Why Medical Necessity Is an Important Factor in Medical Claims Review

Medical necessity is a major consideration in medical claims review because it helps to control overspending and minimizes risks to patients.

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Why Medical Necessity Is an Important Factor in Medical Claims Review

Medical claims review is a significant process that helps guard against costly medical billing errors, overpayments, and various other concerns associated with health claims processing. Painstaking claim review has become indispensable to ensure that employers have more control over the health plan dollars they are spending. Medical necessity is a very important factor that must be considered when reviewing claims because it is a major area where excess spending has become almost a regular occurrence. It has been observed that unnecessary tests are being ordered, procedures that don’t fit the symptoms are performed, and medications that may not be ideal to treat the conditions they are written for are prescribed.

Understanding Medical Necessity • Providers often order for more specialized and costlier tests without trying lessspecialized tests first • High-cost procedures are performed before other lower cost, more appropriate ones are considered.

The above-mentioned actions are against medical necessity protocols and could lead to claim denials and other consequences. Apart from the higher cost involved in providing medically unnecessary care, there may also be risks for the patient that are associated with costlier, more invasive or comprehensive procedures as well as longer and more complicated recovery.

It is important to understand that many insurers including Medicare and Medicaid have medical coverage policies that determine what procedure and diagnosis codes are supported for each diagnostic or surgical procedure. If the diagnosis code is not listed in the policy, the payer determines the procedure is not medically necessary for that condition. The CMS (Centers for Medicare and Medicaid Services) considers “medical necessity of a service is the overarching criterion for payment, in addition to the individual requirements of a CPT code. It would not be medically necessary or appropriate to bill a higher level of evaluation and management service when a lower level of service is warranted.” The documentation should support the level of service provided. To get reimbursed by CMS, the diagnosis codes reported on the claim must

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be in keeping with the complexity of the patient’s conditions and these together determine the level of service.

Unspecified diagnosis codes are also found to create major problems with medical claims. When more specific codes are available to code a particular condition, those codes must be used to report the condition to ensure medical necessity. If there is lack of specificity, the payer could consider the patient encounter as an unnecessary visit or medically unnecessary procedure if a procedure is involved.

The diagnosis must be linked to the CPT, HCPCS or ICD-10-PCS procedure code to establish medical necessity and reimbursement. The diagnosis codes tell the insurer why a procedure or service was performed. If a patient comes in with an ear ache and is diagnosed with Otitis Media, and the doctor bills for a chest X-ray, the insurer may not pay for it, considering it medically unnecessary to perform a chest X-ray on a patient who doesn’t have any breathing or chest-related symptoms.

How Does the Medical Claims Review Process Identify Medical Necessity?

A medical review team evaluates health claims to ensure that the services provided are medically necessary. In other words, the claims are reviewed to make sure that the medical care the patient receives in the process of diagnosing, treating or preventing a medical condition follows applicable medical necessity protocols. For this, the team examines the medical codes used for billing in combination with other medical documentation. They investigate whether the charges are for services that are not medically necessary or those that are over the frequency limits of the plan. The important steps include: • Ensuring accuracy of the medical bills submitted • Reviewing medical claim charges in great detail • Evaluating medical necessity • Complete and exhaustive medical record review • Initiating peer reviews if necessary A detailed review of the medical claims would look to establish the following things.

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• The treatment provided is consistent with the diagnosis of the illness, injury or symptoms • The treatment provided is not experimental or investigational and is necessary and consistent with generally accepted professional medical standards • The treatment is not provided primarily for the convenience of the patient, the attending physician, or another physician or supplier • The treatment is provided at the most appropriate level that can be administered safely and effectively to the patient. It is neither more or less than what the patient requires at that particular point in time.

• The treatment provided is not related to the patient’s or the third party payer’s monetary status or benefit.

A medical records analysis is an effective way to check for medical necessity because it investigates whether the medical care documentation accurately reflects the need for and outcome of the treatment. To avoid medically unnecessary procedures and medications, educating health plan members is indispensable. With proper information regarding medical necessity, pre-authorization requirements and so on, people become informed consumers of care. Otherwise they may just blindly trust their providers’ guidance without going for a second opinion or even enquiring about other diagnostic or treatment protocols available. Reviewing medical claims for medical necessity and appropriate care is vital to control overspending and avoid risks to patients.

www.mosmedicalrecordreview.com

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