Billing Compliance Guidance: Medical Necessity
Establishing that an item or service is "medically necessary" is fundamental to every payment decision made by both federal and private payers. Individual determinations may become complicated by multiple factors, however, the principle of a service being "reasonable and necessary" to meet a patient's needs forms the basis of most payment decisions.
Medicare issues Local Coverage Determinations (or LCDs) that provide guidance on whether or not a service is "reasonable, necessary and appropriate" for specific conditions. Other payers may develop their own payment policy guidelines to determine medical necessity.
What does medical necessity mean? What makes an item or service medically necessary? Generally an item or service is considered medically necessary when it is:
Approved in accordance with recognized medical standards and considered safe, effective and appropriate for the patient's condition;
Intended to address symptoms, diagnosis or treatment of a medical condition;
Not in excess of scope, duration or intensity of the level of care needed to provide safe, adequate and appropriate treatment.
A clinician's documented plan of care for a patient should address why staff are providing a diagnostic or therapeutic service for a particular patient.
In many cases, patient orders and progress notes describe "why" staff are doing what they are doing. For example, a physician's progress note states: "Chest x-ray to evaluate cough and congestion." This is a simple yet illustrative example of clinical documentation telling the story of the patient and answering the question: "What is the reason for the chest x-ray?"
Clinical documentation is an area where the interests of quality and safety and those of compliance are parallel. Payers will audit patient records to confirm what is billed and why. Other regulators will look to patient records as evidence of quality patient care.
It's important for clinicians to remember that the processes and reasons for care are not obvious or inferred. Billing Compliance staff urge clinicians to be as specific and detailed as possible when documenting care.
If you have questions about medical necessity or clinical documentation, please call the Billing Compliance at 617-582-0092.