When Healthcare Services that are not Medically Necessary can be Reimbursed.
Providers that know this one exception to the rule are less likely to leave money on the table.
A mainstay of managed care is that coverage applies only to medically necessary services. Indeed, commercial and government health benefit programs pay providers only for covered services that are medically necessary. Accordingly, most healthcare providers will seek reimbursement only for medically necessary services. One important exception exists.
While most health plans differ on the definition of “medical necessity,” an exception to the medical necessity rule is worth noting: Payment for some nursing home or hospital inpatient services that a patient does not medically need may be justified when discharge planning conflicts arise. Hospitals and nursing homes must know the rules for these special situations or risk leaving money on the table.
A typical scenario of this kind occurs when a patient is clinically ready to be discharged to a lower level of care but cannot be released because no clinically-safe environment for the patient’s discharge is available. For example, it may be the case that no skilled nursing facility (SNF) beds are available near the hospital, requiring the facility to keep the patient admitted longer than clinically necessary. Or, a known safety concern at the patient’s home could also pose an obstacle to discharging the patient from an SNF or hospital.
In these situations, providers should consider taking these three steps to ensure hospital claims for inpatient days will be reimbursed.
Insist on documentation
First, documentation in the patient’s medical record is critical, as discussed earlier in the article, “Medical Necessity 101.” For instance, the facility’s clinical case manager or social worker must provide clear evidence in the chart of the daily calls made to local SNFs requesting patient transfer. Although such efforts are burdensome, they are meant to mitigate the health plan’s costs. The good news is that this documentation also strengthens your case when you explain why the facility should be paid for services that would otherwise not meet the payer’s definition of “medical necessity.” All too often, clients miss out on opportunities to reduce denials because they did not maintain adequate notes of their efforts to find patient transfer options. Daily documentation in the chart of such efforts will often suffice to meet payers’ coverage guidelines.
Keep the payer posted
Second, those payers who require concurrent review status updates should receive timely information regarding the discharge planning issues a provider faces. Managed care plans, in particular, are responsible for “managing” their members’ services, including step-down and home health services. To the extent a payer is involved in coordinating transitional care, the provider should take active steps to alert the health plan’s case managers of discharge planning challenges. Increased communication between the provider and the plan will help shift the burden on the health plan to not deny that portion of the stay that the provider agrees does not meet level of care standards for the patient’s condition.
Review your contracts
Third, facility providers must make sure their managed care contracts take into consideration and cover difficult discharge planning scenarios. Healthcare providers must ensure that the terms of their facility services agreements clearly state the health plan’s obligation to reimburse the provider for inpatient services in those cases where the patients could otherwise have been discharged. Most commercial health plans are open to such realities, and providers must insist that the payers’ case managers actively search for suitable discharge locations.
Putting it all together
Healthcare providers that understand this exception to the medical necessity rule will keep good records of efforts to find a place to discharge patients. Likewise, providers must keep the payers apprised of these efforts in a timely fashion, and their managed care agreements must clearly spell out how difficult discharge planning scenarios will be accommodated in favor of coverage. Providers that comply with these requirements will set their practices up for success.
Anderson & Quinn, LLC is a law firm based in Rockville, Maryland, providing individuals, businesses, corporations, and healthcare institutions with the legal and litigation support they need to protect revenues.
