5 Common Reasons Medical Claims are Denied – Part 2: Lack of Medical Necessity


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The complexities around medical billing and claim submission can baffle the most seasoned doctor or practice manager. Denying medical claims is one of the main reasons why healthcare practices aren’t getting their maximum reimbursements from their services.

This article is part 2 in our blog series about common denials where we take a deeper look at typical denials experienced by independent practices. 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

In the realm of the insurance industry and medical billing, the definition of “medical necessity” reigns supreme. The idea of medical necessity acts as a gatekeeper, determining whether insurance companies will approve coverage and reimbursement for services rendered.

Understanding this concept and mastering its complexities is foundational for maximizing claim approvals and minimizing denials.

Understanding Medical Necessity: The Key to Coverage

Medical necessity refers to the idea that a healthcare service or treatment is essential to diagnose or treat a medical condition, improve a patient’s health outcome, and is generally accepted within the medical community.
Insurance companies assess medical necessity based on several factors, including:

  • The patient’s diagnosis
  • The proposed treatment plan
  • Established medical protocols and guidelines
  • The expected outcome of the treatment

Prior Authorization: A Hurdle to Jump

In some cases, insurance companies require prior authorization before approving certain services. This essentially means obtaining pre-approval from the insurance company for a specific service before it’s performed. Prior authorization is often required for services deemed potentially unnecessary, expensive, or experimental.

Here are some strategies a medical practice can implement to improve their prior authorization process and minimize claim denials:

  • 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.
  • 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 Denial

Failing to demonstrate medical necessity can lead to claim denials. Here are some common scenarios that can trigger denials:

Services Deemed Not Medically Necessary

If the insurance company deems a 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 treatments considered excessive for the specific condition.

Exceeding Industry Standards

If a service goes beyond what’s considered standard practice for a particular diagnosis, the insurance company may deny the claim. 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.

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. Here’s what your documentation should ideally include:

  • A detailed account of the patient’s presenting 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 claim approval.

Get Ahead of the Denials Problem: Partnering with Unislink

Medical necessity guidelines are constantly evolving. Keeping up with these changes can be a significant challenge. At Unislink, we stay current on the latest medical necessity criteria and insurance guidelines. Our team meticulously reviews medical records to ensure your documentation clearly demonstrates the medical necessity of services provided.

Prior authorization is one of the many services provided to ensure medical claims are accepted and quick payments are realized by the practice. Additionally, we can advocate for appropriate reimbursement on your behalf if a claim is initially denied due to concerns about medical necessity.

By working with Unislink, you can navigate the complexities of medical necessity with confidence, ensuring your claims receive proper consideration and maximizing reimbursements for your practice.

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Next in this series:
5 Common Reasons Medical Claims are Denied – Part 3: Missing or Incomplete Documentation