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Medical Necessity vs. Documentation for Inpatient Services

By:  NAMAS
Published:  January 25th, 2019

Auditing the documentation of inpatient and observation E/M services can often be challenging. Many of the notes we are provided for review include so much information that the note feels like a short novel instead of documentation for one date of service. This over-documentation can make it difficult to see what is being treated by our provider. Some of this is caused by how inpatient EMRs are set up, but we (coders and auditors) are also responsible for providers thinking they must include so much information in every note. Over the years, we have drummed into their heads "If you document at least 4 HPI, 10 ROS, each PFSH, and 8 organ systems in the exam we can support any level of service." The problem with this is we have taught them to do more work than necessary to support their services. At the end of the day, they really only need to document enough information to support the complexity of caring for the patient on the date of service. This means that we need to help them understand how to determine the medical necessity level of service then equate that to the documentation requirements needed for that level. The level supported by documentation is found in CPT and the Documentation Guidelines and has been condensed into the information we find on the audit grids. The level of service supported by medical necessity is a different function that is determined by the nature of the presenting problem(s) and the picture painted of the complexity of caring for those problems during the visit. Why do we have to consider medical necessity? Because:

MCPM, Publication 100-04, Chapter 12, Section 30.6.1 states: "Medical necessity of a service is the overarching criterion for payment in addition to the individual requirements of a CPT code. It would not be medically necessary or appropriate to bill a higher level of evaluation and management service when a lower level of service is warranted. The volume of documentation should not be the primary influence upon which a specific level of service is billed. Documentation should support the level of service reported."

MCPM reminds us that volume of documentation is easily compiled especially with the adaption of EMR systems and therefore it cannot be the only determining factor in choosing a level of service. If it was, it is quite possible every patient that presents to the provider could be billed out at the highest level of service.

Not only do we have to determine the level of services supported on the audit grid, but also the level supported by the medical necessity of the visit. If this sounds like you are going to audit the note for two separate responses, you are hearing correctly. The guidance from the MCPC that even if there is enough documentation of the key components to support a higher level of service, the picture painted of the complexity of caring for the patient's presenting problem to the provider on the date of service must also support the level of service. So, how do we determine the level of service supported by the medical necessity of the visit?

For level three inpatient services, the picture painted by the provider is that of a presenting problem chronic in nature that is severely exacerbated or an acute problem posing a threat to life, limb, or bodily function. This problem requires major adjustments to get the patient to a more stable state.

Documentation of level two services will paint a picture of a presenting problem that has begun to reach a more stable state, but still requires adjustment since the problem has not yet reached that stable state. These problems are either chronic problems that are exacerbated (but no longer severely) or acute problems that have complicating factors that are contributing to the complexity of caring for the patient.

The picture of the medical necessity of level one services will be that of a presenting problem that has reached a stable state.

Once we know the level of service supported by medical necessity, we compare it to the level of service supported on the audit grid. If the two do not match, the lower of the two are your supported level of service and would be reported on a claim.

Often, the picture painted of the complexity is blurred by the volumes of information that has been copied into an inpatient note from elsewhere in the EMR. We frequently see lab and radiology reports that our provider is not considering in caring for the problem, or a comprehensive history and exam that was done only to support a level of service even if the provider did not find it to be clinically relevant to the visit. Think about this: the provider is doing a subsequent visit for a problem that is a chronic exacerbated problem, but not severely exacerbated (level two medical necessity). The documentation requirements to support this level of medical necessity are an interval history that includes 1 HPI, 1 ROS, and 2 organ systems examined. It is not necessary for our providers to perform and document all the additional work to make sure they can support level three services (as we have taught them to do) if the medical necessity of the visit does not require it. Once we understand how to identify the level of medical necessity of these visits and relate the minimum necessary documentation requirements to support each level, we can teach our providers to document only what they find clinically relevant to support the level of medical necessity.


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