AMA aims at "not medically necessary"

The AMA is planning a second effort to get that term stricken from Medicare communications.

By Geri Aston, amednews staff. April 10, 2000.

Washington -- When Kenneth M. Lloyd, MD, heard over a year ago that the AMA had successfully convinced the federal government to eliminate the term "not medically necessary" from the beneficiary notices that explain Medicare claims denials, he thought: "Fantastic, score one for us."

But Dr. Lloyd, a radiation oncologist from Nashville, Tenn., kept seeing the language in information he received from Medicare. So he wrote his Medicare carrier and the AMA. Dr. Lloyd discovered that although the medical necessity wording was stricken from notices to Medicare beneficiaries, it is still used in the provider remittance notices that carriers send to physicians to explain payment denials.

"I continue to see that phrase," Dr. Lloyd said. "When something is denied, I argue that medical necessity is not something an insurer can assess. All they can assess is what's covered and what's not."

Insurers use the medical necessity language to shift the blame for a denied claim from themselves to physicians, he said.

Dr. Lloyd is calling on the AMA to work to get the language removed from Medicare entirely and dropped from private payer contracts as well.

The AMA agrees and plans to work to change the wording, said AMA Trustee William Mahood, MD. Physicians are confused about the status of Medicare's use of "not medically necessary." When physicians see the language in the information they get from carriers, they assume patients are still receiving notices with the same wording, he said.

"So it's still a sticking point," Dr. Mahood said.

The document that goes to patients, known as a Medicare summary notice, lists specific reasons for the claim denial. The notice may say "Medicare does not pay for an assistant surgeon for this procedure/surgery" or "the information provided does not support the need for this service or item."

The Health Care Financing Administration was able to change the wording on the form sent to beneficiaries because it is a paper document and not subject to outside guidelines. The notices sent to physicians are more difficult to change because they are sent electronically and subject to standards, Dr. Mahood said.

HCFA uses the not-medically-necessary language, known technically as code 50, because the American National Standards Institute, the group that sets uniform insurance claim transaction standards for many payers, adopted that wording, he said.

He said he had received assurances from HCFA that if the AMA were to develop alternative language acceptable to the agency, it would not likely challenge a modification to the standard for that code. HCFA officials did not return AMNews calls.

Rather than focus on medical necessity, the new language should explain that the plan does not cover the service in question, Dr. Mahood said.

The AMA plans to submit its request to change the code's language to ANSI but expects opposition from the health insurance community, he said.

A change in the ANSI standard would have an impact beyond Medicare and into the private market because so many health plans use the institute's language in their contracts.

"Theoretically, it would change it everywhere, so the sell might be more difficult," Dr. Mahood said.