Case Management

Mentor moment: Medical necessity takes on new meaning

Case Management Weekly, December 1, 2010

The concept of medical necessity takes on new meaning and significance when you consider the recent Comprehensive Error Rate Testing Program (CERT) determination of medical necessity for an inpatient hip replacement. The CERT audit review 99,480 claims valued at approximately $71 million. The CERT contractor found that Medicare improperly paid 19,754 claims valued at about $4.7 million. Based on these results, the national paid claim error rate for FY 2009 was 7.8 percent ($24.1 billion).

The CERT contractor determined that 91 of the improperly paid claims lacked sufficient documentation to prove the services billed were medically necessary. These improper payment determinations related to missing or incomplete:

  • physician progress notes, diagnostic test results, and/or discharge summaries (63 claims with improper payments totaling $453,227)
  • results of examinations or treatments and/or emergency room records (23 claims with improper payments totaling $131,799)
  • physician orders and other documentation (5 claims with improper payments totaling $27,085)

In one example, a hospital was paid $10,433 for total hip replacement surgery. The CERT contractor concluded that the documentation in the beneficiary’s medical record was insufficient to support the need for the surgery. Specifically, the record did not contain information on the types of treatment that had been tried before surgery, a pathology note to support statements in the record, or a preoperative x-ray documenting the extent of osteoarthritis of the hip. As a result, the CERT contractor denied the total payment.

In this clinical scenario, the medical necessity for performing the hip replacement in the inpatient setting is not the issue. The issue is the lack of sufficient medical record documentation to support the medical necessity for performing the procedure in the first place. This is typically not an area of primary concern for case mangers with regard to Medicare beneficiaries. Case managers are more focused on ensuring these patients safely move along the continuum to the next level of care from a business perspective.

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