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Providers would do well to think beyond any specific national standard, to more specific details, when considering denial appeals.

A member of a message board I follow, and to which I occasionally contribute, recently posed a question about a denial of coverage based on an alleged failure to meet medical necessity requirements. The admitting diagnosis was metabolic encephalopathy. She did not say (nor, regrettably, did I ask) the principal diagnosis submitted with the claim. The reason given for the denial was that the physician did not document exposure to a toxic element. The patient’s ammonia levels were high, and ammonia can be a causative factor in metabolic encephalopathy. The patient had Traditional Medicaid.

She asked if toxic exposure was even a factor. I wrote an emphatic “no,” not based on my own research of a national standard, specifically InterQual, one of the allowed tools for medical necessity evaluation.

I advised that she should appeal on the basis of the “totality of the record” principle, as stated in Alexander v. Azar, a strategy I have used successfully before a Medicare Administrative Law Judge (ALJ) long before this decision. Slavish adherence to a national standard (i.e. InterQual or MCG) is contrary to sound medical necessity determinations, according to the judge’s ruling.  

How is the totality strategy applicable here?

The denial appears to have been based on InterQual’s “Toxic Exposure” subset. In my opinion, this is an incorrect subset, not applicable to a metabolic disorder. In my search, there was truly no subset directly addressing metabolic encephalopathy, nor one specific to liver disease. Both MCG and InterQual admit to holes, wherein no ORG or subset is useful in determining medical necessity. This Toxic Exposure requirement was an overreach to justify a position. 

It is not uncommon for payers to use ORG’s or subsets not supported in the record, nor the one reasonably used by the provider to determine medical necessity. Payers also may use the correct ORG or subset, but apply a level-of-care standard for which the plan was not billed. For example, say an acute-stay claim is submitted for care provided on the medical/surgical unit. The criteria applied by the payer is that for intermediate or even critical care. The right criteria were set, but with a manufactured level of care. The inverse is true as well; payers can tend to ignore elements of the criteria set that support inpatient admission so they can justify paying only for observation status.

This payer’s apparent assertion is not unique. Payers have issued initial denials of coverage based on an admitting diagnosis. These denials are usually issued before coding and billing. Once coded and a proper principal diagnosis is provided, the payer will generally approve the stay. Sometimes the denial is based on insufficient information that, once provided, results in the denial being set aside. But not always. Some will ride that horse all the way off the cliff, never acknowledging their possible error, forcing an appeal to state or federal contractors, where the totality of the record will be considered. 

The conclusions of Alexander are, in my opinion, affirmed and expanded upon by Barrows v. Becerra, by the appellate court. The conclusions of the appellate court in Barrows have many layers to peel back, but wading through them reveals that both courts affirm that Medicare beneficiaries have Fourth Amendment standing under the legal theory of property rights. Both deal with hospital and provider admission status decisions essentially coerced to be in compliance with standards set by the Centers for Medicare & Medicaid Services (CMS) and its auditing contractors. Both courts conclude that only the total record can support or refute a claim by the government that inpatient is the wrong status. 

Both cases also involve only Traditional Medicare beneficiary rights to due process, but the overriding principle expressed in both is that anything apart from the total record is at least potentially harmful to patients. Arbitrary application of standards, outside an analysis of the complex medical decision-making, is just wrong. Arguably, these conclusions are also applicable to Medicare Advantage plans and Medicaid. I personally can attest to frequent success by challenging payer and government contractor criteria, whether MCG, InterQual, or payer internal proprietary standards, when confronting them with the total record, without reliance on any national standard.      

This does not mean you will always be the hands-down winner on appeal. The record has to be, as always, descriptive of why hospital care was necessary. Hospitals sometimes enter into contracts with language that, wittingly or unwittingly, means hospitals waive their rights to disagree with payer internal standards.

But apart from this, the lesson of these court decisions is to never let any standard other than the total record rule final status and/or billing decisions. To do so can cause unwarranted loss of revenue, and worse, have very real, even devastating, effects on your patients.

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Marvin D Mitchell, RN, BSN, MBA

Marvin D. Mitchell, RN, BSN, MBA, is the director of case management and social work at San Gorgonio Memorial Hospital, east of Los Angeles. Building programs from the ground up has been his passion in every venue where case management is practiced. Mitchell is a member of the RACmonitor editorial board and makes frequent appearances on Monitor Mondays.

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