Medical Necessity

Friday, September 22 2023

So what constitutes meeting “medical necessity”?

According to most insurance companies, the assumed goal of therapy is an attempt to relieve some diagnosis or suspected diagnosis identified in the DSM-5-TR. Each insurance panel has its own definition of what they consider medically necessary; the criteria vary between plans but there are some general similarities in criteria.  

Therapy progress notes should be describing impairments in an individual's life based on reported behavioral health symptoms; explaining how the therapist is working to reduce such impairments and therefore improve areas of functioning in a person's life through each scheduled session. 

Treatment must be deemed necessary rather than just desired by the client. As a therapist it's important you believe the type of treatment you’re providing is a proven treatment, consistent with the best standard of care, and the most cost-effective for the client’s symptoms. Someone reviewing your progress notes will also want to hear that the client is making progress, or at least that therapy is preventing a deterioration of functioning.

How to check your note for clearly defined medical necessity:

1. Make sure you have addressed each condition that’s listed. If a client has more than one diagnosis listed on their treatment plan and/or has two different treatment goals that cover each area you will need to explain how you and/or other members of the recovery team are addressing these issues.

2. You need to be able to identify and explain a clear “why” in regards to why this individual is seeking and is receiving treatment; excluding other explanations. Insurance companies are looking to make sure you’ve conducted a thorough assessment to reach the diagnosis.  For example: the client is having trouble focusing and feels agitated due to depression or substance abuse.

3. Justify your diagnosis. It’s important to provide an accurate diagnosis without under or over diagnosing. Make sure you’re looking for and diagnosing based on accurate and significant symptoms; it is considered to give them a “lesser” diagnosis.  

4. Make sure you have an actual plan in place of how to address your client’s needs. You can do this by creating an outlined treatment plan with estimated timelines of therapy outcomes (if applicable/possible).  

Example:  Aetna Behavioral Health Treatment Record Review Sample Treatment Forms

5. Is your treatment/recovery plan something insurance companies consider paying for?

  • Does your plan illustrate the therapeutic services and reflect your expertise as a licensed therapist?
  • Make sure the services being provided match the needs. That is, making sure the interventions match the objectives. Example: If a client has a substance abuse problem, are you qualified/trained to address this? 

6. Don’t completely abandon the treatment/recovery plan. You don’t need to constantly check it either, rather just make sure you’re checking it periodically to ensure your notes flow well with it. Mention a client’s progress in the notes you’re taking. Example: “In the past 30 days Alice has demonstrated progression towards her goal of increasing social interactions by joining a support group for anxiety and visiting with relatives on weekends.”

7. Provide a reasonable expectation for the end of a client’s treatment and clearly identify why each step is needed to reach this goal.

8. Ask questions about an insurance’s definition of medical necessity. Generally they are looking for the same criteria in this area but it's good to know specifics about a company you’re credentialed with. Click the links below to access the associated provider manual.  

In the event one of your clients and their progress notes are ever reviewed by insurance keep these suggestions in mind:

Treatment review tips

  • Request information about a review: as a provider you can always contact the health plan, request an outline of the questions that will be asked, and ask for the plan’s medical necessity criteria. This is often posted on their website or included in their provider manual.
  • Focus on observable symptoms: avoid lengthy discussion about the client’s BH history or any theoretical analysis of the case. 
  • Focus on the present: outline current and observable symptoms from the DSM. Cite severity, duration, frequency, and scores on diagnostic tests (even simple self-report scales). For example, instead of saying, “The client is depressed because of attachment problems and a disengaged family system in childhood,” a better picture of the same case would be “The client is experiencing symptoms of major depression, including insomnia five nights a week, social isolation, severe lack of appetite, a weight loss of 10 pounds in the last month, loss of pleasure, poor concentration, and lack of motivation, and scores a 29 on the Beck Depression Inventory.” (Psychotherapy
  • Identify problems in functioning: specify how BH symptoms have negatively affected functioning in a client's work, relationships, finances, interest, etc. Be sure to include ADLs including self-care, showering, dressing, and grooming. For example, you could say, “Jon reports feeling unmotivated to perform typical daily tasks because of depressive symptoms. He says he's called into work five days over the past three weeks, has only bathed once this week, and has been arguing more frequently with his spouse.”
  • Identify diagnosis and risk factors: any health conditions, psychiatric medication dosages, the prescriber, substance abuse or history of, triggers to relapse.

Try not to take offense to a review if it occurs. Be friendly and cooperative. Take the review as an opportunity to see which areas of documentation you can improve on.

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