Minimizing Denials, Part 1: Outpatient Medical Necessity
As the number of patients with Medicare continues to rise, so does the risk of medical necessity denials for healthcare organizations. It is imperative, to minimize denials and increase reimbursement, that healthcare organizations understand the medical necessity requirements and how to address them on both the inpatient and outpatient setting. This discussion will focus on the latter and what can be done to tackle medical necessity denials on outpatient Medicare visits.
Outpatient visits include those that are scheduled, same day add-ons, and walk-ins. These are usually diagnostic tests such as labs, radiology procedures, cardiology procedures, and physical therapy sessions all performed on an outpatient basis. Medicare highly encourages organizations to check medical necessity for all outpatient services and if the test being ordered does not meet medical necessity and will not be covered by Medicare, then an advanced beneficiary notice (ABN) is required to be signed by the patient prior to services being rendered.
So, who should be responsible for this task and where in the revenue cycle should it fall?
Physician’s Office at Order Entry
Best practice has the medical necessity check being performed as early as possible in the revenue cycle; this means at the physician’s office when the order is created. Once the order is written or entered into a system, medical necessity should be checked either manually by looking up the cpt and diagnosis codes on the Medicare website or automated using software to screen the codes for any discrepancies. Obtaining buy-in from the physician offices, especially those not owned by the hospital, to perform the medical necessity check can be challenging. Quite often, the offices do not have the technology or the staff or the incentive since the reimbursement for the ordered test does not go to the physician.
Pre-Arrival Services at Scheduling
If medical necessity checking cannot be done at the physician’s office, then it needs to be done at the hospital by the patient access staff in pre-arrival services. For tests that can be scheduled, leveraging technology at the time of scheduling is most optimal. Once the cpt and diagnosis codes are entered into the system, medical necessity can be ran by the scheduler. If it passes, the scheduler continues with scheduling the test. If it fails, then the account should be sent to a worklist for dedicated staff to handle. These “medical necessity” individuals would work an exception report and contact the physician’s office to ask for a new order with appropriate codes. If the office does not provide an updated order to pass medical necessity, then an ABN should be created to be given to the patient at the time of registration. In my experience, most patients do not want to sign an ABN and will get involved in contacting their
physician for a new order so that they may receive the test they need. If a patient does sign an ABN, then the registration staff needs to be prepared to discuss the patient’s financial responsibility for the test and collect payment.
Registration at Time of Service
For same day add-ons and walk-ins, these patients can show up at any time and are usually carrying an order in their hands. This is where having dedicated “medical necessity” individuals comes in handy since medical necessity must be checked on demand while the patient is waiting. If medical necessity passes, then the patient should be provided the service. If it fails, then the patient should be given the option to either sign an ABN or wait while the physician’s office is contacted for a new order. Sometimes this can take a while since the physician’s office may be busy and therefore, another option the patient should be given is to come back later or another day to allow enough time for the hospital to obtain a new order for the service.
It’s Worth the Work
Sounds like a lot of work…is it worth it? Well, it really depends on the volume of outpatient Medicare visits an organization has. With the trend of more services being pushed to an outpatient setting, it means that more reimbursement will be at stake if medical necessity is not verified. While it does take staff and technology to successfully implement a medical necessity checking process, it also minimizes denials and ensures maximum reimbursement for the services that the organization is providing. As our population continues to age and the Medicare population continues to grow, healthcare organizations that make medical necessity checking a priority will be glad they did.
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