Medical Necessity and Paid Claims:
What Do They Have To Do with
Clinical Validation and Health
By Donna Young, RHIA, CDIP, CCS; Okemena Ewoterai, BSN, MA, CCS, CCDS, CDIP; and Katherine Lusk, MHSM, RHIA, FAHIMA
AS SUPPORT FOR the value-based payment arena grows, payer
audits are increasing. Payment can be denied based upon an
incorrect level of care, inappropriate code or diagnosis capture, lack of clinical information, medical necessity, and clinical validation. Denials are a major concern for hospitals and
non-hospital providers alike. Clinical validation is the review of
a medical record to assess whether the clinical documentation
supports the diagnosis that was captured.
The relationship between clinical documentation and payment is becoming increasingly troublesome with disparate interpretations of coding standards in conjunction with multiple
and conflicting standards for medical necessity by payer.
Begin with the End in Mind
In the book 7 Habits of Highly Effective People, author Steven
R. Covey urges readers to observe Habit 2: Begin with the end
in mind. He describes Habit 2 as the ability to “envision what
can’t presently be seen with the eyes,” and focus instead on
what the mind envisions.
Likewise, with clinical validation of patient records, providers should envision what the patient should “look” like at the
end of the treatment. A physician begins with the end in mind
when the patient is admitted for a surgical procedure. For instance, a patient has an elective total knee replacement, and
the diagnosis as well as the history of the patient’s condition
supports medical necessity and coding for the claim, and the
claim is paid. The physician envisioned the patient’s successful
surgery, the healing process, and recovery without limitation.
Or how about a patient who is having a laboratory work up?
The provider orders the test to clinically confirm the patient’s
symptoms. The provider envisions the lab results validating
the patient’s diagnosis. The patient’s plan of treatment is then
carried forward from that point. The ultimate objective in “be-
ginning with the end in mind” for the healthcare provider is to
achieve a good outcome for the patient while being paid for
treatment and services rendered. In the ever-changing world
of revenue cycle management, having proof for payment with
clinical validation can be a challenge.
The criteria each payer uses for medical necessity and clinical
validation is unique to them. The complexity is illustrated in Chil-
dren’s Health System of Dallas’ payer diversity: 13 financial classes,
112 payers with 567 different plans. Each payer and plan has a
unique set of requirements, including clinical validation and medi-
cal necessity, that must be followed for payment to be received.
Payers can even deny payment when providers use criteria
created by professional organizations. A provider might diag-
nose a patient based on criteria developed by the Kidney Dis-
ease: Improving Global Outcomes (KDIGO) organization, only
to have payment denied because an auditor is using criteria de-
veloped by the Acute Kidney Injury Network (AKIN) or RIFLE
(Risk, Injury, Failure, Loss of kidney function, and End-stage
Additional examples are the ongoing debate among infec-
tious disease specialists, intensivists, and medical leaders alike
regarding sepsis, and in pediatrics with precocious puberty in
a six-year-old child, where the body begins to change early and
hormonal suppression is required. Clinical validation and med-
ical necessity criteria differ by payer for payment.
Coding’s Role in Audits
Coding professionals are trained to adhere to the national
coding guidelines, and those guidelines may or may not align
Navigating Privacy & Security / Illuminating Informatics / Advancing Analytics / Road to Governance
Working Smart a professional practice forum