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How to avoid medical necessity denials

Medical Economics JournalMedical Economics July 2022
Volume 99
Issue 7

How to avoid medical necessity denials and ensure timely payment.

Medical necessity denials are a source of frustration for many practices nationwide. “It feels like the game of whack-a-mole,” says Holly Ridge, B.S.N., RN, CPC, CPMA, manager of medical necessity and authorization denials at Duke University Health System in North Carolina. “We have an increase in denials in one service, determine the root cause, improve our processes and [then] appeal — and then something else comes up.”

Ridge, who oversees hospital and professional denials for medical necessity, says payer policies have become more detailed and restrictive. “Payers have also improved their edits to automate denials,” she adds.

Toni Elhoms, CCS, CPC, CPMA, CRC, the CEO of Florida-based Alpha Coding Experts, LLC, agrees. The worst part? “These denials can add up very quickly,” she says. For example, Medicare pays approximately $40 for a test for vitamin D (CPT code 82306). If a practice fails to support medical necessity and receives denials for this test 30 times a month, that’s $1,200 a month or $14,400 a year.

1.Sick visit on the same day as an annual wellness visit (AWV)

Reason for denial:Lack of clear clinical documentation regarding why the physician had to go above and beyond what is normally addressed during an AWV.

How to avoid it:“I often tell doctors to write the note as if it were two separate visits — one for the problem and one for the well visit — to make it clear,” says Elhoms. “The provider needs to spell out what makes the sick visit significant and separately identifiable from the well visit.”

Providers also need to report the correct ICD-10-CM code for the visit, says Elhoms. When there are abnormal findings (ie, when the physician addresses a separate problem), report Z00.01 as well as any additional diagnosis codes to represent those findings. Only use ICD-10-CM code Z00.00 to indicate the absence of abnormal findings. Payers may question and deny Z00.00 when billed with an AWV and separate evaluation and management (E/M) service on the same day, she adds. Finally, be sure to append modifier -25 to the E/M code so it passes through clearinghouse edits, she adds. Modifer -25 is for “Significant, Separately Identifiable E&M Service by the Same Physician on the Same Day of the Procedure or Other Service.”

2.In-house labs and diagnostic testing

Reason for denial:Testing too frequently. For example, a payer might deny a prostate screening when the patient had it done six months ago through a different physician. Or a payer might deny a hemoglobin A1C every four months because its policy states it only covers the test every six months.

How to avoid it: For annual tests (eg, prostate screenings), patient communication and care coordination are critical, says Elhoms. “Good communication with the patient can help you avoid some of these issues on the back end,” she adds.

For other frequency-related denials, clinical documentation is paramount, says Ridge. “If a patient is diabetic and doesn’t appear to be responding to the original treatment plan even though they’re [adherent], you could appeal this very easily,” she adds. “The clinical circumstances of ongoing hyperglycemia would warrant frequent A1C monitoring.”

Reason for denial:Incorrect ICD-10-CM diagnosis code. For example, a patient on long-term anticoagulant medication requires checks of their prothrombin time every few days. The payer might deny this test if the physician simply pulls the patient’s entire problem list (e.g., atrial fibrillation, heart disease and presence of coronary stent) onto the lab order.

Another common reason for denial is that physicians do not report the correct ICD-10-CM code to justify testing a patient’s vitamin D — especially when ordered for an AWV. “This is one of the biggest denials, volumewise,” says Ridge. “Medical policies cover it for a variety of diagnoses, but the annual exam is generally not one of them. If the annual exam code is linked to the vitamin D test, it won’t be covered.”

How to avoid it: First, link the correct diagnosis code with each lab or test. In other words, the principal diagnosis on the lab order should be the condition that is being screened or monitored. For example, for frequent testing of prothrombin time, list ICD-10-CM diagnosis code Z79.0 indicating long-term (current) use of anticoagulants as the principal diagnosis, says Elhoms.

Likewise, for vitamin D testing, list the most relevant ICD-10-CM diagnosis code as the principal diagnosis on the lab order, says Ridge. For example, this might include cancer, obesity, Crohn’s disease, ulcerative colitis, irritable bowel syndrome or fatigue. A vitamin D deficiency based on a previous test might also suffice, she adds. It is important to know payer policies before ordering the vitamin D test, she adds.

3.High-cost medications

Reason for denial: Patient does not meet the payer’s medical policy criteria for coverage.

How to avoid it: Know each payer’s coverage criteria and appeal denials when possible, says Ridge. “Most Medicare Administrative Contractors will consider other indications at their own discretion,” she adds.

Another tip is to work with pharmaceutical representatives to understand indications and coverage criteria. “Not all, but many, pharmaceutical companies offer patient assistance programs if the physician determines the patient really needs the medication and they have failed multiple other treatments,” says Ridge. One caveat: For patients to qualify for some of these programs, physicians may need to bill the patient’s insurance, receive a denial, appeal that denial and fail to overturn the appeal, she adds.

If you want to address medical necessity denials but are uncertain where or how to begin, experts provide these seven tips.

7 tips to avoid medical necessity denials

Appoint someone to stay on top of each payer’s medical policies. For example, this could be a certified coder, biller or outside consultant. “The return on investment is absolutely worth it,” says Ridge.

Trend and monitor your denials. What are your most frequent denials in terms of volume? What are your high-dollar denials? Knowing this information can help you take a targeted approach, says Elhoms.

It can also help you quickly spot denials that may be due to the payer’s own error, says Ridge. For example, Ridge says Medicare started denying Botox injections due to lack of medical necessity; however, it was referencing a policy that was not applicable. Bringing this to the Medicare Administrative Contractor’s attention can quickly resolve the issue and improve cashflow, she adds.

Appeal denials. Start with your high-volume, high-dollar denials, says Elhoms. To save time, create standard letter templates for certain types of appeals. Also, remember that the quality of your appeal will make or break your case. In the absence of internal expertise, consider working with an external consultant who knows what payers are looking for in terms of appeal language, she adds. Remember to include research studies, CPT Assistant references, the payer’s own medical policy and any other information that can help support your argument, she adds.

Submit corrected claims. In cases where diagnosis codes are omitted or not specific, consider adding the correct codes and resubmitting the claim, says Elhoms. Be sure to check with your payer regarding how to handle resubmitted claims. Also highlight the part of the note that supports the new or revised codes, she adds.

Build edits in your practice management system. The goal is to catch potentially problematic claims before they go out the door. “Coders can review these cases to make sure the right diagnosis codes are linked to the lab or test,” says Ridge.

Involve the patient. Consider asking the patient to sign a form (i.e., the Designation of Authorized Representative form) allowing you to appeal the denial on the patient’s behalf under the Employee Retirement Income Security Act. “It gives you additional appeal opportunities and it’s another chance for a new set of eyes to review it,” says Ridge. Member appeals also have the opportunity for an independent review organization to review the denial, which may increase your chances of overturning it.

Leverage contract negotiations. “If you’re having trouble with a payer, the time to bring up the issues is during contract negotiations,” says Elhoms. “Don’t walk away from the discussion without having some type of resolution.” For example, will the payer build a custom edit in its system or provide a direct contact who can easily address these denials without adding administrative burden on your practice?

If the payer is not willing to work with you, consider walking away, says Elhoms. “Is the payer even worth your time? If you’re spending this much time with medical necessity denials, it may not be worth it,” she adds.

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