Medical necessity denials occur when an insurer refuses coverage for a medical service or treatment, deeming it unnecessary based on their criteria. Insurers typically rely on clinical guidelines, evidence-based medicine, and internal policies to assess medical necessity. However, these criteria may not always align with the individualized needs of patients, leading to disputes and delays in care.
Medical necessity denials plague healthcare organizations, impacting revenue cycle, patient care, and efficiency. This guide may serve as a refresher on the fight and how to be vigilant.
Factors That Decisions Hinge On:
Insurance Variability: Each insurance plan has its own coverage guidelines and medical necessity criteria. What one plan deems necessary might not be covered by another.
Service Scrutiny: Procedures with varying levels of scientific evidence supporting their effectiveness face different coverage decisions. Procedures with strong evidence are more likely to be covered than those with limited data.
Patient-Specific Factors: A patient’s individual medical history, current conditions, and prior treatments all influence the necessity determination for a specific service.
Digging into the Root Cause:
Documentation Deficiencies: This is a common culprit. If your medical notes lack sufficient detail to prove the necessity of a service or procedure, your claim might be denied. For example, missing lab results, incomplete diagnoses, or a lack of justification for advanced imaging could trigger a denial.
Missing Prior Authorization: Certain procedures require prior approval from the insurance company before the service is rendered. Failure to obtain this authorization can lead to a denial of the claim.
Coding Errors: Inaccurate coding can send red flags to insurance companies. Codes may not correctly reflect the complexity of the service or might not match the diagnosis.
Experimental Treatments: Coverage typically excludes treatments lacking sufficient evidence of effectiveness.
Plan Exclusions: Certain services might be explicitly excluded from your specific insurance coverage.
Inappropriate Level of Care: Services deemed appropriate for a lower level of care (e.g., outpatient vs. inpatient) might be denied.
The Unforeseen Factors:
Unpredictable Algorithms and Software: Insurance companies often use automated systems to process claims. These algorithms might mistakenly flag a claim for manual review or even deny it outright due to glitches or unclear criteria.
Truly Medically Unnecessary Service: Sometimes, a service might simply not be considered medically necessary by the insurance company based on their coverage guidelines and evidence-based practices. There could be alternative, less expensive approaches that are deemed sufficient. In these cases, the patient and provider may have been aware of this possibility beforehand.
Outcomes After a Resubmission:
Here’s what happens after you receive a medical necessity denial:
If Not Medically Necessary: If the service truly wasn’t necessary, you might be responsible for the bill. Depending on your communication with the provider, you could discuss options like a payment plan or even a charity care program offered by the facility.
Refiling with Additional or Corrected Information: If the denial stems from missing documentation or coding errors, you can work with your provider to submit a corrected claim with the necessary details. The insurance company can then provide three possible outcomes:
Approval: The claim is processed and payment is issued.
Partial Approval: This can happen if only part of the service is deemed necessary. You may receive payment for the approved portion, but be responsible for the rest.
Denial Upheld: If the additional information doesn’t provide sufficient justification, the claim might be denied again.
BONUS – Billing Implications and the No Surprise Act:
Whether a denied claim can be billed to the patient depends on several factors:
Insurance Type: Commercial insurance policies may allow billing in specific scenarios, while Medicare and Medicaid generally prohibit it.
Advance Beneficiary Notice (ABN): Signing an ABN informs the patient of potential non-coverage and financial responsibility.
State Regulations: Some states have additional regulations regarding billing for denied services.
No Surprise Act: This act promotes transparency and offers avenues for patients to challenge potentially unfair bills.
The Takeaway:
Denials based on medical necessity can be frustrating, but they don’t have to be a dead end. Understanding the reasons behind the denial and the potential remedies empowers you to advocate for yourself or your patient. By working with your provider and following up with the insurance company, you can potentially get the necessary care covered. Remember, clear documentation, accurate coding, and open communication are key to avoiding denials in the first place.
Conclusion:
Medical necessity denials represent a significant challenge within the healthcare system, affecting patients’ access to essential treatments and straining relationships between insurers and healthcare providers. By understanding the strategies employed by insurers, advocating for policy reforms, and fostering collaboration among stakeholders, we can work towards a healthcare system that prioritizes patient well-being while effectively managing costs. Ultimately, ensuring equitable access to necessary medical care should be a fundamental goal for all involved in healthcare delivery and policymaking.
