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Tip: Deal with denials for 'medical necessity' reasons

Ambulatory Surgery Reimbursement Update, July 29, 2008

Do you sometimes see denials for “medical necessity” reasons on your Medicare Explanation of Benefits (EOB)? This denial doesn’t necessarily mean that there was no medical necessity for the procedure performed or that your physicians shouldn’t have done the procedure. But it usually does mean there is a problem with the diagnosis code billed on the claim to Medicare.

Medicare has policies on their Web site that you can find in the Medical Review section. (Note: review those listed as “current” policies) There you will find a list of the diagnosis codes Medicare allows for procedures. If a diagnosis code is not on the list for the procedure, Medicare can deny the claim for medical necessity reasons. While Medicare doesn’t have a policy for every procedure your ASC facility performs, it is important to know the information if it is available..

These policies, which were previously known as Local Medical Review Policies (LMRP), are now referred to as Local Coverage Determination (LCD) policies. Many Medicare carriers have these LCD policies for gastroenterology, ear, nose and throat, pain management, eye, skin, and many other types of procedures ASC physicians commonly perform. These policies list covered diagnoses for the procedure, which you should follow carefully to assure proper reimbursement for your ASC. Remember, any diagnosis not listed in the LCD that you submit on a claim will usually result in a claim denial for “medical necessity” reasons. However, you cannot use a diagnosis from the LCD list which the patient does not have. So if you cannot find a supporting diagnosis in the op report, review the history and physical and/or pathology report for a preoperative symptom or pathology result that is covered on the LCD list.

For example, a patient has a colonoscopy performed for the symptoms of rectal bleeding and abdominal pain. The only postoperative finding is hemorrhoids, which is not on the LCD for colonoscopy procedures. A review of the colonoscopy LCD shows that while hemorrhoids is not on the diagnosis list, the preoperative symptoms of rectal bleeding and abdominal pain are on the LCD as covered diagnoses. Therefore, you would bill the codes for these two conditions and then bill the hemorrhoid condition last on the claim or leave it off the claim altogether.

This tip is brought to you by Ellis Medical Consulting, Inc.

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