The Undefined, Definition of “Medical Necessity”

While the Coronavirus pandemic is horrible and seems to be getting worse. COVID has forced slight, positive changes in the telehealth arena and, perhaps, in the widening of the ambiguous definition of “medical necessity” or, as I call it – the undefined, definition of “medical necessity.” Medical necessity is the backbone of rendering health care services. Without it, services should not be provided. Yet, medical necessity is the most litigated topic in all of audits.

On September 1, 2020, the Centers for Medicare & Medicaid Services (“CMS”) published a proposed rule that will codify a definition of “medical necessity” for Medicare purposes. So far, the definition of medical necessity varies, depending on the source. The MACs have been given long rein in defining the term on an individual and separate basis, creating disparity in definitions and criteria. The proposed rule’s comment period ended November 2, 2020.

All this to say medical necessity is in the eye of the beholder. Much like beauty. Why then, can RAC and MAC auditors who are not doctors, not firsthand, treating providers, not nurses or LCASs, decide that medical necessity does or does not exist for a patient that they have never seen?

Black’s Law Dictionary (the most prominent legal dictionary) has a super, unhelpful definition of medical necessity: “If not carried out the patient’s situation could worsen. For a patient’s treatment found to be necessary is this specific type of procedure or treatment.”

The American Medical Association (“AMA”), on the other hand, has a more detailed definition, probably unintended to make it all the more confusing:

“Our AMA defines medical necessity as: Health care 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 health care provider.”

CMS’ proposed rule codifies a definition of what makes an item or service medically “reasonable and necessary” under the Social Security Act 1861(a)(1)(A). The rule, if finalized, would codify in regulations a definition of “reasonable and necessary” items and services based on a definition currently used by Medicare Administrative Contractors (MACs), with an additional element that potentially would include coverage determinations by commercial insurers as a factor in making Medicare coverage determinations.

The Proposed Definition (To be Codified in 42 CFR 405.201)

“We are proposing to codify the longstanding Program Integrity Manual definition of “reasonable and necessary” into our regulations at 42 CFR 405.201(b), with modification. Under the current definition, an item or service is considered “reasonable and necessary” if it is (1) safe and effective; (2) not experimental or investigational; and (3) appropriate, including the duration and frequency that is considered appropriate for the item or service, in terms of whether it is—

  • Furnished in accordance with accepted standards of medical practice for the diagnosis or treatment of the patient’s condition or to improve the function of a malformed body member;
  • Furnished in a setting appropriate to the patient’s medical needs and condition;
  • Ordered and furnished by qualified personnel;
  • One that meets, but does not exceed, the patient’s medical need; and
  • At least as beneficial as an existing and available medically appropriate alternative.” See Proposed Rule.

In addition, CMS adds that it will also utilize commercial payor standards or have an objective panel determine medical necessity if criteria #1 and #2 were met, but not #3. This additional commentary is another example of how subjective and fact-specific determining medical necessity can be. The LCDs will also be consulted.

If adopted, these proposals would arguably lead to the most wide-ranging changes in Medicare’s coverage standards and procedures in decades. The proposal to codify the definition of “reasonable and necessary” applies to all items and services. The inclusion of commercial payor standards may be a wild card.

The definition of medical necessity has not been officially revised – yet. One could imagine that, in the midst of a RAC or MAC audit, auditors and providers will disagree as to the true definition of medical necessity.

Going forward, when you get audited, immediately look and see whether your claim denials were denied due to “lack of medical necessity.” Ask yourself, “Really? Is there no medical necessity in this case…even in the era of COVID?” Because the auditors may be wrong.

Secondly, ensure that the RAC and MAC entity is CMS-certified to review those certain CPT codes for medical necessity. CMS limits audits on medical necessity because of the vagueness of the definition. When auditors find no medical necessity, then providers must push back. And you should push back, legally, of course!

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on November 3, 2020, in CMS, CMS Proposal, Coronavirus, Federal Government, Knicole Emanuel, Legal Remedies for Medicaid Providers, Managed Care, Medicaid, Medicaid Attorney, Medicaid Providers, Medical Necessity, Medicare, Medicare Administrative Contractor, Medicare and Medicaid Provider Audits, Medicare Attorney, Medicare Audits, Provider Appeals of Adverse Decisions for Medicare and Medicaid, Unnecessary Medical Services and tagged , , , , , , , , , . Bookmark the permalink. Leave a comment.

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