How to Anticipate & Prepare For Medical Necessity Edits Before ICD-10 Hits

Denials are expected to increase 100 to 200 percent during the ICD-10 implementation scheduled for October 1, 2015. While many denials will be technical denials requiring minor coding corrections, some denials will likely pertain to newly developed medical necessity edits.

Unfortunately, it is hard to anticipate where medical necessity edits will likely apply. ICD-10 implementation studies involve reimbursement systems which are very different from our multiple payer system. In our reimbursement system, medical necessity edit impact will likely vary significantly from payer-to-payer as different payers seek to utilize the additional detail in the ICD-10 codes to customize their computerized benefit calculation formulas. Therefore, billing professional have to be on the lookout for claim processing changes from multiple entities.

Software vendors are in the process of updated systems to reflect the medical necessity requirements of Medicare contractors, fiscal intermediaries and commercial payers. However, many smaller payers and third-party administrators do not disclose proprietary medical necessity edits. Therefore, uncovering these edits and tracking their collective impact will likely take detailed claim review. Further, claims checking software used by providers may not consistently check for medical necessity edits triggered by frequency, gender, age-criteria or edits related to secondary diagnosis coding.

One other medical necessity variable to consider will be edits specific to newly developed ICD-10 diagnoses which reflect acuity levels. The ICD-10 code set is composed of highly-specific codes which may allow payers to better track acuity levels on certain codes. Further, newly implemented combination codes should facilitate the use of medical necessity edits for certain chronic diseases and allow for easier pass-through of complex-care claims. However, during the implementation phase, medical necessity edits may be a source of incorrect denials and should be reviewed carefully to determine the accuracy of the edits.

In order to prepare for ICD-10 implementation, first review how medical necessity denials are processed by your business office. In additional to zero payment denials, ICD-10 implementation may result in harder-to-spot partial denials related to medical necessity and/or increased pending claims related to clinical documentation requests. Your staff should be able to quickly identify any pending documentation request and have a procedure for prompt follow-up of unclear medical necessity denials. Appeals staff should also have a letter citing state or national accreditation standards applicable to overly broad requests for medical documentation and/or repeated requests for the same documentation. The Utilization Review Accreditation Commission (URAC) standards for utilization management states that the utilization reviewers should require only the section(s) of the medical record necessary in that specific case to certify medical necessity or appropriateness of the admission or extension of stay, frequency or duration of service, or length of anticipated inability to return to work. Therefore, blanket requests for entire records on multiple patients may need to be brought to the attention of the payer compliance officer. See for a summary of other applicable quality utilization review standards.

Second, review the appeal procedures for medical necessity. In fact, many offices aggressively appeal technical denials, such as timely filing and lack of precertification, while giving the payer’s medical necessity denials little analysis. During ICD-10 implementation, it will be important to expand monitoring and appeals to include medical necessity.

However, many offices find medical necessity review and appeals highly time-consuming. You may want to consider assigning an ICD-10 team member to track medical necessity denial impact to determine the financial impact and designate additional resources to clinical appeals. Develop some general guidelines for handling payer-generated guidance and questionable denials. Also, emphasize the need for business office staff to identify and report signs of poor payer performance, such as poor remittance advice transparency which fails to provide any clinical justification for denials and high denial rates. If staff believes such information will be acted upon, there is often better and more timely communication regarding reimbursement concerns.

Lastly, if your organization does not routinely schedule peer-to-peer reviews of medical necessity denials, now is a good time to encourage more extensive use of this review option. Most payers have appeal protections which require peer-to-peer review of any denied care. However, this additional round of review is not routinely provided unless requested. Since ICD-10 has greater specificity, payers may develop medical necessity edits which could trigger denials for certain care scenarios. Participating in peer reviews of these denials will allow your care providers to discuss the appropriateness of these new edits and also facilitate better understanding on both sides.

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