Skip to Main Content

The Centers for Medicare & Medicaid Services (CMS) has always maintained that medical necessity is the fundamental basis of payment, which helps to explain the 2021  changes to the office/outpatient E/M services that removed the system based on history, exam, and medical decision-making to a system rooted in medical necessity. Accurate coding now depends on a deeper understanding of medical necessity.

In this month’s “3 Things to Know About RCM,” we’ll provide guidance on medical necessity, debunk prevalent HIPAA disclosure myths, and provide tips to make the most of back-to-school visits.

Tell A Story with Documentation to Explain Medical Necessity

Let’s face it, defining medical necessity can be a challenge. The agencies we count on for guidance offer varied and vague definitions.

  • The American Medical Association (AMA) says medical necessity should be in accordance with accepted standards of medical practice; and that it’s not for the economic benefit of the health plan, purchaser, provider, or even the patient
  • Medicare requires that medical necessity is reasonable and necessary for the diagnosis or treatment of illness or injury
  • The American College of Medical Quality says it’s “neither more than less that what the patient requires at a specific point in time”

The challenge is tying them all together.

First, let’s make one thing clear. Medical necessity and medical decision making (MDM) are two different things that are sometimes mistakenly thought of as interchangeable terms. The difference is, MDM is the complexity involved in providing services, including the complexity of the presenting problem(s), management options, and risk to the patient. Medical necessity is the answer to why the services were performed.

How these two terms play together brings more clarity.

Diagnosis codes can explain the complexity of a condition and, to a provider, may justify a specific service because she has the whole story and the background that cannot be fully understood. Her medical decision making seems sound because the treatment stands up to the definitions above. But a payer may see it differently, needing more justification to cover the service, such as, have more conservative treatments been tried, have additional labs or testing been done to arrive at the decision, and does the symptom align with specific classifications about the degree of the condition. In some cases, medical necessity is determined by the payer, not clinical standards of care. (So a treatment may simply not be covered.) And none of this specific information is visible to the payer based on diagnosis codes.

The bottom line: To make sure claims are paid, don’t rely simply on diagnosis codes, but tell a story with your documentation and review payer policies that illustrates medical necessity, then document in their terms. With a clear understanding of medical necessity, your claims will be more accurate, and are much more likely to be reimbursed.

4 HIPAA Disclosure Myths Debunked

When is it okay to disclose protected health information (PHI) and when is it prohibited? We’ll review 4 common myths and provide clarity to keep you compliant.

Myth 1: HIPAA prevents or limits healthcare providers from sharing PHI between each other to provide care for a patient

FALSE: HIPAA allows the disclosure of health information for treatment purposes. In addition, HIPAA does not require a business associate agreement (BAA) in order for a provider to share health information for the purpose of treating a patient. In fact, the HIPAA treatment disclosure exception is so broad that it applies to disclosures between healthcare providers AND the “coordination or management of health care” by a provider and a third party, HHS Office for Civil Rights (OCR) guidance indicates.

Myth 2: Patients do not have an unlimited right to access their entire medical record

FALSE: Your practice has an obligation to give the patient unrestricted access to their PHI.  The current tally of Right of Access cases stands at 19 since OCR instituted its Right of Access Initiative in 2019. You must allow individuals to request access to their own records, for a reasonable cost-based fee, and you only have 30 days of turnaround time to get patients their data.

HIPAA gives patients broad rights to access their health information and healthcare providers are required to honor patient requests. Denial of such access could constitute a HIPAA violation. Patients are also not required to fill out an Authorization for Release of Records when requesting their own healthcare information.

EXCEPTIONS: There are a few exceptions to patient access rights under HIPAA such as psychotherapy notes, and health information for civil, criminal or administrative proceedings.

Myth 3: HIPAA prohibits disclosure of PHI, even if that disclosure might minimize a threat to health or safety

FALSE: HIPAA allows the disclosure of health information to minimize an imminent threat to health or safety of an individual or of the public. You can disclose PHI to persons reasonably able to prevent or lessen the threat.

HIPAA also permits CEs to disclose PHI to law enforcement authorities to identify or apprehend an individual where it appears from all the circumstances that the individual has escaped from a correctional institution or from lawful custody. Additionally, you can disclose PHI to law enforcement when an individual makes a statement admitting participation in a violent crime. In cases like these, the CE must reasonably believe that serious physical harm to the victim would result without the disclosure.

What’s more: According to OCR, HIPAA allows disclosures of health information to help with public health and safety issues to:

  • Prevent disease
  • Help with product recalls
  • Report adverse reactions to medications
  • Report suspected abuse, neglect, or domestic violence
  • Prevent or reduce a serious threat to anyone’s health or safety

PHE reminder: HIPAA still applies to CEs and their business associates (BAs) when the government calls a public health emergency (PHE) like it did for COVID-19, and both must continue to safeguard patients’ privacy the best they can. However, if a PHE is in place, CEs can disclose patients’ PHI without authorization when it’s “necessary to treat a patient, to protect the nation’s public health, and for other critical purposes,” explains OCR in COVID-19 PHE guidance.

Exceptions: HIPAA has some key exceptions to this disclosure for mental health counselors. State law may further restrict the extent of these disclosure exceptions. Know the rules in your state.

Myth 4: Complying with state laws that require certain disclosures violates the HIPAA Privacy Rule

FALSE: The HIPAA Privacy Rule actually contains an exception specifically involving disclosures required by state law. Common state-law disclosure obligations include reporting cases of child abuse, reporting cases of vulnerable adult abuse, and reporting to law enforcement if an individual has certain types of wounds like a bullet wound.

HIPAA’s “required by state law” disclosure exception makes reviewing and understanding your state’s mandatory reporting laws absolutely essential. Focusing only on the federal HIPAA regulations to inform your disclosure obligations is a mistake.

The Takeaway

Learning the types of health information disclosures that HIPAA prohibits and encourages will facilitate the proper flow of information, improve patient experience, and help avoid costly federal investigations and fines.

Source: Health Information Compliance Alert – 2021; Volume 21, Number 7

Q&A: Back-to-School Physicals and Preventative Care

It’s the time of year when your school-age patients show up in droves for athletic and extracurricular athletic physicals – and a great opportunity to build relationships.

To help you and your provider foster great relationships with your patients while receiving the maximum amount of reimbursement your practice is entitled to, we’ve assembled answers to four frequently asked questions about the best way you can provide this service to your patients before the school year begins.

Q: Can the results of a preventive medicine service be used for physicals?

A: Yes. In fact, this is the best way to perform this service for your patient, as the patient will not have to pay out of pocket for the service if their insurance covers the cost of evaluation and management (E/M) services 99381-99385/99391-99395. These services check all the boxes for school and sports physicals and give providers a chance to update a patient’s vaccination status.

Work with your patient to schedule preventive medicine services around the peak times for the beginning of the school year or start of team sports seasons.

Q: What if we don’t use a preventive service for a school physical?

A: One option you have here would be to use 99499 (Unlisted evaluation and management service). Unfortunately, few, if any, payers will reimburse for the code, and the patient may be left to foot the bill. Under these circumstances, your practice should collect on this service at the time of service and reimburse when you receive reimbursement.

Another option would be to have a “sports physical clinic,” which can be done in the evening, weekends, or even early mornings especially in the summer when illnesses are typically not as heavy. Again, this would be another out-of-pocket service and would not be filed to insurance. This is a great way to get your patients to your office.

Q: What is the best ICD-10 code for documenting a physical?

A: That depends on the purpose of the exam, and whether it reveals any abnormal findings. You should “use the code(s) that most accurately reflect the reason for the encounter,” and you can also “report more than one ‘encounter for’ code when appropriate,” according to the American Academy of Pediatrics (AAP) (Source:

So, if you are double counting a preventive wellness exam and a school physical, it is possible to use a combination of Z00.121 (Encounter for routine child health examination with abnormal findings) or Z00.129 (Encounter for routine child health examination without abnormal findings) with one or both of Z02.0 (Encounter for examination for admission to educational institution) and Z02.5 (Encounter for examination for participation in sport), as appropriate.

Q: Can we perform other services during the physical?

A: Yes. Especially if you decide to use 99381-99385/99391-99395 for the physical. That’s because many of the services associated with a preventive E/M can be billed separately. So, vision screens and hearing screens can be billed alongside developmental screens and behavioral screens, depending on the patient’s age and development.

In fact, all screening and testing services can be billed with any E/M service, preventive or a sick visit E/M, under appropriate circumstances.

And should the patient be vaccinated during the service, you can also bill for the vaccine along with the vaccine administration.

The Takeaway

Combining school and sports physicals with wellness visits is smart business, not only for your practice, but also for your patients who won’t have to dig into their own pockets for the services providing their insurance pays for preventive services.

Source: Pediatric Coding Alert – 2021; Volume 24; Number 8

Interested in more urgent care tips, best practices, and industry updates? Check out our June and July installments.

Interested in more? Our RCM experts use smart solutions and best practices to stay on top of revenue cycles and reimbursement.

Learn How

Sign Up for the Urgent Care Minute

Join over 20,000 healthcare professionals who receive our monthly newsletter.