Revenue Cycle Time Line: Medical Necessity

This article has links to allow easy access time line content from Scheduling to Bad Debt Recovery. Use this information as a starting point for planning, SWAT Analysis, or to review policies and procedures for gaps. Create a time line for your facility to assure all participants share the same expectations.

Goals:

· Reduce Medical Necessity Denials

· Improve point of service collection for services deemed not necessary

Activities and Considerations:

Medicare requires hospitals to notify patients if services provided are deemed unnecessary by local/regional medical review organizations. Before an outpatient visit, the provider is expected to compare the services requested with the ordering physician’s diagnosis or patient’s complaint to determine whether the diagnostic test is medically necessary. If the service is deemed unnecessary, the patient must be notified of the circumstances, told how much they will be billed for services deemed unnecessary, and offered the option of not receiving the care. A form is presented for the patient to sign. This document is known as an Advance Beneficiary Notice (ABN). If the ABN is signed and the patient proceeds, the claim sent to Medicare must be encoded with an indicator that tells Medicare that a signed ABN is on file.

Software systems assist with entry of documented diagnosis/complaint, procedures performed, charges for those procedures, and amounts contracted for payment by Medicare, specific to the healthcare provider. Some offer integration with billing systems to update the claim modifiers indicating the presentation to the patient and whether the patient signed an ABN.

The processing must take place as soon as a request for service is clearly identified. If the procedure requested is scheduled, the scheduling interview must include the ABN data capture and dialog. If diagnosis and procedure checking indicate the lack of medical necessity, dialog with the scheduling physician office should help determine and resolve the problem before the patient’s arrival. If the physician or patient continues to request the service deemed unnecessary by the LMRP/LCD criteria, the patient must be advised of the potential for non-covered services so they may make an informed decision whether to proceed.

When this situation does not arise until the patient’s arrival, all participants (patient, hospital, and physicians) are inconvenienced. Patients become frustrated when they learn services ordered may not be medically indicated, causing lost of trust or even doubt with their selected medical providers. Physician time with other scheduled patients may be interrupted while a clerical issue gets resolved. Hospital registrars, often pressured to cycle patient registrations faster, are interrupted with an event that may cause several phone calls to resolve while patients are waiting. Clinical personnel and resources are delayed because patient diagnostic or therapeutic services cannot begin until the patient makes an informed decision whether to proceed.

Use LCD database and determine whether service is deemed “Medically Necessary” by Medicare (and other payers).

Medical Necessity denials without ABNs add up to large losses in revenues.