Types of Denials


Contractors in the Recovery Audit Program (RAP) identified the following:


  • Medical necessity denials for multiple codes;
  • Ambulatory surgical center coding errors paid at the inpatient rate rather than the outpatient rate; and
  • Other outpatient charges that were not billed because the medical services provided were not medically necessary in the inpatient hospital setting.


According to CMS, these categories of medical necessity denials impact multiple codes but no coding trends were identified. Medicare contractors denied these claims because the medical documentation submitted did not:


  • Support the diagnosis;
  • Justify the treatment or procedures;
  • Document the course of care;
  • Identify treatment or diagnostic test results; and
  • Promote continuity of care among healthcare providers.


Pointers for Proper Documentation


To justify Medicare claims payment, CMS gives hospital providers the following guidance:


First, make sure that the medical record contains sufficient documentation to demonstrate that the patient’s signs and symptoms were severe enough to require inpatient hospital medical care.


Also, make sure physicians are documenting any pre-existing medical problems or extenuating circumstances that make the beneficiary’s admission medically necessary. Factors resulting in a simple inconvenience to the beneficiary are not enough to justify an inpatient admission. The beneficiary requires inpatient care only if his or her medical condition, safety, or health would be significantly and directly threatened in a less intensive setting.


When making the decision to admit, physicians should remember to consider four basic factors. In addition to the severity of the signs and symptoms exhibited (already mentioned above), they also should consider the medical predictability of an adverse happening to the patient, the need for diagnostic studies, and the availability of diagnostic procedures at the time and location where the patient presents.


In addition to the above, note the following:


  • Non-legible documentation affects the RAC’s ability to support the medical necessity and appropriate setting of the billed services. CMS encourages providers to complete all fields on documentation tools, such as assessments, flow sheets, and checklists. If a field is not applicable, CMS recommends use of “N/A” or “not applicable” to show you reviewed and answered each question. Fields that you leave blank can lead the reviewer to make an inaccurate claim determination.



  • Ensure that medical record entries, including (but not limited to) the following are consistent. assessments; treatment plans; physician orders; nursing notes; Medication and treatment records; admission and discharge data; pharmacy records; and other documentation. When one entry contradicts previous documentation, include documentation that explains the contradiction.


  • Provide adequate documentation of significant changes in the patient’s condition or care that could impact the review determination.

About the Author


Carol Spencer, RHIA, CCS, CHDA, is a senior healthcare consultant with Medical Learning, Inc. (MedLearn®) in St. Paul, Minn. MedLearn is a nationally recognized expert in healthcare compliance and reimbursement. Founded in 1991, MedLearn delivers actionable answers that equip healthcare organizations with coding, chargemaster, reimbursement management and RAC solutions.

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