Medical necessity is a must for any value-based organization

In our previous post, we outlined how optimizing the technologies and processes behind clinical care is critical to optimizing performance in a value-based environment. The next step on the journey “Beyond the Curve of Health Care” involves medical necessity.

Medical necessity can be burdensome, but its various rules must be followed to avoid significant penalties or revenue loss. Looking at it from a more positive viewpoint, medical necessity is also an important path to build medical and tax benefits to support the financial shift to fee-for-value reimbursement. The Centers for Medicare and Medicaid Services is increasing its medical necessity audits, which makes health care organization leadership a vital role in compliance.

Health care executives must understand a few elements to maximize medical necessity benefits:

  • Stay familiar with compliance standards as they evolve along your value-based journey, and ensure protocols are in place so the organization operates correctly. In addition, nurses, specialists and other staff can be trained to help maintain medical necessity standards.
  • Don’t violate standards by not knowing what’s coming. Using proper data tracking, making smart medical decisions and avoiding waste can mean the difference between financial benefits and huge compliance penalties.
  • Never stop looking for overlooked or unused standards that may come into play as you optimize performance for a value-based future.

If health care leaders need further incentive to put medical necessity compliance near the top of the list, consider this: Since 2011, there have been $7.89 billion in overpayments to hospitals identified by Medicare recovery audit contractors.

Our next post will deal with how health care organizations track data through coding and documentation. For a more complete story of how providers should optimize performance under Beyond the curvevalue-based care, download a copy of the Optum eBook, “Beyond the Curve of Health Care.”

One thought on “Medical necessity is a must for any value-based organization

  1. In a specific way, your advice is truly on point: it emphasizes the destructive approach health care is pursuing by attempting to distill the very act of a physician sitting at a patient’s side, questioning, listening, examining, diagnosing, and determine the proper approach to better health, into a series of data points, metrics, and financially driven decisions. I have practiced nephrology and critical care medicine for nearly 25 years and have spent the last 3 1/2 years as a physician advisor dealing directly with CMS regulations, RAC audits, commercial insurance denials, LOS metrics, CDI, ICD-10 documentation and the likes. It has never been clearer to me that trying to navigate health care as a series of protocols that are, of necessity, dollar-driven will never solve our health care crisis. One cannot be a successful agent of change and reform by being part of the problem. The individual patient, with his/her unique background, life-style, mental makeup, simply does not always follow the protocols and guidelines.

    If we truly want to reform healthcare and help patients and hospitals survive the fiscal challenges that continue to spiral, you must center reform efforts on protecting that sacred bond between the patient and the physician. It cannot be simply about large populations. Ten patients with similar symptoms, admitted under the same diagnosis/DRG, treated by the identical cost-driven therapeutic protocol: 7 respond well, 2 have more complicated protracted courses, and one dies. Tie the hands of physician from practicing the art of medicine….limit him/her to inflexible standards, and people die.

    My advice is simple: choose to be part of the solution. Reform healthcare not by reacting to profit-driven regulations…but by searching for truly effective processes that put the doctor back in front of the patient…face to face…unfettered by hours of EMR documentation, insurance approvals, endless responses to queries that little or no impact of direct care. Acknowledge how sacred the time spent between the patient and physician is and strive to restore and protect it.

    Estimates suggest that 40 cents on every dollar spent on healthcare in the US is spent on regulatory issues and not direct patient care. As the highest per patient healthcare spender of any country in the world, the quality of our work remains far
    below that most developed countries. Ask yourself why? Ask what you are doing to impact in a positive way on that frightening metric. We should be doing far, far better in improving the health of our citizens.

    Finally, as a footnote…statistics are an elusive beast. One must be very careful in publishing numbers without doing one’s due diligence, less we mislead. There is a reason the RAC audits have not been resumed…with over a half a million cases tied up in endless appeals…some upwards of nearly 5 years. Of the nearly 8 billion dollars you report having been collected by the RAC auditors for over-payments….when looking a little more closely at the numbers, one finds that nearly 75% were overturned after determined to be inappropriate denials (not unexpected when utilizing an independent organization incentivized to find ‘fraud’. The tragedy of the misuse of organizations like the RAC is that hospitals have had to spend billions to recover monies that were inappropriately withheld….dollars that should have been spent on direct patient care. Again, a perfect example of why 40% of healthcare expenditures are administrative.

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