clients have used our medical necessity products to access medical necessity information when patients are scheduled for procedures and services and seamlessly integrating components into their software and workflow. Medical necessity can be determined before a procedure is performed or a service rendered avoiding un-billable charges.

Call us today and let us show you how we can help you be successful with your Medical Necessity challenges.

1.    http://www.physiciansnews.com/law/802.miller.html  Nancy W. Miller Esq.

2.    Wikipedia - Medical Necessity Medicare

ICD-10 Delay: Extra Time to Supercharge Your ICD-10 Knowledge

In a recent Physicians Practice blog entry by Marisa Torrieri¹, ICD-10 transition and implementation was noted as one of the biggest stressors for physicians. The blog entry discussed a survey given to 394 physicians and practice managers by an EHR vendor where 85% of the respondents ranked the transition to ICD-10 and 5010 as one of the top issues impacting their practices while noting that this also affects healthcare employees in the ambulatory arena in different ways.

Physicians fear that ICD-10 will reduce time spent with their patients as they will be more focused on utilizing the new coding system and coding to a very specific code rather than focusing on the patient themselves. Some fear that they may end up shortening the patient visit or seeing fewer patients in a day.

Practice managers on the other hand are stressed over productivity, increased workloads, training on the new coding system along with implementation and coordination of new technology.

Billing managers are concerned with how the new ICD-10 changes will affect the workflow of claims and reimbursement in general.

Customized superbills:

The Centers for Medicare & Medicaid Services (CMS) delayed the October 1, 2013 implementation of ICD-10 to a proposed October 1, 2014 ³ and this may give practices the much needed time and opportunity to actually get hands-on training and practice utilizing the new coding system. 

Few directions are provided on how to customize code sets to eliminate time spent searching through several thousands of codes a practice may never use. The key will be customizing your ICD-10 code sets and data itself. It is unlikely that you will be utilizing most of the approximately 68,000 diagnosis codes.  

You can customize your super bills to your specialty using ICD-9-CM to ICD-10-CM Diagnostic code mapping for specialties such as Anesthesia and Cardiology by utilizing Context⁴ Healthcare’s Linkage Libraries in CodeLink^® Pro. Create and build-a-bill (your super bill) to your specifications to provide real hands-on ICD-10 coding practice for you and your staff. CodeLink^® Pro will allow you see what your new ICD-10 codes will be for your specialty. Also, it will allow you to customize code notes or favorite most used codes to build-a-bill – your new super ICD-10 bill.

Transition challenges mitigated:

A recent ICD-10 survey performed by the Workgroup for Electronic Data Interchange (WEDI), reported that one in five of the 2,597 providers surveyed were expected to complete ICD-10 readiness assessments with half of responding providers stating that they did not know when the assessments would be finished.² Health plan leaders reported that one in five of the 661 plan respondents indicated they had either not started or were less than one quarter of the way complete with their gap analysis. Only one in six of the 418 vendors participating in the survey had not even started preparing their products for the ICD-10 transition.

Let Context⁴ Healthcare show you how to make the transition from ICD-9 to ICD-10 seamless and effortless with CodeLink® Pro. As a healthcare software vendor, we offer ICD-10 products tailored to your specialty such as build your own Super Bill allowing you and your staff hands on ICD-10 practice, ICD-9 to ICD-10 cross-walks and code search ability by key words or indexes.