Neurology & Pain Management Coding Alert

Here’s how a compliance program could bolster your bottom line.

There probably isn’t a practice in the country that hasn’t experienced the frustration of receiving a claim denial due to a lack of medical necessity. The concept is known to all coders and billers, but it’s a good idea to brush up on the rules from time to time.

What exactly is “medical necessity,” and is there a correlation between it and the profitability of your practice? CJ Wolf, MD, M.Ed., CPC, set out to answer those questions and more in his HEALTHCON 2023 presentation “Monitoring Medical Necessity: Do You Need Help?”

Here’s what our experts had to say about medical necessity, and building an effective compliance program to help you avoid unnecessary denials.

Coders Need to Know ‘Reasonable and Necessary,’ ‘Accepted and Appropriate’

The definition of medical necessity cited by Wolf is the one the Centers for Medicare & Medicaid Services (CMS) is bound to by law per Title XVIII, Section 1862 (a) (1) (a) of the Social Security Act.

That part of the law states, in part, that “no payment may be made under [Medicare] part A or part B for any 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.”

“Reasonable and necessary” is also the guiding principle behind the Department of Health and Human Services (HHS) Office of Inspector General (OIG) Compliance Program for Individual and Small Group Physician Practices. Wolf noted that the OIG recommends practices develop and maintain a self-audit program, which “can be used to determine whether:

• “Bills are accurately coded and accurately reflect the services provided (as documented in the medical records);
• “Documentation is being completed correctly;
• “Services or items provided are reasonable and necessary; and
• “Any incentives for unnecessary services exist.”

(https://oig.hhs.gov/documents/compliance-guidance/801/physician.pdf)

While “reasonable and necessary” is the significant driving force behind determinations Medicare and payers following Medicare rules make, it is worth noting that it is not the only definition of medical necessity out there.

According to Kim Huey, MJ, CPC, CPCO, COC, CHC, CCS-P, PCS, president of KGG Coding and Reimbursement Consulting, and Sandy Giangreco Brown, BS, RHIT, CHC, CCS, CCS-P, CPC, CPC-1, COBGC, COC, PCS, director of coding and revenue integrity at CLA, in their HEALTHCON presentation “Medical Necessity: Defining and Documenting to Support Billing,” AMA policy H-320.953, for example, defines medical necessity as “health care services or products that a prudent physician would provide to a patient for the purpose of preventing, diagnosing, or treating an illness, injury, disease, or its symptoms in a manner that is:

“a) In accordance with generally accepted standards of medical practice; and

“b) Clinically appropriate in terms of type, frequency, extent, site, and duration; and not primarily for the economic benefit of the health plans and purchasers or for the convenience of the patient, treating physician, or other health care provider.” (https://policysearch.ama-assn.org/policyfinder/detail/H-320.953)

The two definitions are not mutually exclusive, of course, and self-audit programs would do well to adopt criteria based on both OIG and AMA language. And you should also turn to specialty societies such as the American Society of Anesthesiologists (ASA), “who can provide recommendations and guidelines for documentation practices,” Wolf suggested.

Keep Up With OIG Recommendations

Wolf then suggested practices set up a voluntary compliance program like the one recommended in the OIG Compliance Program document. This involves bringing together “the person in charge of billing (if the practice has such a person) and a medically trained person (e.g., registered nurse or preferably a physician (physicians can rotate in this position)),” according to the document.

As for the scope of the program, the OIG recommends reviewing two areas: standards and procedures, and claims submissions, “to ascertain what, if any, problem areas exist and focus on the risk areas that are associated with those problems.”

For standards and procedures, the OIG recommends that the program ensures the standards and practices are not just “current and accurate, but also whether the compliance program is working, i.e., whether individuals are properly carrying out their responsibilities and claims are submitted appropriately.”

For claims submissions, the OIG recommends the program reviews “bills and medical records … for compliance with applicable coding, billing and documentation requirements.”

Know What You’re Looking for

The OIG Compliance Program document offers a practical suggestion for practices implementing or recalibrating their compliance programs: Develop a “set of monitors and warning indicators” that apply to your context, and which should scrutinize:

• “Significant changes in the number and/or types of claim rejections and/or reductions;
• “Correspondence from the carriers and insurers challenging the medical necessity or validity of claims;
• “Illogical patterns or unusual changes in the pattern of … code utilization; and
• “High volumes of unusual charge or payment adjustment transactions.”

Essentially, the program should focus on the top 10 services your practice provides, which should be “80 percent of what the practice does on a regular basis,” Wolf recommended. The program should then perform a risk assessment on these services to make sure they are thoroughly documenting the “specific sign, symptom, or patient complaint that makes the service reasonable and necessary,” according to Wolf.

More, practices should “read the national and local coverage determinations (NCDs and LCDs),” check for items on the OIG watch list, “run a query for those things, and put a policy in place,” Wolf added.