What is Medical Necessity and Why is it a Big Deal?
What is Medical Necessity?
Medical necessity is defined as those services “reasonable and necessary for the diagnosis and treatment of an illness, injury or to improve the functioning or malformed body member and are not excluded under any other provision of the Medicare program.”
False Claim Violations
Intentionally billing Medicare (or other government programs) for claims the provider knows are not medically necessary can result in a false claim violation and there can be severe financial penalties. For example, a few years ago Zwanger-Pesiri, Inc. (a radiology practice in New York) was fined more than $10 million in civil and criminal penalties.
Medically necessity played a central role in this case. Specifically, when patients were referred for either a dual energy x-ray absorptiometry (DXA) bone scan or a vertebral fracture assessment, the practice routinely performed both tests. Or if female patients were referred for a transabdominal pelvic ultrasound, the practice performed both a transabdominal and transvaginal ultrasound.
Understandably, at times, additional imaging is required, however there must be a documentation trail that answers the “medical why” question. In the case of the additional transvaginal imaging example, if the medical reason why the service was necessary was documented “to rule out ovarian torsion” then the audit outcome would have looked very different. Routinely adding services “just in case” vs. patient specific indications for the medical need for the additional service is key.
How does Medicare know?
How does Medicare know this type of violation occurred? In the instance of Zwanger-Pesiri, inappropriate billing practices were reported by two employees in a qui tam (whistleblower) complaint. However, another report from Medicare stated audits can be done through “computer matching, data mining and data analysis techniques.” In other words, each claim submitted results in an electronic footprint that can be analyzed.
Accidentally Performed Procedures?
What if the procedures were accidentally performed and billed because the physician and/or billing entity didn’t understand the rules? If you say, “I’m sorry, it was a mistake,” does that help? Nope. Billing Medicare has with it the obligation to understand and follow the rules and the physician “should have known,” beginning with the fact the additional procedures should never had been performed. Failure to understand can be considered “reckless disregard” of the rules or deliberate ignorance that the claims were fraudulent.
Parameters of Medical Necessity
The parameters of medical necessity are defined in National Coverage Determinations (NCDs) and if not covered by national policies, the Medicare Administrative Contractors (MACs) develop Local Coverage Determinations (LCDs) to establish coverage guidelines. These documents define key criteria for medical necessity as well as limitations for coverage.
Each Claim Attests to Compliance
Expectations of accuracy are further reinforced by the fact every claim form (or electronic claim) includes the following attestation:
NOTICE: Any person who knowingly files a statement of claim containing any misrepresentation or any false, incomplete or misleading information may be guilty of a criminal act punishable under law and may be subject to civil penalties.
SIGNATURE OF PHYSICIAN OR SUPPLIER
(MEDICARE, TRICARE, FECA AND BLACK LUNG)
In submitting this claim for payment from federal funds, I certify that:
the information on this form is true, accurate and complete;
I have familiarized myself with all applicable laws, regulations, and program instructions, which are available from the Medicare contractor;
I have provided or will provide sufficient information required to allow the government to make an informed eligibility and payment decision;
this claim, whether submitted by me or on my behalf by my designated billing company, complies with all applicable Medicare and/or Medicaid laws, regulations, and program instructions for payment including but not limited to the Federal anti-kickback statute and Physician Self-Referral law (commonly known as Stark law);
the services on this form were medically necessary and personally furnished by me or were furnished incident to my professional service by my employee under my direct supervision, except as otherwise expressly permitted by Medicare or TRICARE;
NOTICE: Anyone who misrepresents or falsifies essential information to receive payment from Federal funds requested by this form may upon conviction be subject to fine and imprisonment under applicable Federal laws.
Financial and Operational Implications
There are also financial and operational implications associated with documenting medical necessity and we will examine those in future articles. It takes a team effort between the practice and MSN to accurately document, code and bill a medically necessary procedure. Since it is more than “just another denial code,” medical necessity is central to our work.