Over the last few years, a major concern for health providers and institutions has been the increasing number of medical necessity write-offs. These are charges that cannot be billed or collected due to the lack of medical necessity as determined by insurers. It’s essential to understand what constitutes medical necessity to avoid these avoidable write-offs.
What is Medical Necessity?
Medical necessity is an essential concept that insurance companies use to determine whether or not to cover a specific medical procedure, service, or equipment. Put simply, if a service is deemed not medically necessary, the insurance company will refuse payment, leaving providers with unbillable services – an avoidable write-off.
Determining Medical Necessity
The criteria for determining medical necessity can vary between different insurance providers. Generally, a service or procedure is considered medically necessary when it’s crucial for the diagnosis or treatment of a disease or condition, aimed at improving health functions, and in line with the standards of good medical practice.
The Impact of Avoidable Write-offs
Observe that such avoidable write-offs can have a significant impact on a healthcare provider’s financial health. They result in a loss of revenue and may also demand additional time and resources to manage appeals and follow-ups with insurers.
Strategies to Avoid Medical Necessity Write-offs
Here are some strategies that healthcare providers can adopt:
- Proactive Verification: Before procedures, ensure the insurance company’s criteria for medical necessity are met. This may involve pre-authorization or pre-determination of services before delivery.
- Documentation Precision: Ensuring accurate and detailed documentation of all patient interactions, diagnoses, and treatment plans can substantiate the medical necessity of services provided.
- Perpetual Training: Regular training of clinical and administrative staff on the latest criteria and rules around medical necessity is vital to stay updated and compliant.
- Efficient Coding: Emphasize accurate and adequate medical coding. The codes accurately translate the services provided into billable claims.
- Adopt Technology: Invest in advanced systems that can automatically check for medical necessity, flag potential write-offs before they occur, and provide assistance with pre-authorizations.
Avoiding medical necessity write-offs is crucial for maintaining the financial health of your healthcare practice or institution. By implementing a proactive approach that includes training, accurate documentation and efficient billing practices, organizations can significantly reduce the risk of these unbillable services and optimize their medical revenue cycle.
Mystaffology and Beckers Hospital Review written in greater detail about AWO.
