Medical Necessity: 2013 Year-in-Review

December 30th, 2013 / By Barbara Aubry, RN

Can you believe it? We are saying farewell to another year. And a busy one it’s been from the medical necessity coding and compliance perspective.

The Feds were engaged in 2013 – at least three cardiologists were sentenced to jail time for issues such as placing stents in patients who did not meet criteria even though the physicians believed they were necessary. I recall that in once case the physician misrepresented the diagnosis in the record in order to meet medical necessity criteria.

And extrapolation made its presence known. In the example above, the OIG demanded the hospital refund all cases of stents placed by the physician for the past two years. In this case, Medicaid paid $6,088.45 for an inappropriate stent placement but the hospital had to repay $256,800 in total. Recently, the OIG fined a large university hospital $3.7+ million for extrapolated (assumed) medically unnecessary short stay admissions based on audits, data mining and statistical sampling.

Let us not forget the Two Midnight Rule for determining the medical necessity of short stays announced in September by CMS. While the industry is still under the so called “Probe and Educate” plan, it will be interesting to learn the outcome of the MAC audits on cases of less than two midnights. Stay tuned on this one.

Don’t be fooled into thinking medical necessity and coding compliance efforts are focused on hospitals only. I know of a large medical practice that was audited recently by a commercial payer. The outcome of the E/M audit cost that practice $100,000.00+ in give backs based on extrapolation. They are appealing but it doesn’t look promising.

As physicians in greater number adopt EHRs, payers are noticing an increase in the level of E/M codes reported. This is a major headache for practitioners, their office managers, and coders. Depending on the EHR, some have templates that force more recording of information than would generally be captured. This can increase the coding value of the E/M but not necessarily the medical appropriateness of that level of service. And then there is the cut-and-paste brigade which CMS noticed early on. Now OIG is involved. I expect more on that in 2014.

My take

Most importantly, non compliance is going to cost you more than ever before. Technology is increasing risk. Perhaps 2014 should be the year you revisit your compliance plan. If you don’t already, consider bringing in auditors to determine your current risk, identify your vulnerabilities, and create an action plan. You do not need to become an OIG statistic; make 2014 a better compliance year. A happy and healthy one to all!

Barbara Aubry is a Regulatory Analyst for 3M Health Information Systems.