There are many reasons for insurance carriers to deny an insurance claim. The reasons for a denial of benefits and in the difficulty of resolution of the denial may vary among payers. However, knowing specifics of the denial are of the utmost importance.
Medical necessity refers to a decision by your health plan that your treatment, test, or procedure is necessary for your health or to treat a diagnosed medical problem. Most health plans will not pay for healthcare services that they deem to be not medically necessary such as Botox or procedures that they determine to be experimental or not proven to work.
Medicare, defines medically necessary as: “Services or supplies that are needed for the diagnosis or treatment of your medical condition and meet accepted standards of medical practice.”
Criteria to Determine Medical Necessity
There is not an all-encompassing list of medical necessity criteria. In most instances, Medicare and private insurers have varying criteria for determining whether a given procedure is medically necessary based on the patient's circumstances.
Appealing medical necessity denials
Medical necessity or clinical denials are typically a top denial reasons for most providers and facilities. Many hospitals and practices are experiencing an increase in medical necessity and notification denials. Medical necessity denials can impact the organization’s bottom line. Regardless of how arduous or time-consuming the process can be, providers should appeal and recover denied insurance claims.
Some of reasons for denials are:
Inpatient criteria not being met
Inappropriate use of the emergency room
Length of stay
Some of the primary causes of medical necessity denials are:
Lack of documentation necessary to support the length of stay
Service provided
Level of care
Reason for admission
Providers must ensure that their physician and nursing documentation clearly supports the services billed for and that the physician’s admission order clearly identifies the level of care. when appealing medical necessity denials, be prepared to prove, through documentation, the reason(s) that this procedure should be considered medically necessary through case studies, scientific evidence, and common practice for your specialty and locale.
Avoiding Medical Necessity Denials
Documentation plays a key role in communicating to third-party payers that the evaluation and treatment services provided were medically necessary. Healthcare organizations need to take specific steps to avoid medical necessity denials by:
Ensuring documentation does support the level of care: The provider should specify what the patient’s current needs are that require hospital-level care. Poor documentation and a lack of specificity are the key reasons for medical necessity denials. Documentation must support treatment and level-of-care decisions.
Document daily: Physicians should refrain from copy-pasting the medical decision-making assessment and plan. They should document the patient’s current status daily and explain why they are being provided the treatment.
Provide ongoing education: Ongoing education will help physicians understand the medical necessity implications of their documentation.
Conduct documentation audits: Many providers don’t have a formal auditing program. It’s important to have a formal audit program that calls for regular audits. A system of regular audits will help you if you ever must fight a payor over an improperly denied claim or defend a request for repayment.
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