Medical Necessity: The “Magic Bullet” to Medicare Coverage

Information regarding coding, coverage, and payment is provided as a service to our readers. Every effort has been made to ensure accuracy. However, HMP and the author do not represent, guarantee, or warranty that coding, coverage, and payment information is error-free and/or that payment will be received.

Nearly every week, this author/consultant receives one or more calls from wound/ulcer management professionals, providers and/or manufacturers who ask such questions as:

Wound/Ulcer Management Professional and Provider Questions

·      What is the code for [some product or procedure]?
·      What is the Medicare allowable rate for [some product or procedure]?
·      How often can I perform [some product or procedure] and receive payment from Medicare?
·      Does Medicare have a “cap” on the total number of times a [product can be used, or procedure performed] for the same beneficiary?

Wound/Ulcer Management Manufacturer Questions

·      We just received Food and Drug Administration (FDA) clearance for our [product or procedure]. What code should we tell our customers to report?
·      We just received FDA clearance for our [product or procedure]. How quickly can you obtain a HCPCS or CPT^®1 code for us?
·      Our [product or procedure] costs more than the Medicare allowable rate for the code that was assigned. How can we convince Medicare to pay a higher rate for the assigned code or obtain a new code with a higher rate?
·      How frequently will Medicare pay for our [product or procedure}?
·      Does Medicare cap the total number of times our [product can be used, or procedure performed] for the same beneficiary?

As you can see from these commonly asked questions, wound/ulcer management professionals, providers, and manufacturers tend to focus on coding and Medicare payment. They often forget that reimbursement is composed of 3 parts: coding, coverage, and payment.

When manufacturers are deciding to develop and launch a new product/procedure, they should plan their reimbursement strategy (for coding, coverage, and payment) simultaneously to planning their FDA strategy. When professionals/providers are deciding if they should incorporate a product/procedure into their wound/ulcer management protocols, they should verify if a code exists for the service, if the Medicare payment rate is adequate, and most important—if their Medicare Administrative Contractor (MAC) covers the product/procedure.

Gaining coverage requires manufacturers to conduct adequate clinical trials, to publish the results of the trials, and to educate the MACs about the product/procedure by sharing information about the technology and the published trial results. In addition, gaining coverage from the MACs requires wound/ulcer management professionals to educate their MAC Medical Director(s) about the clinical benefits of the product/procedure for specific types of wounds/ulcers. This can be accomplished via peer-to-peer calls with one or more MAC Medical Directors. Because the MAC Medical Directors must always determine if the product/procedure is medically reasonable and necessary, they evaluate all the product/procedure information through a “reasonable and necessary” lens. Once the MAC Medical Directors review the clinical evidence, they decide if they will/will not cover the product/procedure. The MACs then expect the wound/ulcer management professionals/providers to document the medical necessity for the service at each patient encounter.

If a MAC Medical Director is concerned about inappropriate use and/or overutilization of a product/procedure, she/he will release a draft Local Coverage Determination (LCD) and accompanying Local Coding Article (LCA). During the LCD open comment period, manufacturers, professionals, providers, and even patients, should provide verbal and/or written recommendations pertaining to the draft LCD/LCA. The MAC Medical Directors consider all comments before creating a final LCD and LCA, which typically include covered indications, limitations, a summary of the evidence, documentation requirements, utilization guidelines, coding guidelines, and a bibliography of references used to develop the coverage guidelines.

Once a final LCD and LCA are released, manufacturers should educate their reimbursement, sales, and marketing teams about the existence and details of the coverage and coding documents. Likewise, wound/ulcer management professionals and providers should educate all members of their clinical and revenue cycle teams about their MAC’s coverage and coding requirements.
NOTE: If the Centers for Medicare and Medicaid Services (CMS) determine that a National Coverage Determination (NCD) is required, they follow a similar, but more extensive process to draft, receive comments, and release an NCD. If an NCD exists, all the MACs and all the professionals/providers must follow the same NCD guidelines.

Unfortunately, many manufacturers, professionals, and providers make a major mistake by only looking at NCDs, LCDs and LCAs to verify the correct code(s) to report. Reporting the correct code(s) on a claim, without documentation of the “why,” “who,” “what,” “outcome,” and “next steps” in the patient’s medical record, does not meet the documentation requirements of most NCD, LCDs and LCAs, and will not pass a pre-payment or post-payment audit. Unfortunately, many wound/ulcer management professionals and providers only document the name of the procedure performed.

As stated earlier, in order to cover and pay for a service, the MACs must first verify that the service was reasonable and necessary, which is commonly referred to as medical necessity. The MACs receive this direction from Title XVIII of the Social Security Act (SSA):

·      Section 1862(a)(1)(A) excludes expenses incurred for items or services which are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member
·      Section 1833(e) prohibits Medicare payment for any claim which lacks the necessary information to process the claim
 
Therefore, documentation of medical necessity is the “magic bullet” to obtain Medicare coverage. In fact, auditors usually create a checklist of the documentation items required to prove medical necessity for services they are auditing. If all the medical necessity items are in the documentation, the auditors continue with the audit by verifying that all the other coverage criteria are met and documented. However, if medical necessity is not documented, the audit of that service typically ends, and payment is not approved.

This author/consultant recently attended several excellent Medicare virtual conferences. The presenters emphasized the importance of 1) documenting the “why,” “who,” “what,” “outcome,” and “next steps”; 2) coding correctly so that claims are submitted correctly and paid the first time; and 3) keeping your payment upon a post-payment audit. However, the resounding “take-home message” was to document (at each encounter) the medical necessity for the service provided to the Medicare beneficiary.

The virtual conference presenters pointed out that most MACs’ websites provide medical necessity documentation checklists for various products/procedures. Those checklists align with NCDs and with the MAC’s LCDs/LCAs. If your MAC does not provide a medical necessity documentation checklist for a particular product/procedure, you should create your own checklists by reading the pertinent NCDs, LCDs and LCAs, if they exist. Then you should use the checklists, NCDs, LCDs, and LCAs to improve and align your medical necessity documentation.

In addition to documenting medical necessity, wound/ulcer management professionals should select the ICD-10-CM code(s) that support the documented medical necessity. At each encounter, the ICD-10-CM code(s) should best describe the patient’s condition for which the service was performed. CAUTION: If you are copying and pasting previously reported diagnosis codes, they may not support the documented medical necessity for that particular patient encounter.

The NCDs and LCAs often provide a list of covered ICD-10-CM codes. In fact, some LCAs have separate lists of ICD-10-CM codes that prove medical necessity for specific products/procedures. Be sure to read the narrative at the beginning of each list of covered ICD-10-CM codes. The narrative assists you in understanding which product/procedure codes apply to that specific list of ICD-10-CM codes.

The narrative may also provide further medical necessity guidance. For example: Some routine foot care LCAs identify diagnoses for which the patient must be under the active care of a Doctor of Medicine (MD) or Doctor of Osteopathy (DO) for the treatment and/or evaluation of the complicating disease process during the six-month period prior to the rendition of the routine foot care. In that case, the date last seen by the MD/DO who diagnosed the complicating condition must be reported in item 19 of the CMS-1500 claim form or in the electronic equivalent.                                                                              

This author/consultant has seen “first-hand” the negative payment, audit, and appeals consequences when the medical necessity required for coverage was not documented. In most cases, the professionals simply documented the name of procedures performed, but did not document “why” the procedures were medically necessary, “who” performed the procedure, a full description of “what” was done at each step of the procedure, the “outcome” of the procedure, and the “next steps.” When the payers reviewed the documentation (either pre-payment or post-payment), coverage and payment for the services were typically denied. Not only did the lack of medical necessity documentation reduce the professionals’ revenue, but it frequently resulted in unnecessary increased clinical and revenue staff time and expenditures which could have been easily avoided. No one likes to 1) receive less or no payment for the work she/he performed, 2) repay money that was already received, and 3) deal with unsatisfied employees, all of which can be prevented by using the “magic bullet” to coverage: document the medical necessity “why.”

Similarly, this author/consultant has also seen “first-hand” the positive payment, audit, and appeals outcomes when the medical necessity required for coverage was succinctly and thoroughly documented. The professionals received the expected Medicare allowable rates, passed payer audits, and maintained an elevated level of satisfaction among their clinical and revenue cycle teams.

In Summary

This author is encouraging every reader to review your own documentation for each type of service you perform. If the documentation for every encounter clearly describes the medical necessity “why,” celebrate your success. If the medical necessity “why” is missing or non-convincing, now is the time to use the “magic bullet” to coverage by taking the steps required to improve your written and/or EHR documentation. Remember that your goal should be to have your Medicare claims processed and paid correctly the first time and to keep your well-deserved payment after an audit.

Kathleen D. Schaum is a founding member of the Today’s Wound Clinic editorial advisory board and oversees a consulting business. She can be reached for consultation and questions by emailing kathleendschaum@bellsouth.net.

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Reference
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