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Medical Necessity in the ER Commentary 

Medical Necessity in the ER

Of all the criteria for a receiving a payment by Medicare, MACRA requirement to establish medical necessity seems to generate the most questions and discussion. With the introduction of ICD10 and the added complexity of coding for medical conditions, the debate over what constitutes medical necessity and how it should be documented runs high. Discussions with ER physicians indicate that there is continued confusion about documenting medical necessity when ordering diagnostic testing and that hospital practices may have not caught up with CMS regulations.

However, the confusion extends far beyond Medicare since insurers have been anxious to deny services based on medical necessity and the courts have been inconsistent in their definition. Hospital practices are not consistent either. As one physician recently asked ‘We don’t have to provide a reason for placing orders in other hospitals so why do we have to do it here?’

What came out of discussions with ER physicians is that they were used to providing medical necessity documentation after the fact or in many cases having someone else provide coding of the diagnostic process from their notes. While Medicare includes the concept that medical necessity might reasonably be ‘inferred’ from the documentation this will likely not be a standard to count on in a Medicare audit.

What might help this debate is building a documentation path to the final diagnosis in the patient problem list. This concept rests on an understanding that ICD10 includes not only diagnosis of medical conditions but also complaints and indications. For example, R10.10 Upper Abdominal Pain, unspecified is not a final diagnosis, but is a starting point for diagnostic tests that can lead to a final diagnosis and that supports medical necessity for initial tests. Adding this problem to the patient’s problem list before ordering tests documents the reasons for certain tests. However, the tests must be appropriate to the problem to be ‘medically necessary’ from Medicare’s point of view.

If, on the other hand, no ICD10 codes are provided when diagnostic orders are placed, there is the potential that some might be disallowed when the final diagnosis is the only item in the problem list. If, for example, a patient presents with upper abdominal pain and tests are ordered to determine the root cause but only the final diagnosis of gallstone is entered into the patient chart, some of the tests might not be appropriate to a gallstone diagnosis and could be disallowed in an audit.

While Medicare has not been enforcing medical necessity aggressively in the past, this is clearly an area where Medicare as well as insurers see an opportunity to save big money. Unfortunately, Medicare works by disallowing charges in an audit rather than denying payment initially so hospitals can be hit with a big bill years afterward. In a recent case, a hospital in California was charged $2.2M for cardiac diagnostic procedures that were not considered medically necessary.

In a related issue, there is a common misunderstanding that only physicians can document ICD10 codes. While this will be true of diagnoses of medical conditions, documenting the reason for a patient visit will commonly be done by admitting staff or nurses in the ER. For this purpose, having a cheat sheet of the ICD10 codes that reflect patient complaints can be an important tool in the ER admitting process. While some might argue that the reason for visit be a text field that allows for open-ended text, ICD10 codes are available for most (if not all) reasons for patient ER visits, so ICD10 should be used.

This starts the ball rolling for physicians by documenting the initial complaint the patient presents with, which will be followed by more detailed problems and diagnosis as the patient’s condition is identified in more detail. It will also provide documentation of medical necessity as the patient’s care is started.


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