Hospitals continue to find that procedures and tests performed on an outpatient basis do not always meet the standards of medical necessity. Many are lab tests, although it appears there is an upswing in write-offs for bad diagnoses to include infusions [of expensive drugs] and radiology procedures. Logically, we anticipate that with ICD-10 and the associated increased level of detail available via diagnosis codes, combined with changes to NCDs and LCDs, could make it more challenging to select the appropriate diagnosis code to support a procedure’s medical necessity.
If your facility is experiencing issues with having clear documentation supporting procedural medical necessity presently, the situation will become significantly more pronounced under ICD-10.
The following are suggestions to reduce potential issues in 2014:
First, if you don’t have a billing adjustment code that’s used to monitor write-offs for medical necessity, establish one now. In a recent HCCA (HealthCare Compliance Association) forum a key point was discussed regarding medical necessity - if you can’t measure it, you can’t monitor it, and if you can’t monitor it, you can’t improve it. As a recent article about medical necessity from MedAssets notes, an organization with $150 million in outpatient revenue annually, having a medical necessity write-off rate of 1% (which is a much better rate than many facilities) results in a $1.5 million dollar revenue loss. A corresponding concern is that an organization not pursuing ABNs (too much work, not worth it, not part of our customer service approach, etc.), may trigger a larger issue, such as a compliance risk of unfair competition or ‘enticement’, or a formal complaint by organizations taking exception with the ‘free care’ being provided by your organization.
Graphs from a recent HCCA presentation show a number of ways to review and analyze write-off data, such as by patient type and by physician:
Second, review the various entry points in the organization where the verification of medical necessity can take place – pre-surgical testing, lab, radiology, central registration, infusion center. Determine the methods that information arrives at those locations – fax, patient walk-in, electronic – and incorporate easier and faster ways to validate orders against diagnosis information and to contact provider offices.
- In an article from Intermountain Healthcare, they opted to credential their lab registration and phlebotomists as coders and have them serve as the gatekeepers, so as to reduce unnecessary blood draws fulfilling orders that did not meet medical necessity.
- Some institutions have coders assigned to review diagnosis information and medical necessity via phones when there are multiple registration locations – phone-a-coder!
If current diagnoses on order scripts arrive from physician offices scribed with ICD-9 codes instead of text, consider how challenging that will be when ICD-10 goes live. Will your physicians be able to accurately select from the plethora of ICD-10 codes? Will they have time to also prepare accurate and sufficient clinical documentation that supports the diagnoses codes (which will support the billing codes)? If you are not comfortable with providers selecting ICD-10 codes, then:
- Start working now on requesting physicians to provide clear clinical documentation.
- Review your order request materials to ensure there is sufficient room to record text diagnoses.
- Meet with office staff and communicate the rationale behind this change.
Review and communicate feedback on medical necessity adjustments at a detail level to physician offices, ED physicians, internal clinic physicians, or other order sources about the rates at which write-offs are occurring for them.
Analyze unexpected denials from payers. All payers are not the same and it may be that issues of medical necessity with one payer were not in effect with another payer. Put the checks in place as new information is uncovered.
Talk to your ordering physicians, both on your staff and referring from outside your organization about ICD-10 and what they are planning in terms of readiness and education. While it will be more work for your organization, improving the odds of their ability to provide good diagnosis information for tests being ordered in October 2014 may be worth your investment in educating and helping them!
Measure the improvements in adjustment rates on a regular basis so you know how your efforts are paying off.
Carle Nicklas
Strategic Advisory Services
Santa Rosa Consulting
carlenicklas@SantaRosaConsulting.com