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Subpart VC
Chapter
66
Financial – Medical Necessity, Denials, and Appeals
Medical Necessity
Robert H. Leviton, MD, MPH, FACEP, Diplomate, ABPM, Clinical
Informatics
In 1965, President Eisenhower suffered an
uncomplicated anterior wall myocardial infarction and spent 7 weeks convalescing in a hospital
where he was not permitted any physical activity,
allowed only to be carried to and from his bed by
two corpsmen; the same treatment was equally
provided to less notable individuals.
1
Hospital
length of stay was highly individualized and prolonged; no two physicians or hospitals followed
any particular regimen, often adhering to their
own judgment about tests that were needed or
the amount of time a patient would remain hospitalized. Patients would stay in hospitals for
weeks or months for treatments that today would
require only a few days.
In that same year, President Johnson signed
into law the Social Security Act of 1965 where
Title XVII and XIX enacted the formation of
Medicare and Medicaid to provide health insurance coverage to more than 19 milli on people.
Within the many provisions of the law, regulation
42 CFR 482.30, section 1861 (k) required “each
hospital to develop a utilization review plan to
review hospital admissions, the duration of hospital stays, the professional services provided
(including drugs and biological) furnished, (A)
with respect to the medical necessity of the service
and (B) for the purpose of promoting the most
efficient use of available health facilities and
services.”
In the early years of utilization review,
guidance for making admission and length of stay
decisions was provided by the Professional Activity Study, a principal service of the Commission
on Profess ional and Hospital Activities. While an
early important source for the research, evaluation, planning, and management of patient care
and monitoring regional trends in diseases and in
medical procedures, some studies suggested that
there were operational problems with the
methods in performing reviews.
2
Regional differ-
ences in the approach to care
3
led to a government request for assistance developing a quality
assurance program based upon severity of illness
and intensity of service criteria, later including
appropriateness of admissions, levels of service,
and discharge screens. Responding to this request,
the InterQual criteria was first published in
1978 and by the 1990s, the Centers for Medicare
and Medicaid Services (CMS) licensed InterQual
criteria for use in reviewing Medicare hospital
inpatient services.
4
Since its inception in 1965, the Medicare program has only paid for those health care items
and services that are considered to be medically
necessary and relevant to improving or maintaining the health of a beneficiary. In particular,
Section 1862(a)(1) of the Social Security Act prohibits payment for services or procedures that are
not “reasonable and necessary for the diagnosis or
treatment of an illness or injury or to improve the
functioning of a malformed body member.”
Accordingly, Medicare carriers have generally
used the following criteria to determine the medical necessity of specific items and services:
Consistent with the symptoms or diagnoses of
the illness or injury under treatment.
Necessary and consistent with generally
accepted professional medical standards (i.e.,
not experimental or investigational).
Not furnished primarily for the convenience
of the patient, the attending physician, or
another physician or supplier.
Furnished at the most appropriate level that
can be provided safely and effectively to the
patient.
With the rise of third-party payers and managed
care health care coverage programs, there was
increasing concern in contract reviews that
071
21:31:20
revealed language imposing “lower cost” criteria
being included in the definition of medical necessity. This raised the question whether some health
plans were basing their medical necessity determination on a standard that provided patients a
lower quality of care than most physicians would
provide without the cost-of-services concerns.
Lawsuits abounded and alleged that since 1990,
Aetna, CIGNA, Health Net, Prudential, Anthem/
WellPoint, and Humana engaged in a conspiracy
to improperly deny, delay, or reduce payment to
physicians by engaging in several types of
improper conduct, including failing to pay for
“medically necessary” services in accordance with
member plan documents.
5
Under the terms of the
settlement agreements betw een 2003 and 2006,
each company agreed to accept a definition of
medical necessity.
The American Medical Association (AMA)
has numerous policies regarding medical necessity and strongly recommends that physicians
should review their health insurance plan’s medical services agreements for their specific definition of medical necessity. The AMA policy
defines medical necessity as:
Health care services or products that a prudent
physician would provide to a patient for the purpose
of preventing, diagnosing or treating an illness,
injury, or 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 insurers and
purchasers or for the convenience of the patient,
treating physician, or other health care provider.
6
In its original intent, Congress sought to define
medical necessity as a means to assure physicians
and hospitals were paid for services they provided
their patients. As health care costs continued to
rise, both the public and private sector began to
seek new me thods for controlling costs while
managing increasin gly complex, new and expensive technologies and treatments. Emergency
physicians must be aware of the complex and
widening array of programs that seek to define
how their care decisions may be scrutinized and
questioned. The following list of programs,
reports, and activities serve as a reference point
to begin more detailed study and preparations to
best manage your department’s policy and procedures relating to medically necessary care,
appropriate test ordering, coding, and patient disposition status.
National and Local Coverage
Determinants
National Coverage Determinants (NCDs) are
developed by CMS to describe circumstances for
Medicare Coverage for a specific medical service,
procedure, or device. NCDs generally outline the
conditions for which a service is considered to be
covered or not covered under Medicare coverage
and is limited to items and services that are reasonable and necessary for the diagnosis or treatment of an illness or injury. The primary
authority for all coverage provisions and subsequent policies is the Social Security Act, section
1862(a)(1). NCDs are made through evidencebased processes
7
that allow for public comment
periods. It is important for emergency physicians
to be aware of those tests or medications that may
not be covered for a patient’ s visit.
For example, a finger stick glucose determination often necessary for the management of
patients with diabetes mellitus may be denied
payment because repeat testing may not be indicated unless abnormal results are found and
documented or there is a documented change in
a patient’s condition. If repeat testing is performed, a specific diagnosis code should be
reported to support medical necessity.
Computed tomography requires that sufficient medical record documentation be provided
with claims to insure that the requested CT scan is
reasonable and necessary for the individual
patient; that is, the use of CT scanning must be
found to be medically appropriate considering the
patient’s symptoms and preliminary diagnosis.
A case reviewer may determine that the use of a
CT scan as the initial diagnostic test was not
reasonable and necessary because it was not supported by the patient’s symptoms or complaints
as stated in the medical record or claims form.
In the absence of a national policy, Medicare
contractors may use their discretion to establish
medical policy, earlier described as Local Medical
Review Policies (LMRPs) but now referred to as
Local Coverage Determinants (LCDs). Each
Medicare contractor may develop LCDs pertinent
to its area of jurisdiction when a validated, widespread problem demonstrates a significant risk to
Robert H. Leviton
071
21:31:20
the Medicare Trust Fund, identified as potentially
high-dollar and/or high-volume services.
Emergency physicians are expected to be
aware of both current NCDs and LCDs coverage
policies. The Medicare Coverage Database
(MCD)
8
contains all NCDs and LCDs, local articles, and proposed NCD decisions. The database
also includes several other types of National Coverage policy-related documents, including
National Coverage Analyses (NCAs), Coding
Analyses for Labs (CALs), Medicare Eviden ce
Development & Coverage Advisory Committee
(MEDCAC) proceedings, and Medicare cove rage
guidance documents.
Remember, when a patient’s medical care may
not be covered because it is not medically necessary and reasonable in a particular case, you are
obliged to provide the patient with an Advanced
Beneficiary Notice (ABN).
9
The ABN indicates
the patient’s choice to receive the item or service
and accept the financial liability for the care.
National Correct Coding
Initiative (NCCI)
CMS developed the NCCI to promote national
correct coding methodologies and to control
improper coding leading to inappropriate payment in Part B claims. These coding polices are
based upon coding conventions defined by the
American Medical Association’s Current Procedural Terminology (CPT) manual, national and
local policies and edits, coding guidelines
developed by national societies, analysis of standard medical and surgical practices, and a review of
current coding practices. CMS annually updates
the National Correct Coding Initiative Coding
Policy Manual for Medicare Service and is used
by carriers and Fiscal Intermediaries as a general
reference that explains the rationale for NCCI
edits.
For example, a patient who has chronic pain
to the foot after sustaining a contusion was noted
to have a normal plain film radiography study on
a previous admission. The emergency physician
elected to order an MRI to evaluate the potential
for stress fracture of the foot. The claim form was
submitted and ICD-10 code S90.30 (contusion of
unspecified foot) and the procedure code 73721,
(Magnetic Resonance Imaging, any joint of the
lower extremity, without contrast material). The
claim was rejected because “coverage of this
procedure with the given diagnosis is not covered,
based upon the official Medical Review Policy.”
The purpose of the NCCI edits is to prevent
improper payment when incorrect code combinations are reported.
Office of Inspector General Annual
Work Plan
10–12
The Office of the Inspector General (OIG) was
created to protect the integrity of the Health and
Human Services (HHS) programs and operations
as well as the well-being of beneficiaries by
detecting fraud, waste, and abuse; identify ing
opportunities to improve program economy, efficiency, and effectiveness; and holding accountable
those who do not meet program requirements or
who violate Federal laws.
The OIG collaborates with HHS and its operating staff divisions, the Department of Justice (DOJ)
and other executive branch agencies, Congress, and
States to bring about systemic changes, successful
prosecutions, negotiated settlements, and recovery
of funds. Each year, the OIG considers mandatory
requirements for reviews as describedby laws, regulations, or other directives; requests made by Congress, HHS Management, and the Office of
Management and Budget; and work to be performed in collaboration with partner organizations.
The OIG Work Plan outlines the current focus
areas and states the primary objectives for each
review. The plan is published annually usually
during the first week of October. Reviews slated
to begin in 2015 could result in 2015 or 2016
reports.
11,12
It is important for emergency physicians to
know the study and review areas within the OIG
Work Plan to ascertain whether a study topic will
impact on the policies and procedures of their
practices and departments. For example, in the
2012 Work Plan the following reviews impact on
the Emergency Department (ED):
Hospital admissions with conditions coded
Present on Admission (POA) – review claims
to determine which facilities most frequently
transfer patients with certain diagnoses, for
example, pressure ulcers that were coded as
being present when patients were admitted.
For certain diagnoses specified by CMS,
hospitals will receive a lower payment if the
specified diagnoses were acquired in the
hospital.
Medical Necessity
071
21:31:20
Accuracy of POA Indicators Submitted on
Medicare Claims – hospitals do not receive
additional payments for certain conditions
that were not present when the patient was
admitted. Recent law provides that hospitals
with high rates of hospital acquired conditions
(HACs) will receive reduced payments.
Accurate POA indicators are needed for CMS
to implement the requirements of the Act
when reviewing medical records and Medicare
claims.
Observation services during outpatient visits –
OIG will review Medicare payments for
observation services provided by hospital
outpatient departments, including EDs, to
assess the appropriateness of the services and
their effect on Medicare beneficiaries’ out-ofpocket expenses for health care services. Part
B covers hospital outpatient services and
reimbursement for such services under the
hospital outpatient prospective payment
system.
Hospital Payment Monitoring
Program
13
(Hospital Payment Monitoring Program HPMP)
was created by CMS to measure, monitor and
reduce the incidence of improper fee-for-service
inpatient Medicare payments. This includes the
provision of medically unnecessary services, the
provision of services in inappropriate settings,
errors in Diagnosis-Related Group (DRG) assignment and or coding, errors in billing, and errors
in prepayment denials.
During 2002, the Peer Review Organizations
were renamed Quality Improvement Organizations (QIOs). As specified in 42CFR 476.71(a)(6),
QIO reviews of hospital medical records must
indicate that inpatient hospital care was medically
necessary, reasonable, and appropriate for the
diagnosis and condition of the patient at any time
during the stay. The patient must demonstrate
signs and or symptoms severe enough to warrant
the need for medical care and must receive services of such intensity that they can be furnished
safely and effectively only on an inpatient basis.
Similarly, these reviews seek to determine whether
a patient has been prematurely discharged from
the hospital, that is, the patient was not medically
stable and/or discharge was not consistent with the
patient’s need for continued acute inpatient
hospital care.
14
The HPMP Compliance Workbook provides
numerous suggestions and tools for hospitals to
develop programs to control activities that can
lead to citation by their QIO or other regulatory
agency.
Program for Evaluating Payment
Patterns Electronic Report
15
Under contract with the CMS, the TMF Health
Quality Institute (web site: www.tmf.org) provides
hospitals with an electronic data report that contains a single hospital’s claims data statistics for
Medicare severity DRGs and discharges at high
risk for improper payment due to billing, coding,
and or admission necessity issues. Data in (Program for Evaluating Payment Patterns Electronic
Report PEPPER) such as 30-Day Readmission to
same hospital, 2-day stays for heart failure and
shock (DRG 291,292,293), cardiac arrhythmia
(DRG 308, 309), and esophagitis or gastroenteritis
(DRG 391, 392) are some of the data elements
presented in tabular form as well as in graphs that
depict the hospital’s target areas percentages over
time. The PEPPER report is designed to assist
hospitals to identify potential overpayments as well
as potential underpayments.
Comprehensive Error Rate Testing
CMS developed the Comprehensive Error Rate
Testing (CERT) program
16
to determine national,
contractor specific, provider compliance error
rates, paid claim error rates, and claims processing error rates. The CERT measures error rate
claims submitted to Medicare Administrative
Contractors (MACs). The CERT Methodology
includes randomly selecting a sample of approximately 120,000 submitted claims, requesting
medical records of providers who submitted
claims, and reviewing the claims and medical
records for compliance with Medicare coverage,
coding, and billing rules.
Medicare Administrative Contractors
Under the recent Medicare contracting reform
initiative, Fiscal Intermediaries and carriers are
being replaced by Medicare Administrative Contractors (MACs).
17
Through the initial series of
Robert H. Leviton
071
21:31:20
Part A/B MAC procurements, Medicare’s claim
processing operations have realized significant
operational savings from the consolidation of
state workloads. Emergency physicians should be
knowledgeable of their MAC work plans
18
and
efforts to manage the administration of all Medicare services. MAC jurisdictions are awarded
regionally and currently comprise 15 regions
but will be consolidated to 10 in the next several
years. New York, Connecticut, Illinois, Indiana,
Michigan, and Wisconsin are managed by
National Government Services whose website,
www.ngsmedicare.com/wps/portal/ngsmedicare,
provides valuable content for Medicare providers.
Recovery Audit Program
Section 302 of the Tax Relief and Health Care Act
of 2006 made the Recovery Audit Program
(RACs)
19
a permanent and required expansion
of the program in all 50 states no later than
2010. Each RAC is responsible for identifying
overpayments and underpayments in our country. RAC jurisdictions match the Durable Medical
Equipment MAC jurisdictions.
RACs review claims on a post payment basis
and may be automated where no medical record
is needed or manually reviewed where the medical
record is required. A demand letter is issued by
the RAC requesting the hospital to supply medical
records for review; if there is an improper payment determination, the RAC will offer an opportunity for the provider to discuss the improper
payment determination. Issues identified by the
RAC will be approved by CMS prior to widespread review posting on the RAC’s website. If
you agree with the RAC’s determination, you may
pay by check, allow recoupment from future payments, request for an extended payment plan, or
appeal the determination.
It is important for the emergency physician to
review their jurisdiction’s RAC website for new
issues, vulnerabilities, and detailed result reviews.
Previous improper payment determinations are
also listed in the OIG and CERT reports. If you
are familiar with these findings, you can protect
your practice by assuring proper policies and
procedures are in place for documenting the medical necessity and appropriateness of care. Keep
track of denied claims, look for patterns of errors,
then determine what corrective actions you need
to take to avoid improper payments.
Observation Care and Medical
Necessity
In a 2010 communication, the U.S. Attorney’s
Officer for the Western District of New York, in
conjunction with the U.S. Department of Health
and Human Services, Office of Inspector Gen eral,
the DOJ reviewed certain zero and 1-day chest
pain admissions. The review involved assessments
of the medical necessity of chest pain admissions
and the claim submission related to the procedures treating the patient’s chest pain. After
reviewing the records from the hospital, the US
DOJ determined that there were concerns with
the billing for 1-day stays applying Medicare rules
for inpatient services.
The DOJ wrote, “Medicare generally
describes that an inpatient site of service is
appropriate for a patient who is admitted to a
hospital for the purposes of receiving inpatient
hospital services.” When assessing whether a
patient requires inpatient level of services, the
provider must consider whether the “patient
demonstrate[s] signs and/or symptoms severe
enough to warrant the need for medical care
and must receive services of such intensity that
they can be furnished safely and effectively in an
inpatient basis.”
The letter continued by citing the Medical
Benefit Policy Manual (c h.1, section 10) and the
Medicare Quality Improvement Organization
Manual (section 4110), describing that “ inpatient
care rather than outpatient (or observation
status) care is required only if the patient’ smedical condition, safety, or health would be significantly and directly threatened if care was provide
in a l ess intensive setting.” The author of the
letter concluded by describing, “the critical
assessment as to whether patient safety or health
would have been significantly and directly
threatened by care in a less intensive setting
requires more than a monotonous physician
provider’s decision to admit all patients with
chest pain. The medically necessary and documented treatment will be a s ignificant factor in
assessing the credibility of any safety or health
claim offered by the institutional or individual
practitioner.”
One can readily appreciate why there is a growing consensus to use observation services to
meet the needs and requirements of our patient’s
care while remaining within the guidelines and
Medical Necessity
071
21:31:20
definitions of medical necessity and the appropriateness of services.
When providing Observation care
20
– which
includes certain short-term services such as treatment, assessment, and reassessment that are furnished while a decision is being made regarding
whether patients will require further treatment as
hospital inpatients or if they are able to be discharged from the hospital – it is important to
accurately document the reasons for placement
in the Observation Service. Have you adequately
documented within the patient’s medical record:
Current medical needs
Patients medical history
Stability/instability of vital signs
Presence or absence of severe pain
Current diagnosis, including chronic and
acute conditions
Laboratory and other test results relating to
the need for an observation stay
Severity of other signs/symptoms
Physician concerns from a clinical perspective
Medical likelihood of an adverse outcome if
the patient is not placed in an observation
setting
Risks if the patient is discharged home
Patients’ reaction to treatment
Discussions with the patient and family
Communication with patient/family
concerning the rationale behind the treatment
decisions.
Observation services must be reasonable and
necessary to be covered by Medicare. In only rare
and exceptional cases do reasonable and necessary
outpatient observation services span more than 48
hours. In the majority of cases, the decision
whether to discharge a patient from the hospital
following resolution of the reason for the observation care or to admit the patient as an inpatient
can be made in less than 48 hours, usually in less
than 24 hours.
Improper use of observation services may subject beneficiaries to high cost sharing. It is
extremely important to remember the need to
advise the patient that they are being placed in
an observation service and not admitted to the
hospital. Many patients remaining in the hospital
overnight may believe they are admitted to the
hospital rather than being kept for observation
services. This will make a difference on their
hospital bill as patien ts may be obligated for an
unexpected co-payment while medications may
also not be covered. A handy guide to provide
patients is the pamphlet, “Are You a Hospital
Inpatient or Outpatient?”
21
In other instances, a patient may insist upon
being admitted to the hospital when, in fact, there
is not a medically necessary reason to substan tiate
the admission. In these instances it is best to
provide the patient with a Hospital Issued Notice
of Noncoverage (HINN) model letter
22
that
describes the financial liability protections provided under the patient’s policy coverage.
23
Observation services should not be billed concurrently with other diagnostic or therapeutic services for which active monitoring is a part of the
procedure (e.g., colonoscopy for acute gastrointestinal bleeding, Cardiac Stress Testing). In situations
where such a procedure interrupts observation services, hospitals may determine the most appropriate way to account for this time. For example, a
hospital may record the beginning and ending time
during the outpatient observation encounter for
each period of diagnostic or therapeutic service,
then add the total length of time for each period
of observation services together to obtain the total
number of units reported on the claim for the
hourly observation services using the Healthcare
Common Procedure Coding System (HCPCS)
code G0378 (Hospital observation service, per
hour). A hospital would then deduct the average
length of time of the interrupting procedure from
the total duration of time that the patient receives
observation services.
Observation time ends when all medically
necessary services related to observation care are
completed. For example, this could be before discharge when the need for observation has ended,
but other medically necessary services not meeting the definition of observation care are provided
(in which case, the additional medically necessary
services would be billed separately or included as
part of the ED or clinic visit).
Alternatively, the end time of observation services may coincide with the time the patient is
actually discharged from the hospital or admitted
as an inpatient. Observation time may include
medically necessary services and follow-up care
provided after the time that the physician writes
the discharge order, but before the patient is discharged. However, reported observation time
would not include the time patients remain in
Robert H. Leviton
071
21:31:20
the hospital after treatment is finished for reasons
such as waiting for transportation home.
There are instances where a physician may
order a patient to be admitted to the hospital to
an inpatient bed, and not an observation bed. However, upon subsequent review by a utilization
review committee, it is determined that an inpatient
level does not meet the hospital’s admission criteria.
The National Uniform Billing Committee (NUBC)
provided CMS a new condition code that all emergency physicians should be aware of, the Condition
Code 44, applied when an inpatient admission is
changed to outpatient or observation service.
24
When a Condition Code 44 has been applied,
there are several conditions that must be met to
successfully submit an outpatient claim for Medicare Part B services:
a) The change in patient status from inpatient to
outpatient is made prior to discharge or
release, while the patient is still in the hospital;
b) The hospital has not submitted a claim to
Medicare for the inpatient admission;
c) A physician concurs with the utilization
review committee’s decision; and
d) The physician’s concurrence with the
utilization review committee’s decision is
documented in the patient’s medical record.
When the hospital has determined that conditions
above have been met, it may submit an outpatient
claimand the entire episode of care should be treated
as though the inpatient admission never occurred.
Creating a check list or electronic guidance
using an electronic health record (EHR) clinical
decision support will often assist you in determining whether a patient is a candidate for observation
services or inpatient admission and avoid many of
the reviews, citations, and denials described here.
Some suggestions for your medical record:
Does the patient’s placement in observation
services comply with the hospital’s bylaws and
admission policies?
Is the patient acutely ill?
Does the patient require an observation level
of care?
Does the patient require observation care
monitoring?
Dose the patient require observation care
services?
Does the patient require hospital services that
can be provided only in an observation setting?
Are observation services medically
required based upon the patient’s medical
condition?
Based upon the patient’s medical condition,
can care be provided safely and effect ively
within the observation setting?
Do diagnostic studies used to assess the
medical necessity of inpatient admission
require a hospital stay of less than 24 hours?
Are the fa cilities needed by the physician to
perform the procedure/test available in an
outpatient setting in the local community?
Is the procedure to be performed medically
necessary with regard to relevant community
standards of practice?
Does the patient’s history prior to observation
support the need for observation services?
Could the patient’s treatment have been
performed safely in an outpatient setting?
Does this patient’s initial clinical presentation
indicate the need for observation service?
Does the patient care record contain medically
justified explanations of why the patient’s
condition requires at least a 24-hour stay?
Do later tests results support a finding that
admission was medically necessary, that is,
following the evaluation is it likely that the
patient will need inpatient services for more
than 24 hours?
Does the patient condition or care receiving in
the observation setting substantiate the need
for inpatient admission?
Once these conditions have been met, you are
certain to have met the criteria of medical
necessity.
Summary
As our health care system continuously transforms, seeking new methods to provide our
patients with the highest quality of care, with
complex medical conditions, requiring new services and technology, it will always be incumbent
on the emergency physician to deftly describe the
medical necessity for the patient’s admission to
avoid the consequences of denied care or payment. Use of Observation Services as described
in the following chapters will certainly provide a
successful pathway to assure optimal outcomes
for our patients.
Medical Necessity
071
21:31:20
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February 20, 2016)
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Medicare-Contracting/
Medicare/ContractingReform/
index.html (last accessed
February 20, 2016)
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Contacts; www.cms.gov/
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PartAandPartBMAC
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Monitoring-Programs/
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index.html?redirect=/RecoveryAudit-Program/ (last accessed
February 20, 2016)
20. Outpatient Observation
Services, Medicare Claims
Processing Manual Chapter 4
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24. CMS Manual System, Pub.10004 Medicare Claims
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2004.
Robert H. Leviton
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Subpart VC
Chapter
67
Financial – Medical Necessity, Denials And Appeals
Denials and Appeals
Robert H. Leviton, MD, MPH, FACEP
There will soon come a day when you arrive on
your shift to find a letter from a health care plan
or perhaps your hospital’s Utilization Management Department describing that the care you
provided to your patient has been denied; the
health care plan wants to take back several thousands of dollars of paid reimbursement because
your care was determined to be “medically
unnecessary.” What are you to do?
If your original medical record documentation has been clear and consistent with current
standards of care and practice, you may be okay;
if not, it’s time to brush up on how to meet the
standards of medical necessity and be relieved
that all initial claims determinations have the
right to be appealed. Processes have been defined
by the patient’s health care insurance plan or by
the Medical Administrative Contractors (MAC),
the Fiscal Intermediaries (FIs) who contract with
Medicare or Medicaid to provide services, and
assure all health care services claims are processed, corrected, adjusted, or cancelled. These
same FIs may make inquiries for the status of
claims, make requests for additional information,
determine patient eligibility, and review the various codes applied to the bill for services.
There are many reasons that the care you
provided a patient may be denied:
Mutually exclusive, incidental, down coding,
or bundling of procedure codes
Health Care Insurance Plan contract or fee
schedule or reimbursement terms
Modifier used for reimbursement; Current
Procedural Terminology (CPT) modifier 25
(e.g., a significant, separately billable service is
provided on the same day by the same physician)
or 59 (e.g., procedures or services that are
commonly bundledtogether but are appropriate
to report separately under some circumstances)
from the medical code set maintained by the
American Medical Association
Inpatient facility denial due to level of care,
length of stay, delayed treatment day
Experimental or Investigational procedure
Medical necessity of service
Timely claim filing
Precertification/Authorization not obtained
Request for in-network benefits
Benefit plan exclusion or limitation
Benefit plan administration (i.e., co-pay,
deductible, etc.)
Maximum reimbursable amount attained
Generally, there are denials for billing or coding
issues and for care that was determined to be medically unnecessary. Each carrier will have a defined
number of days to appeal the denied services and
several levels of process that a physician may follow
to successfully overturn the denial for services.
1
Blue
Cross Blue Shield allows providers 90 calendar days
from the claim adjudication date to submit Level 1
billing, coding, or Medical Necessity Provider
Appeals. Cigna
2
allows 180 calendar days from the
date of the initial payment or denial decision.
3
These
time periods are critical to know so you do not lose
the opportunity to appeal a denial. Other contractual
language may describe that a third party, such as
your billing agency, cannot act on your behalf in the
appeals process; you have to write the letter yourself.
Be sure to have someone in your practice create a
health insurance plan denials management log that
lists each carrier’s appeals process.
4
Once receiving your appeal information, the
insurer has a contractually defined period, in some
instances 30 calendar days to complete the Level
1 Provider Appeal review and respond to your
letter. Each carriermay have a nurse reviewer determine whether the appeal may be reversed or not; if
not reversed, the appeal will be turned over to their
physician reviewer or plan Medical Director.
If you are not satisfied with the First Level
review decision, always request a Second Level Payment Review. In general, the Second Level review
072
21:31:01
must be initiated within 60 calendar days of the date
of the First Level review decision letter. These
Second Level reviews must be handled by a reviewer
who was not involved in the initial decision or First
Level review. In the case of medical necessity
denials, the reviewer must be in same specialty
(but not necessarily in the same subspecialty) as
the ordering or treating provider. In some
instances, Second Level review may be associated
with a filing fee determined by the amount of reimbursement in dispute; a medical necessity dispute
valued at less than $1,000 may require a $50 filing
fee while a dispute in excess of $1,000 may require a
filing fee of $250 or more. Again, it’simportantto
review every detail of your contracts with health
care insurers to understand how they have structured their denial and appeals process.
The appeals process does not end with a
Second Level review as all health care insurance
plans must offer an External Review process as
well. The External Review will be provided by an
independent medical review organization
described by the health care insurance plan. These
independent review organizations (IROs) have no
affiliation with the insurance company other than
a vendor-contract relationship. Again, the IRO
must use a practitioner of the same specialty as
the ordering or treating provider. Most health
care insurance plans will describe that providers
must exhaust the internal appeals processes, then
the request for the External Review must take
place within a specified period of time, in some
instances, within 180 days of the of the Second
Level denial letter. The decision by the IRO’s
external appeal is usually binding for both parties
in the process where the insurer must comply
with the decision of the external reviewer.
5,6
The Medicare Appeals process is more detailed,
offering five levels to the Part A and B processes.
7,8
First Level of Appeal: Redetermination – an
examination of a claim by the FI, carrier, or
MAC personnel different from the individual
who made the initial determination. You have
120 days from the date of receipt of the denial
to file the appeal. A decision must be provided
within 60 days of the redeterm ination appeal
request.
If not using CMS Form 20027; be prepared to
include the beneficiary’s name, Medicare
Health Insurance Claim (HIC) Number,
specific service and or items for which the
appeal is being requested, specific date(s) of
service, name and signature of the provider or
their representative. Be sure to include any
supporting documentation to add strength to
your appeal letter.
Second Level Appeal: Reconsideration – if you
are dissatisfied with the First Level
redetermination, a Qualified Independent
Contractor (QIC) will conduct the
reconsideration by a panel of physicians or
other health care professionals. If you are
taking this route, it is very important to be
sure to include any and all evidence to
support your appeal as evidence not submitted
may be excluded from consideration at
subsequent levels of appeal unless you show
good cause for submitting the evidence late.
You will hear a decision from the QIC within
60 days of receipt of the request for
reconsideration.
Third Level Appeal: Administrative Law Judge
(ALJ)Hearing – if at least $130 remains in
controversy following the QIC’s decision,
you may request an ALJ hearing within
60 days of receipt of the reconsideration
appeal letter. If you go this route, be prepared
to send your ALJ request to all previous
level contacts; also the ALJ reviews are
generally by video-teleconference or
telephone, although you may ask for an inperson hearing. The ALJ will usually issue a
decision within 90 days of receipt of the
hearing request, but may be extended due to a
variety of reasons.
Fourth Level Appeal: Appeals Council
Review – if you are still dissatisfied with the
decisions rendered by the ALJ, you may request
a review by the Appeals Council by submitting
a request in writing within 60 days of receipt of
the ALJ’s decision and specify the issues and
findings that are being contested. You should
hear the decision of the Appeals Council within
90 days of receipt of a request for review.
Fifth Level Appeal: Judicial Review in U.S.
District Court – if at least $1,260 or more is
still in controversy following the Appeals
Council’s decision, you may request
judicial review before a U.S. District Court
judge by filing a request for review within
60 days of receipt of the Appeals Council’s
decision.
Robert H. Leviton
072
21:31:01
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