The Definition of Medical Necessity in the Era of COVID

Sometimes, in an audit, it comes down to the definition of “medical necessity.”

While the coronavirus pandemic is horrible already, it seems to be getting worse. But COVID has forced slight, positive changes in the telehealth arena – and, perhaps, in the widening of the ambiguous definition of “medical necessity” (or, as I call it, the “undefined definition of medical necessity”). Medical necessity is the backbone of rendering healthcare services. Without it, services should not be provided. Yet, medical necessity is the most litigated topic in audits.

Personally, I have a hard time accepting that a Recovery Audit Contractor (RAC) or Medicare Administrative Contractor (MAC) auditor could look at, for example, my grandma’s medical file and claim that no medical necessity exists. I use my Grandma as an example. She is 96 and relies on Medicare for her long-term care. Were an auditor to audit my grandma’s facility and find that she does not meet medical necessity – for whatever reason – that would not be fair to her facility. I hope her facility is reimbursed for caring for my grandma. Sometimes, in an audit, it comes down to the definition of “medical necessity.”

All of this is to say that medical necessity is in the eye of the beholder, much like beauty. Why, then, can RAC and MAC auditors – who are not doctors, not firsthand treating providers, and not nurses or LCASs – decide that medical necessity does or does not exist, for a patient they have never seen?

Black’s Law Dictionary has a super-unhelpful definition of medical necessity: “if not carried out, the patient’s situation could worsen. For a patient’s treatment (to be) found to be necessary, this specific type of procedure or treatment (must take place).”

The American Medical Association (AMA), on the other hand, has a more detailed definition, to make it all the more confusing (probably unintentionally):

“Our AMA defines medical necessity as: healthcare services or products that a prudent physician would provide to a patient for the purpose of preventing, diagnosing, or treating an illness, injury, disease, or its symptoms in a manner that is: (a) in accordance with generally accepted standards of medical practice; (b) clinically appropriate in terms of type, frequency, extent, site, and duration; and (c) not primarily for the economic benefit of the health plans and purchasers or for the convenience of the patient, treating physician, or other healthcare provider.”

I think these definitions, both Black’s Law’s definition and the AMA’s definition, fail to contemplate COVID. COVID has morphed the definition of medical necessity in real time. Isolation causes more need for mental health services. All symptoms are extenuated in a pandemic. Broken arms and busted lips are more serious when you risk contracting COVID at a hospital. Medical necessity in the era of COVID is wider, a lower hump over which to leap. The Centers for Medicare & Medicaid Services (CMS) agrees. Fellow RACmonitor contributor and Monitor Mondays panelist Dr. Ronald Hirsch pointed out that on Sept. 1, CMS published a proposed rule aimed at doing two things: (a) speeding Medicare coverage of certain innovative devices; and (b) codifying a definition of what makes an item or service medically “reasonable and necessary” under the Social Security Act 1861(a)(1)(A). The rule, if finalized, would create a new pathway to coverage, called Medicare Coverage of Innovative Technology (MCIT), which would provide nationwide coverage for technologies designated as “breakthrough” by the Food and Drug Administration (FDA). This is in an effort to speed up the process for creating vaccines. The rule will also codify in regulations a definition of “reasonable and necessary” items and services, based on a definition currently used by MACs, with an additional element that could include coverage determinations by commercial insurers as a factor in making Medicare coverage determinations.

The definition of medical necessity has not been officially revised – yet. One could imagine that in the midst of a RAC or MAC audit, auditors and providers will disagree as to the true definition of medical necessity.

Going forward, when you get audited, immediately check whether your claims were denied due to “lack of medical necessity.” Ask yourself, “really? Is there no medical necessity in this case, even in the era of COVID?” Because the auditors may be wrong.

Secondly, ensure that the RAC and MAC entity is CMS-certified to review certain CPT® codes for medical necessity. CMS limits audits on medical necessity because of the vagueness of the definition. When auditors find no medical necessity, then providers must push back, when justified.