Having reviewed hundreds of Usual and Customary (“U&C”) and Medical Necessity provisions, contained within various employee benefit plans, and spending countless hours reviewing U&C and Medical Necessity topics with some of the best medical bill review firms in the country, The Phia Group has determined which terms result in a strong right to monitor claims for U&C, and which provisions leave the Plan helpless in the face of excessive charges.

During times of economic strife, every dollar counts. Every plan sponsor hoping to provide members with benefits during the turbulent days ahead must focus on savings and plan sustainability. Plans cannot afford to ignore dubious provider billing practices anymore, and must review claims to ensure the amounts being charged come within both the definition of U&C and Medical Necessity, in strict accordance with their plan terms. Furthermore, they must consider upgrading their plan documents to include the best U&C and Medical Necessity language possible.

Most if not all Plans will limit U&C to charges roughly equivalent to those charges billed by similar providers, providing similar services, in a similar locale. Similarly, medical necessity is determined by simply asking what other medical providers in the area might do. The problem is that in many geographic areas, sample sizes used as a basis for comparison are small or even non-existent. In other words, there are places where a medical provider may be the only provider of a given service for hundreds of miles. It therefore falls upon the Plan to define an “area” (for comparison purposes) as one that can expand enough to provide an adequate cross section.

When deciding whether a treatment or charge is customary or necessary, relying solely on industry practices is a mistake. Administrators have the right to consider other sources of information, such as Medicare cost to charge ratios, average wholesale prices (AWP) for prescriptions and/or manufacturer’s retail pricing (MRP) for supplies and devices.

When determining whether a treatment is medically necessary, as with U&C, plan administrators should exercise their discretionary authority by considering multiple sources of information. The Phia Group’s clients have access to upgraded U&C and Medical Necessity language, which takes this all into consideration.

Please contact our legal team to learn more about U&C and Medical Necessity language. To set up an appointment, please call 888-986-0080 and speak to Cindy Monfils at extension 155. Ms. Monfils can be reached by email as well at cmonfils@phiagroup.com.

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This entry was posted by Adam V. Russo on Wednesday, March 4th, 2009 at 12:14 pm and is filed under Never Events. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.