ICD-10: Preventing Medical Necessity Denials

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Written by Daria Bonner, CHCA, CCP, RMC | Monday, 23 May 2016 00:00

Given the added specificity inherent in ICD-10, it’s no surprise that medical necessity denials for physician practices and medical groups are expected to increase throughout 2016. In addition to greater levels of code granularity, three key industry drivers are expected to impact ICD-10 coding compliance among physician practices in the year ahead.

First, payers will continue to refine coverage policies based on the new code set. Second, the ICD-10 grace period for physician practices comes to a close as of Oct. 1, 2016. And finally, almost 6,000 new ICD-10 codes will be added that same day as the partial code freeze concludes. These factors will impact all providers, but they will be especially notable within physician practices and medical groups.

Practices are also predicted to struggle with reporting ICD-10-CM diagnosis codes that aren’t medically necessary as it pertains to supporting the corresponding CPT codes. Without proactive planning, the following three specialties may see an increase in medical necessity denials in the months ahead:

This article takes a closer look at these specialties to identify common medical necessity gaps in physician documentation and clinical coding. Left open, these gaps carry the potential to increase denials, audits, and revenue loss in 2016.

Cardiology Concerns

With 42 national coverage determinations (NCDs), cardiology is both a high-volume and a high-value service line. While CPT and E&M codes prevail in cardiology claims, the correct assignment of an ICD-10 code drives medical necessity decisions through NCDs. Some cardiology practices are already experiencing medical necessity denials related to the following:

Unspecified codes
Incomplete codes
Use of services for specific diagnoses
Specific concerns for cardiology include incorrect documentation for certain common conditions. To ensure accurate assignment of codes, documentation must support the specificity of each code category.

Hypertension: While ICD-10 has only one code for chronic hypertension (I10), there are more specific codes required for hypertension caused by another disease. To ensure accuracy of code assignment, make sure the causal relationship is clearly documented (i.e. pulmonary hypertension, renal hypertension, etc.).

Acute MI: Acute myocardial infarctions (AMIs) must include documentation stating “acute” for four weeks from the time of the initial MI. For subsequent AMIs occurring within the four-week period of the initial MI, physicians must also document the four-week period and note that it is a subsequent AMI.

Congestive heart failure: For heart failure, be sure to document the type (acute, chronic, acute on chronic) and severity (systolic, diastolic, combined systolic on diastolic).

Atherosclerosis with angina: For atherosclerosis, be sure to document the cause of the atherosclerosis, whether the condition is stable or unstable, the artery involved, and whether the artery is native or autologous. If there is a bypass graft, also document the graft, the original location of the graft, and whether it is autologous or biologic.

Ischemic cardiomyopathy: The diagnosis of ischemic cardiomyopathy must also state the type (dilated/congestive, obstructive or nonobstructive, hypertrophic), location (endocarditis, right ventricle), and the cause (congenital or alcohol).

Valvular heart disease: When documenting disease of heart valve, be sure to specify the cause (rheumatic or non-rheumatic), type (prolapse, insufficiency, regurgitation, incompetence, stenosis), and location (mitral valve, aortic valve).

Common Radiology Pathology and Lab Errors in Practice

Pathology, lab, and radiology services are all impacted by the laterality specificity required in ICD-10-CM diagnosis coding. It is imperative that the provider document whether diagnostic services are being performed on the left, right, or bilateral sides to ensure the most specific code assignment.

Providers should also note that ICD-10-PCS impacts code assignment for the inpatient component of radiology and pathology. All documentation for radiology and pathology procedures must meet the increased specificity required for these procedures. Procedures must also match the specificity in the professional (physician) component CPT code as well.

Three More Medical Necessity “Gotchas”

Diabetes, neoplasms, and pain codes are also key areas for medical necessity concerns in ICD-10.

There are five category codes for diabetes mellitus in ICD-10-CM. Diabetes due to underlying conditions, category E08, requires clear documentation of the underlying condition as follows. This includes hyperosmolarity, ketoacidosis, kidney complications, ophthalmic complications, neurological complications, circulatory complications, other specified complications, and unspecified complications and w/o complications.

E08 – Diabetes mellitus due to underlying conditions

E09 – Drug or chemical-induced diabetes mellitus

E10 – Type 1 diabetes mellitus

E11 – Type 2 diabetes mellitus

E13 – Other specified diabetes mellitus

Many neoplasm codes require more specific locations of the neoplasm and laterality specificity. One example is malignant neoplasm of the breast. Note that the gender must be documented for accurate assignment of code category for breast cancer as well.

In ICD-10-CM, the documentation for pain requires more specificity for location of pain (specific extremity such as arm, leg, finger, etc.), area of the pain in the specific extremity (forearm, upper arm, etc.), and laterality (left, right, bilateral).


Pain in right upper arm


Pain in left upper arm


Pain in unspecified upper arm


Pain in right forearm


Pain in left forearm


Pain in unspecified forearm

Eight Proactive Steps to Take:

Ultimately, the goal is to prevent medical necessity denials before they occur, rather than chasing them down after claims rejections or denials. Consider the following eight steps to mitigate medical necessity denials in physician practices and medical groups.

Focus on clinical documentation improvement—answer the “why:” The importance of CDI cannot be understated. The goal for each physician encounter note is to answer the “why” of every visit, every procedure, and every test.

CDI should be embedded in each practice’s workflow from the time the patient registers for an appointment through the actual encounter and during the billing period. This includes training on ICD-10 documentation requirements for front-office staff, all providers who document in the record, and back-end staff. As ICD-10 denials occur, be sure to disseminate this information, along with documentation improvement tips, to providers by specialty.

Track unspecified codes: Perform a detailed review of all unspecified codes. Is an unspecified code clinically appropriate, or could the physician have documented greater specificity? Physician documentation should demonstrate diagnostic severity and specific patient outcomes to support appropriate ICD-10-CM code assignment. Unspecified codes are predicted to be a key target for payor denials in 2016 as the grace period for physician practices comes to a close.

Monitor and update NCDs and LCDs: This is an ongoing process that practices must maintain consistently to ensure that all coverage requirements are met and documented. Review annually for high-volume procedures. To find more information about NCDs for your specific region, go online to https://www.cms.gov/medicare-coverage-database/overview-and-quick-search.aspx.

Work with your EMR vendor: When possible, build (or enhance) electronic medical record (EMR) templates to encourage greater specificity in clinical documentation for each visit, diagnosis, procedure, and test. For example, for coding pain, specific extremity, location, and laterality must be coded, as mentioned above.

Review all pre-authorizations and referrals: Ensure that any orders for ancillary testing include specific ICD-10-CM codes that meet medical necessity requirements. Check with your hospital counterparts to make sure that accurate information is received from the ordering provider. Lack of sufficient physician documentation for ancillary testing and procedures is a top concern for all providers.

One teaching hospital in the Midwest experienced continued medical necessity denials for outpatient services in cardiology, radiology, and laboratory, resulting in significant write-offs and lost revenue. Poor quality physician documentation on outpatient testing orders was identified as the primary culprit.

Know your payor policies: Many payor claims processing guidelines have changed with ICD-10, resulting in increased rejections and requiring providers to keep close tabs on denials. The most frequently reported reasons for denials include:

Invalid ICD-10 code
Nonspecific ICD-10 code
Lack of medical necessity for procedure performed
Patient ineligible for service
Revisit payer policies for your most common diagnoses, procedures, and testing.

Monitor medical necessity denials closely: When a medical necessity denial occurs, track the specific reason for the denial as well as the specialty, clinician, and payor. Share this data with the entire clinical, coding, and billing teams within your practice or medical group. Conduct targeted documentation and coding education to highlight what documentation was missing. Finally, when educational efforts are complete, conduct audits to gauge overall improvement in medical necessity denial rates for each specific diagnosis or procedure.

The Road Ahead

Going forward, physician practices must devote ample time and resources to combat medical necessity denials. While it’s true that the potential for medical necessity denials is greater in ICD-10, consistent implementation of solid processes for denial mitigation across your physician practice or medical group is a smart strategy.

Unsure about ICD-10 codes and reimbursement? Physician Credentialing and Revalidation ? or other changes in Medicare, Commercial Insurance, and Medicaid billing, credentialing and payments? Call the Firm Services at 512-243-6844 or [email protected]