Is it Medically Necessary?

If so, can you prove it?

Documentation is the key to payment for services rendered. We have heard it time and time again. As coders we have to be cautious and precise with our coding decisions in order to stay compliant and assign codes to the highest level of specificity gleaned from the documentation. This is a huge challenge

for many hospital coders, and without the support of the physicians and clinical staff it is virtually impossible to increase the bottom line.   Let’s look at Observation services for example. In recent Observation service audits performed by CentraMed, certain problem areas have been consistent in hospitals across the country.

What are some of the areas of concern?

  • Non-compliant orders to observation status
  • Omitted physician documentation
  • Injection and Infusion omitted start and stop times
  • Lack of Utilization Review staff over the weekend

What is the outcome?

Patients were found to have been admitted to observation status with orders that did not contain the elements necessary to validate the encounter and the medical necessity. When a patient is admitted to observation, Medicare has provided guidance on what should be reflected in the physicians order.

Physicians must document the ongoing care of the patient while they are in observation status. This documentation should include improved status of the patient or any worsening of the patient’s condition. If the order was originally for a 24 hour observation and then the patient ends up being in the observation status for 72 hours, (which was the finding for many of the cases reviewed), without documentation to justify the time frame, the appropriate amount of hours the patient was in observation status cannot be captured and billed.

Documentation is the key to payment for services rendered

Many of the medication administration records that are electronic have been reflective of omitted start and stop times for the injections and infusion administration performed. This is also a revenue leak. Drug or hydration administration infusion hours cannot be captured for charging and coding if there is not documentation to substantiate the services took place and for how long.

Utilization review appeared to be a short staffed area over the weekend. If the patient was admitted through the emergency department or a direct admission from a physician in the community, many times there was not staff to review the chart until Monday morning. This has resulted in use of hospital staff, time and supplies without appropriate documentation to substantiate medical necessity.
What should be done?

Getting it correct from the start is the best practice. Obtain the information for Observation services from the claims processing manual section 290 and section 230.2 for drug administration. Provide the CPT guidelines for reporting of injections and infusion for facility. Put education in place. Start with the admission staff. If the order does not reflect the correct language, for example: Order to Observation 24 hours and the reason the patient should be in observation status, indicating the predictability of an adverse outcome, if the patient is not in a facility that can provide adequate care, the admission staff should contact the ordering physician for corrected orders. Medicare does not allow retrospective orders to be written following an admission to observation status. If the orders are not correct from the start then the facility is out of compliance and cannot bill for the services.

Work with the nursing staff who care for the observation status patients, provide the education to them from the CPT Guidelines and the Medicare claims processing manual to educate them on the drug administration start and stop times. Show them how much revenue is being lost when the information is omitted.

Put chart checks in place for review of the medical history, current medical needs, severity of signs and symptoms. If changes are made to the length of stay past the 24 hours the physician needs to again document the predictability of an adverse outcome in addition to the facility’s availability for adequate care. This information will assist in the medical necessity of the patient’s stay. Ask the physicians to document risk supported diagnosis.

Audit, track and trend, educate. Initiate a process improvement.  Follow through and audit again and educate again until it is perfect.  This will improve the facilities bottom line. In today’s audit environment if you are treating patients and submitting claims, you will be audited.

Finally, be sure to have a charge protocol manual in writing and written carve out sheet in place for each unit that observation services take place in within your hospital. Anyone responsible for capturing the charging, coding, quality assurance and final billing needs to have access to this manual and carve out sheet.
With RAC already reviewing Region C for Observation services for 2013 it is absolute that other regions will be reviewed in the days to come.

Stay compliant and improve your bottom line. If you need assistance please contact CentraMed, we are here to assist you.


By Dawn Davidson
CPC, RCC, AHIMA-Approved ICD-10-CM/PCS Trainer

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