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Hospitals are always looking for ways to improve operating margins. One reason for a drain in cash flow is due to payment denials because medical necessity is not met. Medical necessity denials are a significant challenge to hospitals not only because of lost revenue, but also because of the resources and time required to resolve denials. Organizations that have made strides in improving the management of medical necessity denials share one key characteristic: their priority is to prevent denials from occurring in the first place.

Hospitals have developed processes to avoid medical necessity denials in two general areas: at patient access (before providing the medical service) and in patient accounting (well after the patient has gone home, but before the bill is submitted for payment). These scenarios are typically referred to as preservice editing and postservice bill scrubbing, respectively.

* Before rendering service, checking to determine whether Medicare or the primary payer will pay for that item or service

* Ensuring there is proper documentation to support the order for the services

* Providing the patient an advance beneficiary notice (ABN) if the provider expects the claim to be denied by the payer for reasons of medical necessity, local standards of care, or similar denials. The ABN lets the patient know that the item or service is not covered by Medicare or the payer and that the patient may be financially responsible for that service.

Postservice steps involve:

* Processing UB92 and HCFA 1500 claims through a bill-scrubbing routine, either at the facility or at the claims clearinghouse

* Suspending the claim and returning it to the health information management (HIM) department to have the patient record checked for documentation that supports medical necessity, and adding new diagnosis codes, if applicable

* Writing off unbillable charges

Although these actions appear straightforward, they each present complexities providers must address.

Determining Medical Necessity

In the 1990s, the Office of Inspector General (OIG) and the Health Care Financing Administration (HCFA, now called CMS) began a series of investigations that dramatically altered the landscape of healthcare coding and billing. The goal was to determine the appropriateness of Medicare payments.

# posted by Medical Information : 5:50 AM