Q&A: How modifier use impacts the therapy cap in 2018
Q: Are outpatient departments considered part of the therapy cap for hospital-owned facilities? If so, do we need to bill with modifier –KX (Type of Bill 012X)?
A: Coders and billers struggle to understand what the term “medical necessity” really means. Unfortunately, these two words can easily lead to misinterpretation and misunderstanding of what needs to be clearly communicated in a variety of healthcare areas.
CMS provides this specific definition of medical necessity under the Social Security Act (SSA): “No Medicare payment shall be made for items or services that are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.”
In essence, the diagnosis drives medical necessity. Coders need to understand the diagnosis, as well as what services or treatment options are available to the provider, to evaluate whether medical necessity has been met.
When submitting claims for reimbursement and payment, the diagnosis and service codes will “tell the story” of care and explain to the payer why a service was performed. The reported code is the determining factor in supporting, or not supporting, the medical necessity of the procedure. Unfortunately, it is this nebulous concept of medical necessity that may ultimately determine whether the payer will reimburse the provider for services that have already been rendered.
The definitions of medical necessity are important, but it’s how they get applied in the claims settlement process that gives them shape, particularly where evaluation and management (E/M) services are concerned. According to the Medicare Claims Processing Manual, medical necessity is the “overarching criterion for payment in addition to the individual requirements of the CPT code.” This means that it would not be medically necessary or appropriate to bill a higher level of E/M code when a lower-level code is more appropriate.
The volume, length, or amount of clinical documentation should not be the primary reason for the choice of the E/M level code to be billed. The clinical documentation should be clear and concise and should directly support the appropriate level of service to be reported for claims reimbursement. Medical necessity will always be a subjective term that may never have clear parameters as to what is or is not considered “necessary.”
In other words, medical necessity trumps everything else. If the insurance claims adjudicators and/or auditors find that the medical necessity is lacking, the claim won’t be paid, even if the physician deems the treatment necessary.
Editor’s note: This question was answered by Denise Williams, RN, COC, senior vice president of revenue integrity services at Revant Solutions in Trussville, Alabama, and Valerie Rinkle, MPA, lead regulatory specialist for HCPro in Middleton, Massachusetts, for the National Association of Healthcare Revenue Integrity.