Overturn and Prevent Medical Necessity Denials with These Strategies

Hi everyone and welcome to our podcast series. My name is Meghann Kiernan and I’m a Senior Solutions Manager here at Outsource Strategies International (OSI). Today we’ll be discussing strategies to overturn and prevent medical necessity denials.

The term “medically necessary” generally refers to care that is reasonable, necessary, and appropriate, based on evidence-based clinical standards of care. Medicare and private payers regard medical necessity as a deciding factor for claims payment. The interpretation and application of medical necessity can vary based on payer policies. According to recent reports, many hospitals and practices are experiencing an increase in medical necessity and notification denials. Medical necessity denials can impact the organization’s bottom line. Regardless of how arduous or time-consuming the process can be, providers should appeal and recover denied insurance claims.

First, let us discuss overturning medical necessity denials. A recently published www.outpatientsurgery.net article recommends three strategies to navigate denials based on a medical necessity decision.

No.1 is reviewing payer’s “medical necessity” documentation. Government and private insurances have specific guidelines as to what is considered medically necessary for certain items, procedures, and services. These policies are available in the payment policies or clinical guidelines. The coverage policies for Medicare includes NCDs or National Coverage Determination, which are nationwide determinations for Medicare covered services and Local Coverage Determinations  or LCDs or determinations if a service is covered carrier-wide by a Medicare Administrative Contractor. Outpatient Surgery recommends that providers ask insurers for their state’s clinical criteria used to make treatment decisions and review it for relevance and accuracy. This will help develop a better case against exceptions that the payer makes to this type of guidance.

Second is demand peer review. Next, the Outpatient Surgery report advises appealing adverse decisions through independent external review organizations. Physicians can ask for a peer review by sub-specialty peer reviewers who have the expertise to conduct meaningful dialogue with providers regarding both treatment decisions and applicable coverage limitations.

Third is: chase multiple levels of appeal. Most insurers, including Medicare and Medicaid, have multiple levels of appeals. For instance, Original Medicare has five levels of appeal, with its own unique requirements for each. According to Outpatient Surgery, providers should pursue all levels of appeals and importantly, strive for higher-level appeal reviews to overturn mediocre appeal review components obtained at the lower levels of review.

Next, let us discuss how to avoid medical necessity denials. Healthcare organizations need to take specific steps to avoid medical necessity denials.

• First is improving documentation processes. Poor documentation and a lack of specificity are the key reasons for medical necessity denials. Documentation must support treatment and level-of-care decisions. Ongoing education will help physicians understand the medical necessity implications of their documentation. Reviewing supporting documents for accuracy and relevance before claim submission can prevent incomplete documentation that can lead to medical necessity denials.
• The second is to have a skilled coding team. Medical coders translate the clinical documentation into codes which insurance companies use to determine if the services were medically necessary. Coders should therefore be aware of the medical necessity implications of the codes they report and how coding impacts the revenue cycle. They should be knowledgeable about LCDs, NCDs, and other payer policies. Outsourcing medical coding to an experienced company can ensure that coding errors don’t cause medical necessity denials.
• Update billing software: Billing software should be upgraded to incorporate the new codes. Outdated systems can cause errors and delays in billing and coding.
• Prior authorization: Providers should ideally have an insurance verification team to verify and validate patients’ benefits and demographic information and obtain referrals and prior authorizations prior to the service being provided.

Providers should keep track of denials and appeals and use the data to identify trends and determine root causes of denials. This will help them take steps to avoid such mistakes in the future.

I hope this helps. But always remember that documentation as well as a thorough knowledge of payer regulations and guidelines is critical to ensure accurate reimbursement for the procedures performed.

Thanks so much for joining me and stay tuned for my next podcast.