Medical necessity continues to be one of the most common reasons that claims are denied by Medicare and other payers. While your organization may also note other areas where processing claims should be improved, it's likely that medical necessity falls into that category. The good news is that most denials can be prevented with proper documentation and an organized, efficient protocol to evaluate medical necessity in patients.
For your organization, claim denials represent a very prominent risk to the health of your revenue cycle management. Your hospital does have recourse through appeal in cases where claims were inappropriately denied. However, in cases where medical necessity wasn't properly documented, your hospital may not be able to collect from payers at all, even though services have already been rendered. To add to the difficulty, finding a standard way to evaluate medical necessity remains elusive for many physicians and staff members. The term itself is broad. What's imperative is that documentation is complete.
Tips to Better Documentation in Evaluating Medical Necessity
Hospitals and organizations have an advantage in guarding against claim denials if they use the type of technology and software that will allow them better oversight of past and present data. The right technology can also alert staff to possible issues and incomplete data that will likely lead to a denial. Some key things to consider in improving your claims processing with regard to medical necessity:
- Verify Eligibility. If your organization is not verifying eligibility prior to service, it needs to. This small step in the process will help guard against claims denials for multiple reasons.
- Analyze Data on Denials. Your staff should be able to analyze the data on your claim denials and determine if there are common denominators. If the highest rate of denials are in certain departments or involve the same staff members, it's a key indication that those staff members may need further training on meeting documentation needs for future claims. Analyzing the overall performance data can give you key information about where your processing needs improvements.
- Accurate Documentation. Claims are often denied due to incomplete information. This might include missing tests and diagnostics, incomplete records of evaluation, or any number of determining factors. If documentation issues arise regularly, it may be an indication that your software or program should be updated with a more automated system that guards against leaving out imperative information.
- Coding Accuracy. Accuracy in coding can also be a key reason that claims are denied. If coding is done in house, technology can help staff to improve the accuracy and guard against using inappropriate codes for services.
In most cases, improved administrative processes and access to data can diminish the risk of claim denials. The key for your organization is in streamlining the documentation process so that missing, incomplete, and inaccurate information can be identified and fixed prior to filing the claim.