Of all the issues in the healthcare insurance sphere, determinations of “medical necessity” spark the most news headlines and conflicts between payers and radiology submitting claims. Radiologists and patients rail against the fact that payer auditors (with little medical training) who haven’t even met the patient decide whether medical necessity for a test exists at all.

The truth behind medical necessity denials, however, goes beyond auditors stepping out of their areas of expertise. Sometimes, providers and radiologists rush claims out the door without due diligence. If the radiologist doesn’t correct the error, it goes to the payer incomplete, and the response, “not reasonable and medically necessary” results.

When you as the radiologist are aware of where providers make the most errors in submitting claims, you can avoid these pitfalls so that your claims are paid and you get the reimbursement you deserve.

Accurately Associate Diagnoses, Procedures, Tests, and Documentation

The most common reason claims and prior authorizations are denied for medical necessity stems from failure on the part of providers and labs to accurately associate tests, diagnoses, and documentation.

The payer needs clear information on which diagnoses resulted in which procedures or tests. This information must initially come from the referring provider. Sometimes, providers order several tests for one diagnosis. At other times, there are two or more diagnoses with multiple tests distributed for each. There may even be several tests specific to one diagnosis. When providers fail to associate which test is for which diagnosis, payers deny the claim for the images due to lack of medical necessity because they do not know the medical necessity. Radiologists who catch these failures can avoid the hassle of having to resubmit the claim.

Diagnosis and tests are just two of the critical aspects of a complete claim, however. Payers also want clear provider documentation that supports the associated diagnoses and tests. Make sure the provider’s documentation clearly outlines why the patient is being sent for imaging and provides detail supporting why the tests are medically necessary. Contacting the doctor to share your past experiences with claims denials due to insufficient documentation should prompt them to properly document why the tests are ordered.

You may also need to make clear to a provider that documentation involves more than a diagnosis and test order. Payers also expect providers to document the patient’s progress, response to treatments, and changes in diagnosis or treatment. Payers also want providers to report any time when patients fail to comply with treatment recommendations. Providers typically include any non-compliance in the medical record.

It’s no secret that prior authorizations are a hassle for providers. As a rendering provider, your lab can ease the process, not only by reviewing prior auths but by giving referring physicians access to your automated prior authorization software. All it takes for the provider to start obtaining quick approvals is a link to your custom provider enrollment landing page. Once the referring physician is enrolled, they can submit their orders for faster approval.

Ensure Appropriate Tests Ordered for Stated Diagnoses

The second most common reason for claims denials due to medical necessity is when tests ordered are not appropriate for the diagnosis. For instance, documentation shows patient pain in the left shoulder but the order is for a chest x-ray. These are clear cases of mistakes and oversight arising from provider and staff overwhelm. Again, the radiologist can act as an important gatekeeper, catching these kinds of errors. Calling the provider hopefully will rectify this situation in a timely way.

Know The Company’s Guidelines

The third most common reason for denials due to medical necessity is that the test or procedure is not covered or the documentation does not meet medical necessity standards. Documentation must support the service billed and justify the need for the test or treatment provided. For Medicare patients, providers can find medical necessity criteria via local and national coverage resources. Commercial payers list their medical necessity criteria on their websites. While commercial insurance companies follow Medicare’s policies to some extent, most develop their own.

If, as the radiologist, you aren’t certain about what the payer covers, go through the website or call them and find out if the test requested is authorized for that specific diagnosis. The payer’s coverage policies will specify if a diagnosis code supports medical necessity for a certain procedure.

Further, radiologists should have a firm enough grasp of payer guidelines to know which tests need prior procedures and even other tests to take place before that test can be approved. Payers may ask providers and labs for certain values that need to be met per the policy in order to win prior authorization or get the claim paid. They will only approve the prior authorization or pay the claim if providers have met requirements or conducted tests payers deem pre-requisite.

Medical Necessity Policies Will Continue to Evolve

Patients receive the best care when physicians, coders, billers, and payers are all on the same page when it comes to the determination of medical necessity.

Write-offs don’t have to be normal. The radiologist who takes the time to review correct associations between diagnoses, procedures, tests, and documentation as well as payer guidelines will win more compensation for the lab and the provider.

While payers have documented their policies thoroughly, healthcare pundits foresee definitions of medical necessity changing over the coming years. For now, Black’s Law Dictionary defines medical necessity as procedures and tests that, “if not carried out, the patient’s situation could worsen. For a patient’s treatment (to be) found to be necessary, this specific type of procedure or treatment (must take place).”

The American Medical Association (AMA)’s more detailed definition is “ healthcare services or products that a prudent physician would provide to a patient for the purpose of preventing, diagnosing, or treating an illness, injury, disease, or its symptoms in a manner that is: (a) in accordance with generally accepted standards of medical practice; (b) clinically appropriate in terms of type, frequency, extent, site, and duration; and (c) not primarily for the economic benefit of the health plans and purchasers or for the convenience of the patient, treating physician, or other healthcare provider.”
Adding to the muddiness surrounding these unclear definitions, one RAC Monitor writer sounds the alarm that COVID has disrupted the limits of medical necessity even more. The RAC (Recovery Audit Contractor) writer explains,

“COVID has morphed the definition of medical necessity in real-time. Isolation causes more need for mental health services. All symptoms are extenuated in a pandemic. Broken arms and busted lips are more serious when you risk contracting COVID at a hospital. Medical necessity in the era of COVID is wider, a lower hump over which to leap.”

While this insight has yet to be written into law or even payer medical necessity policy, clearly more changes are ahead.

More radiology labs are managing these inevitable changes by partnering with an automated revenue cycle management software solution like Infinx’s A/R Optimizer AROS. With state regulations and payer restrictions coded into an automated system, claims specialists don’t have to spend hours looking up which payer covers what and which payer is not acting in accordance with which state regulations. Fueled by artificial intelligence and machine learning technology, automation shoulders repetitive, manual tasks, freeing claims specialists and doctors to spend more time with patients.

We can show you the best ways to improve your practice bottom line through our accounts receivable optimizer solution.

Contact us or request a demo to learn more about recovering payments due to medical necessity denial. Use automation to fine-tune your processes so that your revenue is more recoverable and predictable.