Upsurge of Medical Necessity Denials Fueled by ICD-10

One perhaps unexpected impact of the adoption of ICD-10 codes in 2015 was the dramatic increase in medical necessity denials of clinical laboratory tests. In an interview for The Dark Report (November 25, 2019 edition), Kyle Fetter, XiFin Executive Vice President and General Manager, stated the increased data provided by additional diagnosis codes has led to health insurers requesting more information about prescribed tests. “Many times, those requests for more information lead to demands for more data on medical-necessity or to payment denials, or both,” according to Fetter.

Fetter estimated denials attributed to medical necessity have increased by as much as 20% since 2016 with narrowing coverage of testing not just associated with Medicare but other health insurers as well. And the more-narrow coverage policies do not apply to more expensive molecular testing but are now being developed for routine clinical testing.

Assigning the large number of medical necessity denials to bad debt is not a viable option for laboratories. Many of the denials can be successfully paid with more accurate coding by ordering physicians or including clinical documentation with the claim to support the ordered testing. Efficiently managing the appeals process requires a purpose-built (focused on laboratory) revenue cycle solution. XiFin provides that type of solution.

XiFin’s billing and reimbursement experts cite the following requirements to optimize reimbursements on medical necessity denials:

• A rules-based platform, with payor specific front-end edits that identifies orders requiring more accurate coding or documentation prior to the order becoming a denied claim.
• A configurable workflow that can utilize tools like our client portal and automated faxes to engage ordering physician office staff to correct.
• Document storage allows for attaching medical records and documents with initial claims and appeals.
• Ability to bulk appeal.
• A system able to identify those customers who most often submit orders with errors. Identifying those customers and providing additional onboarding education will reduce the amount of re-work for the laboratory team.

While the increase in medical necessity denials was an unanticipated result of the implementation of ICD-10 codes, XiFin’s unique combination of dedicated-lab expertise and automation provides a powerful one-two punch in mitigating the impact. For those hospital labs that are seeking to address these sorts of denials, as well as the myriad other lab-specific regulatory mandates, XiFin is an invaluable partner. XiFin hospital clients recognize that having full real-time visibility into their labs’ revenue cycle is a powerful tool; it delivers a wealth of real-time information pertaining to their payors, and enables them to quickly analyze their lab financial reimbursement performance.  

For more information on how XiFin’s combination of automation and dedicated lab support expertise is assisting other labs in successfully addressing their medical necessity requirements, contact us today.