Medical Necessity and Internal Auditing Compliance

Medical Necessity and Internal Auditing Compliance

  • 22 Dec Off
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by Richard Schamp, M.D., C.M.D., C.H.C.Q.M., Chief Executive Officer

Several times in 2016, my comments in this column have emphasized elements related to corporate compliance with regulations and rules governing documentation and coding.  As 2016 comes to a close, I wish to share two key messages from a recent compliance and auditing conference. 

Listening to presentations from several prominent healthcare lawyers, I was reminded of the priority (which we have mentioned repeatedly here) for all healthcare organizations, especially health plans, to have robust internal auditing and monitoring processes and appropriate policies and procedures to support the audit results. Our observation among PACE organizations is that the dominant priority is service delivery and patient care, while the administrative infrastructure to support compliance and internal auditing is typically limited. We can assist plans to develop their processes and also provide outside auditing related to documentation and coding.

The second key message has to do with the concept of Medical Necessity, which has become increasingly relevant in the EMR age as over-documentation reaches epidemic proportions. Patient encounters must have legitimate Medical Necessity, not to be confused with Medical Decision-making (a topic for another day).  According to the CMS Manual:

Richard Schamp, M.D., C.M.D., C.H.C.Q.M., Chief Executive Officer

Richard Schamp, M.D., C.M.D., C.H.C.Q.M.,
Chief Executive Officer

Medical necessity of a service is the overarching criterion for payment in addition to the individual requirements of a CPT code. It would not be medically necessary or appropriate to bill a higher level of evaluation and management service when a lower level of service is warranted. The volume of documentation should not be the primary influence upon which a specific level of service is billed. Documentation should support the level of service reported. The service should be documented during, or as soon as practicable after it is provided in order to maintain an accurate medical record.

We recommend healthcare organizations have a policy that defines “Medically Necessary.” One example could be that Medically Necessary health-care services are those that a physician, exercising prudent clinical judgment, would provide to a patient for the purpose of evaluating, diagnosing, or treating an illness, injury, disease or its symptoms, and that are:

  1. in accordance with the generally accepted standards of medical practice;
  2. clinically appropriate, in terms of type, frequency, extent, site, and duration, and considered effective for the patient’s illness, injury or disease; and
  3. not primarily for the convenience of the patient or Physician, or other Physician, and not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient’s illness, injury or disease.

For these purposes, “generally accepted standards of medical practice” could mean:

  • Standards that are based on credible scientific evidence published in peer-reviewed, medical literature generally recognized by the relevant medical community;
  • Physician Specialty Society recommendations;
  • The views of Physicians practicing in the relevant clinical area.

As you look toward 2017, we encourage a fresh review of your compliance plan and practices in these two key areas.  Please contact us if you wish further information or support.

All good wishes for a joyful holiday season and a compliant and happy 2017!