Understanding the Difference Between MDM and Medical Necessity

Posted by Advent Health Partners on Jul 18, 2017 2:42:31 PM

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The claims process is complex, requiring accurate supporting documentation and multiple codes.  To ensure they receive payment, providers must be certain to furnish payers with adequate data to justify why they opted for a particular test, procedure, or follow-up visit.  While some clinicians include copious notes in the patient record, the emphasis should be on quality rather than quantity when documenting MDM and medical necessity.

Think It Through

Supplying appropriate documentation is similar to taking a math test.  You may select the right answers, but can't get credit for them without writing out the steps that allowed you to arrive at the solutions.  Likewise, providers should go beyond merely entering codes, noting what factors drive their decisions.  EHRs can make this more difficult, as some information may be included automatically, although it isn't related to the patient's current condition.  Hence, providers are advised to record their observations and assessments as if they were documenting them on paper.  "Thinking on paper" includes mentioning any conditions they have ruled out to make diagnoses and treatment decisions.

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Consider the "Why" of Medical Necessity

Providers should make note of other elements that influence their decision-making, especially if there are secondary concerns in addition to the presenting condition.  In such cases, MDM could be relatively low, while the level of service could be higher than what you would expect considering the level of MDM.  For example, when treating a patient suffering from the common cold, a provider might order additional services if that patient also has asthma.  

Follow CPT Standards

The CPT manual outlines the complexity of medical decisions according to three elements--  diagnosis and management options, data that must be considered, and the risk of complications.  Following CPT guidelines will likely result in more thorough documentation.  Keep diagnostic criteria in mind to ensure more accurate supporting information and coding.  For example, when attempting to diagnose a condition, providers may recommend lab work or other services that go beyond the history and exam.  It's a good idea to note the reasons for these "extra" services so payers agree that they are medically necessary.

Refer to Payer Guidelines

Refer to the terms outlined by your largest payers to determine their criteria for MDM and medical necessity.  For example, you can find Medicare's definition of "reasonable and necessary" services in Title XVIII, Section 1862 (a)(1)(A) of the Social Security Act.  It ultimately states that medical necessity--   services required to diagnose a condition and promote healing from injuries or illnesses-   is the top consideration when reviewing claims.

When providing documentation for Medicare, you can use either the 1995 or 1997 E/M Documentation Guidelines, as long as you don't combine elements of both within the same report.  Documentation must:

  • Demonstrate that two out of three elements were met or exceeded to warrant the decision made.
  • Be clear, legible, and support the medical necessity of services provided.
  • Note what problems were encountered during the visit and how this information was used to influence the provider's decision.
  • Provide a link between how the patient's status and the services provided determined the level of MDM billed.

Sometimes, even after looking at payer guidelines, there may still be some confusion over how to substantiate MDM and medical necessity, especially when there are different standards for new and established patients.  Again, this is where quality documentation is an asset; it increases the likelihood that you and reviewers will be on the same page concerning the necessity of services rendered.

Although establishing medical necessity can be a challenge, it becomes easier when MDM clearly supports it.

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Topics: Healthcare Providers, Medical Necessity