Payers are refusing to pay claims for gastric bypass, joint replacement, and even cataract extraction. Why? Because documentation in the record does not support the need for surgery.

“We are certainly seeing an increase in denials for medical necessity,” says Ronald Hirsch, MD, FACP, a physician with Chicago-based R1 RCM Physician Advisory Solutions. The denials fall into two categories:

• Unscheduled patients who present to the ED and require hospitalization. “Many denials are issued for inpatient admissions where the payer felt a lower level of care was warranted,” Hirsch explains.

Payers insist the patient did not meet criteria for inpatient status and should have been treated as observation during the hospital stay. Obtaining the correct payer information is the first step in avoiding problems. “At every step, the payer source will be needed,” Hirsch stresses.

It all starts with determining the correct admission status. Payers use varied criteria to determine if a hospital stay is warranted. For instance, Medicare uses the “Two-Midnight” rule, requiring a hospital stay to cross two midnights to meet criteria for inpatient admission. “Other payers use myriad different methods,” Hirsch reports.

If the payer information is wrong, there is no way to ensure the admission is authorized. “Denial is likely for lack of notification,” Hirsch adds. Even more problems can arise during the hospital stay. “Payers will often authorize a set number of days for the admission,” Hirsch says.

If it turns out the patient is not ready to be discharged after all, the hospital must provide updated clinical data to justify it. “If that information is not provided within the payer’s arbitrary timeframe, the hospital may receive a partial payment, or see the whole stay denied,” Hirsch warns.

• Elective patients with scheduled hospitalizations. Payers are steering as much care as possible to lower-cost settings. Increasingly, they are refusing to pay for hospital-based procedures and refer patients to physician’s offices or ambulatory surgery centers. “If the procedure is safe to be done in that setting, they want it done there to save money,” Hirsch explains.

Solid documentation is needed to support the need for the procedure to be performed in the hospital. For example, it is true that some elective laparoscopic cholecystectomies can be performed safely in surgery centers. However, not all fall into this category. One example is patients with sleep apnea who are at increased risk of respiratory compromise.

“Safe practice would be for that patient to have surgery at the hospital,” Hirsch says. “But unless that is documented in the notes, that crucial information cannot be conveyed to the payer.”

The surgery itself is no different, whether it is performed as an outpatient or inpatient procedure. “It’s the same surgeon, same nurses, same OR, same implants, same recovery,” Hirsch observes. “The status is really all about payment.”

Sometimes, the payer approves the surgery to be performed as an inpatient procedure. Then, the hospital submits an outpatient claim, or vice versa. “It will be denied, even though the surgery went well, and the patient recovered,” Hirsch notes.

Conflicting documentation on the patient’s status (i.e., outpatient or inpatient) causes problems. “Close communication between the payer, the doctor, and the hospital, to ensure everyone uses the same status, is important,” Hirsch adds.

Even if all this is executed perfectly, payers still can dispute the claim on medical necessity grounds. On this point, payers argue the patient really did not need to undergo surgery, receive a pacemaker, or undergo chemotherapy.

Payers are asking specific questions, such as: What has been tried prior to surgery? What alternatives were discussed with the patient? Does the care match the guidelines for treatment of that condition? “Much of this requires someone with clinical knowledge,” Hirsch says. Ideally, patient access works with use review nurses to schedule surgery. It is a problem when surgeons bypass the process altogether, simply calling the hospital, giving a patient name, and placing a surgery on the schedule. This long-standing practice, “should no longer be acceptable,” Hirsch offers.

First, the documentation needed to support the medical necessity of the surgery should be in place. Then, patient access can compare the payer guidelines to the clinical documentation. “If the guidelines are not met, further action is required,” Hirsch explains.

Otherwise, the payer is going to deny the claim. To bring physicians on board with these practices, patient access needs support from hospital leaders. “The first time the doctors are told they can’t schedule a surgery unless they send office notes, they will storm into the CEO’s office complaining,” Hirsch predicts.

Once administrators realize the financial implications, they will understand that revenue is lost if doctors schedule their patients directly. “The CEO needs to know why the doctor is being asked for the information so they can support the patient access process,” Hirsch says.