Retrospective chart reviews under managed care: will payment be authorized?

Publication: Getting Paid in Behavioral Healthcare

Publication Date: 01-SEP-05

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COPYRIGHT 2005 Manisses Communications Group, Inc.

Managed care organizations (MCOs) and insurance companies functioning like MCOs generally prefer to conduct medical necessity reviews during treatment rather than after an episode of treatment has been completed.

However, providers not infrequently fail to contact MCOs for reviews. Sometimes this occurs due to providers deliberately avoiding or ignoring the need for reviews with MCOs. At other times, it may be inadvertent, such as accidental oversight or the result of a patient not giving coverage information which identifies that a MCO is involved.

When medical necessity reviews are not done during treatment episodes, MCOs do not discover that services were provided until they or the insurance company receives the claims. In these cases, which are numerous, MCOs usually then require a copy of the medical or clinical record (i.e. the chart) for retrospective review.

In addition, even when authorization has been obtained during treatment, MCOs may conduct random retrospective chart audits. If they find inadequate charting, or discrepancies between the information obtained during concurrent reviews and the information in charts, they may decide to rescind authorizations and to recoup monies already paid.

Retrospective chart reviews can be more problematic for providers and provider organizations than concurrent reviews with respect to securing authorization and therefore payment (or avoiding recoupment of funds already received). There are three major reasons for this: Inadequate documentation of medical necessity, inadequate overall documentation, and charting that fails to support the CPT codes that were billed.

Documentation of medical necessity

Many providers still fail to document sufficient information to validate the presence of medical necessity. They may do a masterful job of conveying medical necessity to MCOs in...

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