Podiatry Coding & Billing Alert

Experts say medical necessity should drive the amount of history and exam the physician performs.

As a coder, you've no doubt heard the terms medicalnecessity and medical decision-making (MDM) multiple times. Although some podiatry practices may think medical necessity and MDM can beused interchangeably, you don't have to make this costly mistake.

Don't worry: If you ask these three questions, you'll discover everything you need to know about differentiating between medical necessity and MDM to get your coding on track.

Master the Ins and Outs of Medical Necessity

Question 1: What is the definition of medical necessity?

Answer 1: To better understand medical necessity, look at these explanations from Medicare, The American Medical Association (AMA), and the Centers for Medicare and Medicaid Services (CMS).

In Title XVIII of the Social Security Act, Section 1862 (a) (1), Medicare defines medical necessity as "items or services, which are reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member."

The AMA defines medical necessity as "healthcare 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; (b) clinically appropriate in terms of type, frequency, extent, site, and duration; and (c) not primarily for the economic benefit of the health plans and purchasers or for the convenience of the patient, treating physician, or other healthcare provider."

CMS emphasizes the importance of medical necessity when it calls it "the overarching criterion for payment in addition to the individual requirements of a CPT^® code."

Brush Up on Your MDM Knowledge

Question 2: What is MDM?

Answer 2: Along with history and examination, MDM is one of the three key components to use when choosing the correct level for an evaluation and management (E/M) service.

The CPT^® 2017 manual defines MDM as "the complexity of establishing a diagnosis and/or selecting a management option." There are four levels of MDM: straightforward, low complexity, moderate complexity, and high complexity.

Within each MDM level, the physician determines the number of possible diagnoses or management options; the amount and/or complexity of the data to be reviewed; and the risk of significant complications, morbidity, and/or mortality.

Take note: The documentation must support that at least two of the three above elements were met for an E/M service to qualify for a certain level of MDM. Adding to the history level and the examination level, in most cases (established and subsequent service codes need only match one of these elements), will determine the final E/M service code.

Watch for Distinctions Between MDM and Medical Necessity

Question 3: Why does understanding the differences between MDM and medical necessity matter?

Answer 3: Although it's common for people to confuse MDM and medical necessity for the same concept, the guidelines are very clear, according to Suzan Hauptman, MPM, CPC, CEMC, CEDC, AAPC Fellow, senior principal of ACE Med in Pittsburgh.

"Medical necessity is the over-arching criteria for all services - not just E/M," Hauptman says. "Medical decision making is only one component of an E/M. They are not the same."

Hauptman further reiterates her point.

"They [MDM and medical necessity] sometimes walk hand-in-hand, but don't have to," Hauptman adds. "By suggesting the MDM is the medical necessity, coders could be down-coding services unnecessarily."

It's crucial to understand this difference, according to Marcella Bucknam, CPC, CCS-P, COC, CCS, CPC-P, CPC-I, CCC, COBGC, manager of clinical compliance with PeaceHealth in Vancouver, Washington.

"Medical necessity should drive the amount of history and exam that is performed," Bucknam says. "Medical decision making is all about the conclusions and decisions made after that history is gathered and the exam is performed."

Bucknam further explains why knowing the difference between medical necessity and MDM is important.

"No service can be billed at a higher level than is required by the medical necessity, no matter how much work was done and no matter how much documentation is in the record," Bucknam says. "If the physician does a comprehensive history and physical for a patient with an ingrown toenail, the medical necessity still does not allow a higher level of service to be billed."

In contrast, with MDM, you're trying to identify and rate the physician's thought process during the exam.

"It's an effort to determine how many factors had to be taken into consideration and how much risk was involved between the current visit and the next time the patient would be seen," Bucknam adds. "Sometimes this is rather low, but you might not know that the decisions would be low complexity without assessing the patient."