Tag Archives: Milliman Care Guidelines

What is medical necessity?

Dennis Barry’s Reimbursement Advisor poses this question. Here is their answer:

Medical necessity is the determination that the level of care provided to a patient is appropriate and necessary to treat a patient’s medical condition and ensure a patient’s safety or health, such that a less intensive setting or service would jeopardize patient care. Medical necessity is documented by physician orders and outlined in local coverage and national coverage determinations.

Documenting medical necessity is required for Medicare to pay for the service. A service may benefit the patient, but it may not be a covered benefit if it does not meet medical necessity.

According to the Web site Payment Accuracy, “Approximately 99,500 claims were reviewed for the 2009 reporting period and the inpatient hospital short stays error rate was 12.4 percent, or $35.4 billion in estimated improper payments. The primary causes of improper payments were medically unnecessary services and insufficient documentation errors.” [See www.payment accuracy.gov.]

Short stays are a large-risk area for medical necessity inquiries. Providers must validate the necessity of short stay admissions. Providers cannot admit patients simply for the convenience of housing the patient overnight. Many short stays are found not to be medically necessary because the procedure or services provided could have been administered in an outpatient setting with no additional health risk to the patient. The fact that a patient was admitted only for a short period of time raises the question as to whether the patient should have been admitted at all.

Medical record documentation is essential to prove the validity of the claim. What is documented provides a clear directive for a medical necessity determination.

CMS considers claims medically unnecessary when they identify enough documentation to make an informed decision that the services billed were not medically necessary. This is based on Medicare coverage policies. An insufficient documentation error occurs when the provider does not submit sufficient documentation to determine whether the claim should have been paid.

The idea that medical necessity is driving some patients toward outpatient care is interesting to think about in the context of something we blogged about earlier this week.

Where do clinical guidelines fit in the medmal fix?

What follows is excerpted from a recent healthcare reform briefing paper by Chad Karls, “Retooling Medical Professional Liability”

Clinical guidelines are not a new idea, but the idea of using them to shield doctors from malpractice lawsuits has gained some purchase of late. The idea is to establish a list of agreed-upon, evidence-based guidelines, which, if followed, would give physicians and other healthcare providers safe harbor from claims of malpractice. In addition, if physicians are in fact protected from medical negligence lawsuits provided they follow such guidelines, this could have an additional and significant benefit of reducing the level of defensive medicine that takes place.

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The convergence of healthcare quality and efficiency

Milliman clinicians Helen Blumen and Lynn Nemiccolo have published a new healthcare reform research report about the relationship between improving healthcare quality and finding new efficiency in the delivery of care.


Q: How much waste is present in today’s healthcare system?

A: Milliman’s actuaries have concluded that the amount of waste in the U.S. healthcare system is in excess of 25% of total healthcare spending, or more than $600 billion in 2008 dollars. These estimates square with the numbers put forward by other prominent sources.

Q: How does Milliman define waste?

A: Milliman has defined inefficiency or waste within the healthcare delivery system as unnecessary, redundant, or ineffective treatment (and the costs associated with such treatment). This includes treatment that is contrary to, or not demonstrably associated with, healthcare quality and outcomes. Looking beyond the care delivery system, inefficiency also includes costs that are not demonstrably associated with a sound approach to enabling full access for everyone to appropriate healthcare coverage.

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Health IT Down Under

As the business of healthcare becomes more global, best practices will increasingly migrate around the world. A recent example of this trend has emerged in Austrailia, where hospitals are using the Milliman Care Guidelines via handheld devices in order to improve outcomes, reduce unnecessary care, and optimize length of stay. In the words of Milliman Principal Scott Harris:

“The tool helps avoid delays in care, can reduce underuse, overuse and misuse of medical resources, provides planning tools to anticipate patient needs and includes patient education tools…One of the key outcomes we have shown is that using these tools can appropriately shorten patient length of stay in hospital.  This not only improves the patient experience, but reduces the possibility of hospital acquired infections and can place the patient at a more suitable care setting.”