The complexities around medical billing and claim submission can baffle the most seasoned doctor or revenue cycle manager. Denying medical claims is one of the main reasons why healthcare providers aren’t getting their maximum reimbursements from insurance companies.
This article is part 2 in our blog series about common denials where we take a deeper look at typical claim denials experienced by medical billing teams. In each article, we discuss the reasons for those denials and offer some practical solutions to reduce those rejections and optimize your reimbursements.
Blog Series: 5 Common Reasons Medical Claims are Denied
Part 1: The Pitfalls of Coding Errors
Part 2: Lack of Medical Necessity
Part 3: Missing or Incomplete Documentation
Part 4: Service Not Covered by Insurance
Part 5: Missing Deadlines for Claims Submission
Lack of Medical Necessity: Navigating the Justification Maze
The definition of “medical necessity” is important to understand with regards to an insurance company’s requirements around healthcare providers’ medical claims and reimbursement. Documentation around medical necessity is like the gatekeeper, helping determine whether insurance companies will approve coverage and reimbursement for a patients’ healthcare services.
Understanding this concept and mastering its complexities is foundational for maximizing claim approvals and minimizing denials based on “lack of medical necessity”.
Is your practice seeing medical claims denied due to “lack of medical necessity”? This article outlines the primary reasons for denied claims and what to do about it.
Understanding Medical Necessity Denials: The Key to Coverage
Medical necessity refers to the idea that a healthcare service or treatment is essential to diagnose or treat a patient’s condition with the objective of improving their health outcome. Medical necessity is generally accepted within the medical community and a denial by an insurance companies is based on several factors, including:
- The patient’s condition and diagnosis
- The proposed treatment plan
- Established medical protocols and guidelines
- The expected outcome of the treatment
- Prior authorization
Prior Authorization: A Hurdle to Jump
In some cases, insurance providers and their payer policies require prior authorization before approving certain healthcare services. This essentially means obtaining pre-approval from the insurance company for a specific service before it’s performed. Prior authorization is often required within the payer policies for services deemed potentially unnecessary, expensive, or experimental.
Here are some strategies a healthcare provider can implement to improve their prior authorization process and minimize claim denials for lack of medical necessity:
- Develop a Master List: Create a comprehensive list of medical procedures requiring prior authorization, categorized by health insurance provider. Include any relevant details like documentation requirements or alternative approaches not requiring authorization.
- Invest in Technology: Utilize electronic health record (EHR/EMR) systems with built-in features for prior authorization requests, or leverage the new breed of AI and RPA tools that focus exclusively on automating prior authorizations. This streamlines the process and reduces errors compared to faxes or paper forms.
- Standardize Workflows: Develop clear and standardized workflows for handling prior authorization requests. This ensures consistency and reduces the risk of missing steps or deadlines required by health insurers.
- Dedicated Staff: Consider assigning dedicated staff members to handle prior authorization requests. This fosters expertise and efficiency in navigating the process..
- Gather Thorough Information: Collect all necessary clinical data upfront, including diagnosis codes, supporting documentation (test results, physician notes), and treatment plan details.
- Clarity and Conciseness: Ensure all documentation is clear, concise, and directly addresses the medical necessity of the requested procedure. Utilize clear language and avoid medical jargon where possible.
- Coding Accuracy: Double-check coding accuracy to ensure alignment with the requested procedure and supporting documentation. Inaccurate coding can be a red flag for denials.
The Pitfalls of Not Meeting Medical Necessity: Reasons for Claim Denial
Failing to demonstrate medical necessity can lead to claim denials by health insurers. Here are some common scenarios that can trigger claim denials:
Services Deemed Not Medically Necessary
If the insurance company deems a medical service unnecessary for the diagnosed condition, it will likely deny the claim. This could be preventive care procedures not covered under the patient’s plan, or a medical treatment considered excessive for the patient’s condition.
Exceeding Industry Standards
If a service goes beyond what’s considered standard practice for a particular diagnosis, the insurance company may submit a medical necessity denial. For example, additional tests or consultations not deemed routine for the specific situation could be flagged.
Experimental Treatments
Insurance companies typically don’t cover experimental or investigational procedures still undergoing clinical trials, triggering a medical necessity denial.
Building a Strong Case: How Clear Documentation Supports Medical Necessity
Clear and concise medical documentation is your strongest asset in convincing an insurance company of medical necessity and preventing an appeal process. Here’s what your documentation should ideally include:
- Accurate CPT code and any administrative code
- A detailed account of the patient’s condition, including symptoms and medical history
- A clear explanation of the diagnosis
- A well-defined treatment plan outlining the proposed service and its rationale
- Documented evidence supporting the necessity of the recommended treatment, potentially including relevant lab results, imaging reports, or specialist consultations
- Expected outcomes of the treatment plan
By providing comprehensive and well-documented justification for the service, you can significantly increase your chances of approved claims and avoiding an appeal process.
Get Ahead of Claim Denials Due to Lack of Medical Necessity: Partnering with Unislink
Medical necessity guidelines are constantly evolving. Keeping up with these changes can be a significant challenge. Unislink is an experienced medical billing company providing full service revenue cycle management services.
Our certified medical coders stay current on the latest criteria for submitting claims with accurate medical necessity and health insurer guidelines.
UnisLink’s expert medical billing team meticulously reviews medical records to ensure your documentation clearly demonstrates the medical necessity of healthcare services provided. We use advanced medical billing technology to flag any claim concerns before they head out to the insurance company.
Prior authorization is one of the many revenue cycle services we provide to ensure medical claims are accepted and quick payments are realized by the practice. Additionally, we will follow up with insurance companies for appropriate reimbursement on your behalf, if a claim is initially denied due to concerns about medical necessity.
Contact UnisLink, and begin to navigate the complexities of revenue cycle management billing and medical necessity with confidence. You will know your claims receive proper consideration and your practice is receiving maximizing reimbursements by reducing your denial rate.
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Next in this series:
5 Common Reasons Medical Claims are Denied – Part 3: Missing or Incomplete Documentation