Warning: Medical Necessity isn’t Medical Decision-Making

Why the Highmark decision—since rescinded—was wrong about medical decision-making relative to medical necessity.

When payers and coders downcode evaluation and management (E&M) notes based on medical necessity, how do they determine what level of history and exam is medically necessary for a particular presenting problem? The answer: subjectively. 

What is Medical Necessity?

Of course, in order for any medical service to be paid, it must be medically necessary. The American Medical Association (AMA) defines medical necessity this way: “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.”

But, medical necessity in an E&M service is like beauty: it is in the eye of the beholder.

The medical necessity for ordering an EKG or CT scan of the brain is clearly listed in medical policies. If a patient is going to have a blepharoplasty, there are clear diagnostic indications to separate out cosmetic services from medically necessary services. Neither Medicare nor the AMA nor any payers has developed guidelines that describe the medical necessity for performing a specific level of history or exam for a particular presenting problem. If a clinician documents a detailed history and a detailed exam, should a payers or coder say that that wasn’t needed?

Problems in Coding and Reimbursement

A coder wrote to one of my colleagues recently and said: “the insurance company told me that even though the visit met the requirements for 99215, they were downcoding it to a 99214 because it only had moderate complexity.” A week before that, a physician wrote to me and said “my coding department downcoded my 99215 visit even though I had documented 45 minutes. The coder told me that despite the time, it didn’t meet medical decision-making.”

Recent listeners to Monitor Monday probably heard about the Highmark decision, since then rescinded, communicated to medical practices in a document called “Today’s Message.” Highmark announced in big capital letters that it was going “to require providers to prioritize medical decision-making with complexity of history and exam when reporting established E&M services.” Why did they do that? They say it was based on their interpretation of the 1995 and 1997 guidelines.

Their interpretation is dead wrong.

What justification do payers and coders give when they downcode visits despite the history and exam supporting the level of service? They base it on a quote from the Medicare claims processing manual that says that medical necessity is the overarching criterion in selecting a level of service, not the volume of documentation. Let’s hold on to that thought.

Medical Decision-Making: The Documentation Guidelines

The documentation guidelines were developed in 1995 and 1997 as a joint work product of Medicare and the AMA. The guidelines state that for established patient visits and some other visit types, two of the three key components of history, exam, and medical decision-making must be met. Neither CPT nor the Centers for Medicare & Medicaid Services (CMS) said that medical decision-making must be one of those key components.

The quote from the Medicare claims processing manual states that there must be medical necessity for the level of service, not that medical decision-making must be one of the key components. Medical necessity is not synonymous with medical decision-making and medical decision-making should not be used as a stand-in for medical necessity.

Over-Documentation and Copying and Pasting

Of course, our electronic health records have resulted in some medically unbelievable notes. I don’t deny it. I’ve been known to ask “did you need to do a mirrored exam of the larynx for this child with an earache?” “Is it usual to do a comprehensive exam for a patient with a sprained ankle?” But developing medical policies that are based on outliers in medical documentation is the wrong solution.  The correct solution? Follow the guidelines and let the medical director deal with outliers. 

Revenue and Compensation

Many physicians are paid based on the relative value units (RVUs) associated with a CPT code. Coders and payers that arbitrarily downcode visits based on an incorrect interpretation of the guidelines cost their organization or practice money, and the doctor salary. The medical necessity for performing history and exam are determined by the nature of the presenting problem, the patient’s own personal history, and the clinical judgment of the provider. Medical decision-making, the number of problems treated and their status, data ordered or reviewed, and the risk associated with the problem diagnostics or treatment is formulated as the outcome of the history and exam needed.  

Medical decision-making is the result of the history and exam and is not a substitute for medical necessity. If CMS had wanted medical decision-making to be that substitute, then the Medicare Claims Processing Manual would read, “medical decision-making is the overarching criterion in selecting an E&M service” instead of medical necessity. 

If CMS had wanted medical decision making to be a substitute for medical necessity, then either medical decision-making would be required in determining the code, or all codes would require all three components.

Program Note:

Listen to Betsy Nicoletti live this morning on Talk Ten Tuesday as she reports this important story.