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Tip: Avoid medical necessity denials

Ambulatory Surgery Reimbursement Update, August 12, 2008

Did you know that a majority (about 85%, according to Medicare) of claim denials for medical necessity reasons are because of diagnosis coding errors? Most medical necessity denials are not because the ASC should not have performed the procedure, or because the procedure was not medically necessary. This means that the majority of the time, the diagnosis code you billed did not make it clear to the payer that the facility performed a procedure with sufficient reason for the payer to reimburse you for it.

If a procedure performed in your ASC has an associated Medicare Local Coverage Determination (LCD) policy in place for a procedure performed in your ASC, and you are billing for a Medicare patient, you should consult the diagnosis list on the LCD for allowable codes. You need to find a diagnosis on the list that is for a condition or symptom the patient has, and this will support the medical necessity of the procedure. 

The allowable codes are either preoperative symptoms or something found during the procedure to justify the performance of the procedure. Do not make up a diagnosis that the patient does not have in order to bill a diagnosis on the LCD list just to get paid. If the op report is vague about diagnosis information (either before or after the procedure), it is acceptable to look to the pathology report for a postoperative diagnosis finding and/or consult the history and physical for a preoperative symptom that might be on the LCD list.

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

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