How to avoid radiology claim denials: Medical necessity

2016 07 28 15 12 04 784 Coffta Sandy 20160728221344

In our previous articles in this series, we covered two top reasons for radiology claim denials: patient eligibility problems and lack of proper authorization. The third biggest reason for insurance claim denials is failure to document the medical necessity for the exam. Let's take a look at this issue in detail so that your radiology practice can avoid such claim denials.

What is medical necessity?

The physician must be sure that the performance of any exam is medically necessary in the diagnosis or treatment of the patient's condition. The definition of "medical necessity" is made by each insurance payor based on its own payment policies.

Sandy Coffta, vice president of client services at Healthcare Administrative Partners.Sandy Coffta, vice president of client services at Healthcare Administrative Partners.

This means that while a physician might feel a particular procedure is warranted, payment for that procedure might not be made by the payor due to its own medical protocols that dictate the conditions under which certain procedures are to be performed. Knowing specifically which insurance plan the patient has and what its requirements are is important to maximize reimbursement and avoid denials.

What causes medical necessity denials?

Denials of claims for medical necessity usually do not result from the physician's patient care decisions but rather from a lack of appropriate documentation conveyed to the insurance payor. Exams with a positive finding do not usually generate a denial, since the finding is usually enough obvious evidence that the exam was necessary. The performance of tests to rule out a particular condition is problematic, especially when the result is negative, and this is where it pays to be clear about the reason for the exam.

When documenting the exam, the radiologist should always include the answer to the question, "Why were we looking for this condition?" For example, duplex Doppler extremity ultrasound is performed routinely to rule out blood clots, and the vast majority of the results are negative, yet the reason for performing the exam is usually very good. Indications that will most often justify this procedure include swelling of the extremity, limb pain, or shortness of breath. A postoperative patient who is immobile for an extended period is also a legitimate candidate for this exam.

There is also a correlation, albeit anecdotally, between the relative cost of the exam and the incidence of a medical necessity denial. Chest x-rays for almost any reason are rarely denied, while CT and MRI exams undergo far closer scrutiny by the payor to determine whether or not payment should be made. It is often useful to indicate in the documentation the types of exams already performed for the current condition, along with their results. Performance of an exam based on a previous abnormal result will usually pass review for medical necessity.

How to avoid denials

A good medical history obtained from the patient will usually provide the signs and symptoms being presented. The referring physician can also provide the reason for the referral, including the patient's symptoms. Some referring physician offices are better than others about providing the radiologist with a complete history that includes signs and symptoms. A review of your insurance denials might reveal a pattern of which referring offices are associated with more denials than average; this information will then help the scheduling staff seek out more complete information from those particular offices.

Another good source is the technologist, who can gather useful information at the time of the exam. Modality worksheets should be reviewed to be sure they include questions about the patient's history, signs and symptoms, and previous imaging.

Armed with as much information about the patient as it is possible to gather, the radiologist must be sure to include the relevant information in the documentation of the procedure. This makes it available to coders and billers for proper claim preparation, and also in the event the payor requests additional information or audits the case.

What to do about denials

While the best course of action is to avoid denials in the first place by understanding the payor's rules and obtaining good information, a denial for medical necessity is not final. If after reviewing the denial the practice feels that it is not correct, an appeal can be filed.

This is where maintaining detailed documentation is invaluable, as it allows a case to be made for payment when the initial claim form might not have contained enough information. The reasons for appeal can be as simple as clarifying a detail about the patient's history, or as complex as citing case studies or other evidence to show why the procedure was appropriate under the circumstances.

A denial for medical necessity usually means that while the insurance company has declined to pay, the patient can still be held liable for payment. Medicare, however, has specific rules that govern when collection can be obtained from the patient. Before performing a procedure that is either noncovered or determined by Medicare to be not medically necessary, the patient must be given written notice using an Advance Beneficiary Notice (ABN) form. Failure to do so will preclude the practice's ability to collect payment from the patient. Practices should be aware of the rules covering the proper use of Medicare ABNs.

The practice must be sure to keep the patient informed about its activities during any appeal process. When the payor notifies patients that they are going to be responsible for payment after a denial, this will usually be quite upsetting to them. Be proactive and let them know what steps are being taken to resolve the issue between the practice and the payor.

Action plan

Avoiding denial of payment due to a lack of medical necessity requires that a few simple procedures be put in place:

  • Understand the medical protocols and payment policies of the various payors.
  • Train registration staff to gather as much detailed insurance information as possible.
  • Be sure the registration staff knows the questions to ask when the appointment is being made and when the patient arrives for the exam.
  • Update technologist worksheets to include appropriate questions about history, signs, and symptoms.
  • Understand which exams are more likely to be scrutinized and be sure to provide complete information for those exams.
  • Establish lines of communication so that everyone in the process is aware of changes.
  • Perform internal reviews of cases that have been denied and provide feedback to the radiologists about the adequacy of their documentation.
  • Monitor denial reports and act on any trends that are identified; useful data can be gathered about referring physician, payor, and modality patterns.
  • Review denials and identify when an appeal is appropriate.
  • Following a denial, keep the patient informed about the practice's intentions.

As with many radiology practice management issues, when it comes to minimizing claim denials, being proactive definitely pays off.

Sandy Coffta is vice president of client services at Healthcare Administrative Partners.

The comments and observations expressed herein are those of the author and do not necessarily reflect the opinions of

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