Understanding Medical Necessity Improves Utilization Review Process, Reduces Denials
EXECUTIVE SUMMARY
The case management team should be trained thoroughly on utilization review and medical necessity to avoid payer denials.
- The goal is to ensure patients receive medically necessary, high-quality care.
- Hospitals might experience transition delays when tests are delayed by staff limitations.
- Errors in writing discharge orders and lack of transition planning also can cause delays and denials.
If payer denials are stacking up, it is possible case managers and other staff need more training on utilization review (UR) and medical necessity.
Denials also occur due to operational issues, such as lack of information at the right time, says Hemant Gupta, MD, MSc, lead national physician educator at Sound Physicians in Tacoma, WA.
“The team made a decision with preliminary data that led to a denial,” he explains. “If it’s just an operational issue, then don’t get discouraged; just find out why these denials are happening.”
Medical necessity was born of the federal legislation that created Medicaid and Medicare, and has been the cornerstone of UR ever since. Case management and UR in hospitals can become more efficient and successful only when everyone involved keenly understands what this means.
“When Medicare and Medicaid were developed in the 1960s and President Lyndon B. Johnson initiated those programs, they put in the concept of medical necessity to attempt to manage the rising cost of healthcare,” says Cynthia Young, BSN, MBA, RN, CMPC, care strategy consultant with MCG Health.
The Social Security Act Amendments — also called the Medicare bill — was signed by Johnson on July 30, 1965.
“Is it medically necessary or is it not medically necessary are what drive the services rendered and to be paid for a consumer,” Young adds.
Hospitals should ensure patients receive a level of care and interventions that are medically necessary and high-quality, says India Watson, RN, MSN, CCM, CMPC, manager of care strategies with MCG Health. Watson and Young have spoken at case management conferences on UR and medical necessity.
Assess Level of Care
Clinicians, along with UR staff and committees, must continually assess the level of care to ensure medical necessity. “Does this patient need to be in the hospital? Can we perform these services in an outpatient setting?” Watson asks. “Is it medically necessary, and does it meet the CMS definition of medically necessary?”
The goal of UR is to reimburse appropriately for necessary care because there is not an unlimited source of money to pay for medical services. “This activity is done on the insurance side, and the same utilization review activities have to be done on the provider side,” Gupta says.
When medically necessary care is provided and everyone agrees the services were necessary, then it is reimbursed by payers, he says. (See story on case studies of denials in this issue.)
Prevent Transition Delays
Transition delays occur when organizations lack the metrics to understand bottlenecks and staffing shortage issues. The UR process provides an opportunity to collect data for targeted quality improvement.
“One of the common reasons for delays has to do with limitations in staffing in many of our hospitals,” Young says. “Perhaps there’s a procedure that needs to be done, but they won’t call in someone after hours or on weekends.”
For example, a patient may need an MRI, but has to wait until the next morning for the test, which could result in another overnight hospital stay. “There can be a variety of reasons for delays, so track them and study them. Action plans can be put in place,” Young says. “The last thing the hospital wants is a denial, and denials can sometimes be the outcome of delays.”
Optimal quality care and the most efficient practice from the UR standpoint is for tests to be performed timely when they are needed, Young says.
Another common reason for delays is when the physician does not discharge a patient because of other pending hospital services that may not be related to why the patient was admitted to the hospital. “[Patients] may want to go ahead and get those preventable things done,” Watson explains. “For instance, if someone is in the hospital for chest pain, and they want to get their annual colonoscopy completed, the patient may stay in the hospital an extra day to do that unrelated service.”
These delays can be prevented by scheduling patients to return for the unrelated procedures, instead of keeping them in the hospital an extra night when it is not medically necessary, Watson says.
Other delay issues are related to someone forgetting to write the discharge order, or not planning far enough in advance for a transition to post-acute care. The solution to most of these delays and denials is to collect data on what happens and identify ways to improve processes.
“It’s a very complicated thing. We stress that you need to capture information,” Young explains. “Identify those gaps and document and study information so you can determine where to close the gaps and how to do that.”
For example, if the data show a significant number of denials for hospital days due to delayed tests, then case managers could make a case for employing an imaging technician in the hospital on evenings and/or weekends.
“We’re in the age of technology, and there are a lot of systems out there where the nurse reviewer would have exposure to evidence-based guidelines,” Young says.
Case managers should review electronic information and measure outcomes. They should look for solutions that use relevant clinical information and evidence-based guidelines. “There is an ability to track medical necessity determinations to capture patients’ status in terms of utilization review,” Young says. “The industry is moving toward automation and documentation systems that display evidence-based guidelines as best practices.” Paper documentation or documentation gaps create problems that an electronic system could fix.
While every hospital uses a formal UR program, not all include a process developed through use of evidence-based guidelines and standards and that is consistent with payers. “A hospital may use one set of guidelines and criteria sets, and payers may use different guidelines and criteria sets,” Young says.
Organizations can improve consistency by using national guidelines and standards, such as those created by organizations like MCG, InterQual, and other groups, including national healthcare associations. For example, the American Society of Addiction Medicine uses its own criteria for UR and management.
“The professional associations like the American Medical Association and American College of Obstetricians and Gynecologists have protocols or standards that some people use,” Young says. “When you’re looking at a utilization review program, the gold standard or best practice is to use evidence-based guidelines.”
These would include guidelines developed from studies that were published and peer-reviewed, she adds.
For example, a utilization reviewer should look at every medical treatment or procedure to compare against the guidelines, ensure they are medically necessary, and were performed in the appropriate setting, Watson explains. The goal is to help the patient progress through the continuum of care to better health.
“In the hospital setting, there are touch points that utilization review should follow with the patient,” Young adds. For example, at admission, UR ensures the patient’s condition and situation are appropriate for a hospital admission.
Evidence-based guidelines prepare the patient’s care path and should match the tests and services ordered from day one. “Also, utilization review helps make sure the patient is appropriate to be discharged and helps to determine where they need to go,” Young explains. “When a case manager is doing daily rounds, pull up the guidelines while asking where Mr. Jones is today and whether he has had his chest X-ray.” It helps the case management team to use the guidelines to determine any unmet care needs as well.
Another need is for nurses to receive UR training, Watson says. Hands-on training is important, but it would be optimal to combine that with formal UR training provided through a collaboration with health systems and national organizations.
Vendors also should provide training on how to use and interpret evidence-based guidelines and their electronic integration with documentation. “Having efficient and appropriate documentation standards in place will help to drive that type of data-capturing,” Young explains. “But more importantly, we should capture the story of what’s going on with the patient from start to finish.”
The case management team should be trained thoroughly on utilization review and medical necessity to avoid payer denials. The goal is to ensure patients receive medically necessary, high-quality care.Subscribe Now for Access
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