A medically necessary service must prove to be reasonable and necessary to diagnose or treat a patient's medical condition. Furthermore, the diagnosis code(s) reported (on the claim) with the service rendered is to justify (to a payer) "why" a service was performed. The diagnosis reported can determine the medical necessity of the procedure.
Clinicians must understand the rules and regulations that guide the wound care department's documentation and billing processes. The rules within the wound care department are generated from your Fiscal Intermediary, Carriers, and Medicare Administrative Contractors (MACs); National Coverage Determinations (NCD); respective Local Coverage Decisions (LCD); Centers for Medicare & Medicaid Services (CMS); The Joint Commission; American Medical Association; and so on. It is important to have processes in place to ensure your documentation supports the rules of medical necessity.
Performing medical necessity reconciliation begins with patient registration. Patient registration is a part of the Revenue Cycle process that includes compliant billing and denial management. These components of the Revenue Cycle process complement the documentation process for a fiscally successful department. These processes are governed by policy. It is also important to remember that Medicare, required by the Social Security Act, is set in place to ensure that payment is made only for those medical services that are reasonable and necessary. Policies specify the circumstances under which Medicare covers specific services. Most payers have implemented medical necessity guidelines for wound care services.
The CMS has defined medical necessity as "No Medicare payment shall be made for items or services that are not reasonable and/or necessary for the diagnosis or treatment of illness or injury to improve the function of the malformed body member."1 In short, the clinical documentation, diagnosis, and Current Procedural Terminology (CPT-4)2 codes reported must meet medical necessity, or the claim will likely not be paid.
Medical necessity guidelines can be payer specific, but most often payers follow guidelines published by CMS, NCD, or LCD. For example, Noridian Healthcare Solutions notes the following within their LCD for Wound Care and Debridement Wound Care & Debridement-Provided by Physician, NPP, or as Incident-to Services last updated October 7, 20163:
"Medical necessity: Providers must document the medical necessity for all services provided. If there is no documented evidence (eg, objective measurements) of ongoing significant benefit, then the medical record documentation must provide other clear evidence of medical necessity for treatments. The medical record must also clearly indicate the complexity of skills required by the treating practitioner/clinician."
The LCD further notes the need for medical necessity under the following areas:
"Patients may be evaluated by the physician/NPP, and the follow-up care may then be provided by qualified hospital incident-to staff working under the physician's plan of care. When a physical therapist provides these incident-to follow-up services and provides an initial therapy evaluation (CPT 97001), the documentation must clearly indicate the medical necessity for these additional evaluative services (as compared with the previously completed physician evaluation of the patient's condition) in order to be separately reimbursable.
"An advance beneficiary notice (ABN) may be given when medical necessity is not supported for the initial therapy evaluation. However, an ABN may not be given when medical necessity is not supported for a follow-up visit since there is no billable therapy code for a routine reassessment (ie, routine wound assessment with/without a dressing change)."
It is important to stay abreast of the NCDs and your specific LCDs for the latest information and specific guidelines for coverage by the specific MAC that processes the Medicare claims in your jurisdiction. Information for Medical Necessity is found under the LCD section titled: Coverage Indications, Limitations, and/or Medical Necessity. It is also prudent to be familiar with the managed-care payer agreements and limitations.
Payer medical necessity verification should be completed prior to the service rendered. There will be times when it is "thought" the service would be considered medically necessary based on the inquiry confirmation, but a denial may result. Every effort must be made to ensure complete and compliant documentation. It is your documentation that will be used to dispute, and potentially overturn, the denial.
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