Medical Necessity: Not Knowing Coverage and Fraud Can Prove Costly

The United States Department of Justice resolved alleged scheme of over-admitting patients at nearly 120 Community Health System hospitals across the country.

DURHAM, N.C., Aug. 11, 2014 /PRNewswire-iReach/ -- There is a thin line between not knowing coverage and fraud. In a recent settlement, the Community Health Systems, Inc has to pay $97million to resolve whistleblower lawsuits uncovered in federal courts across the United States, the reason being—medical necessity. CHS routinely admitted Medicare patients who were present at their hospitals' emergency rooms for inpatient admission that was not medically necessary— so they could charge Medicare at higher inpatient rates. To drive this appalling practice, CHS came up with certain benchmarks and enforced it by incentivizing the emergency department physicians, administrators and other hospital officials.

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In the past few years, medical necessity has become central focus of dispute. The litigations of denials of coverage for costly experimental treatments have hogged the limelight. The growth in integrated health plans, new technology and capitated payment systems has forced patients, their physicians, and insurance companies to confront tough decisions about appropriateness and relative costs.

Discerning Medical Necessity Is Not As Easy As It Seems
Insurance companies reject coverage for treatment that is not medically necessary. Decisions as to what services are "necessary" are usually taken by the attending provider. If your doctor prescribes a treatment or procedure does not mean the insurance company will agree that it is medically necessary. Most medical policies require you to pre-authorize elective inpatient hospital stays and major operations. If you do not pre-authorize the service, it can result in a penalty or denial of the claim. If your policy asks for pre-authorization then you need to follow the proper procedure to know whether the coverage is available or not, and if they don't then you will not be able to figure out until the claim is submitted.

What to Do In Case Of Denial Due To Medical Necessity
If an insurer denies a claim due to lack of medical necessity, you may appeal their decision. Managed care Reform and Patient Care Act has set forth an internal appeal procedure, where you can file an appeal (written or oral) with the insurance company. In case of emergency, the Act requires an insurer to request necessary information needed to review the appeal within 24 hours and to render a decision within 24 hours after receipt of all required information.

Over the last couple of years, there has been a significant rise in CMS auditing to help root out fraud, waste and abuse from health care system. The subject of medical necessity continues to be a prime target in ongoing audit and investigation activity. The decision of inpatient admission of a patient has come under immense scrutiny; as a result the hospitals need to become proficient at ensuring compliance with medical necessity requirements under federal rules and regulations for every patient. Inappropriate decisions regarding medical necessity can adversely affect the performance metrics of the hospitals, and affect patients' financial responsibilities.

It's imperative for the Hospitals, providers and others to become more proficient in managing medical necessity compliance. If you are confused about the legal definitions of 'medical necessity' and their application, you could join expert speaker John E. Steiner, Chief Compliance and Privacy Officer and Associate General Counsel for CTCA, in a LIVE audio conference – "Medical Necessity" and Recent Government Scrutiny and Theories of Enforcement — on Wednesday, August 13, where he will help you assess the seriousness of specific situations, where the 'medical necessity' of a claim for a clinical service is the issue. John would be taking this audio session on behalf of, country's top healthcare training provider of business-enhancing information for healthcare professionals. The portal conducts close to 250 healthcare conferences a year on hot topics –coding updates, compliance know-how, ICD-10, EHR, and more—delivered by nationally-known experts from more than 24 specialties and markets.

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