Saturday, December 17, 2011

Not deemed a “medical necessity” by the payer - Insurance denial

What does 'Reasonable and Necessary' mean?

'Reasonable and Necessary' describes services that are:

Safe and effective (Not experimental or investigational)
Appropriate, including the duration and frequency that is considered appropriate for the service, in terms of whether it:
Is provided within accepted standards of medical practice for the diagnosis or treatment of the patient’s condition or to improve the function of a malformed body member
Is furnished in a setting appropriate to the patient’s medical needs and condition
Is ordered and provided by qualified personnel
Meets, but does not exceed, the patient’s medical need
There are several exceptions to the requirement that a service be reasonable and necessary for diagnosis or treatment of illness or injury. The exceptions appear in the full text of The Federal Register at Section 1862(a)(1)(A) external link  and include but are not limited to:

Pneumococcal, influenza and hepatitis B vaccines are covered if they are reasonable and necessary for the prevention of illness
Hospice care is covered if it is reasonable and necessary for the palliation or management of terminal illness
Screen mammography is covered if it is within frequency limits and meets quality standards
Screening pap smears and screening pelvic exam are covered if they are within frequency limits
Prostate cancer screening tests are covered if within frequency limits
Colorectal cancer screening tests are covered if within frequency limits

One pair of conventional eyeglasses or contact lenses furnished subsequent to each cataract surgery with insertion of an intraocular lens

PR 50 These are non-covered services because this is not deemed a “medical necessity” by the payer


Resources/tips for avoiding this denial

Denial indicates the procedure code billed is incompatible with the diagnosis, for payment purposes.

• Refer to the “Active/Future/Retired LCDs” medical coverage policies for a list of procedure codes, relating to services addressed in the local coverage determination (LCD), and the diagnoses for which a service is/is not considered medically reasonable and necessary.

• Before billing a claim, you may access the Procedure to Diagnosis Lookup/Service Indication Report to determine if the procedure code to be billed is payable under the specific diagnosis.

• Note: Medicare does not cover diagnostic or screening procedures for screening purposes, such as an annual physical. This denial would be appropriate in this case.

• Respond promptly to a request for additional documentation (ADR). Failure to respond to an ADR will result in claim denials.

Tips to correct the denied claim

• If a payable diagnosis is indicated in the patient's encounter/service notes or record, correct the diagnosis and resubmit the claim.

• Do not resubmit an entire claim when a partial payment has been made; correct and resubmit denied lines only.

• If a claim is denied based on failure to respond to an additional documentation request, a request for a redetermination will be necessary to correct the denial.

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