Medical Necessity is a systematic review and analysis of the clinical information found in a patient’s medical record to determine the appropriateness of a service or procedure, level of care for admission (inpatient versus observation), or continued inpatient stay.


General Medical Necessity

PYA’s hospital record review includes an analysis of the medical record to:

  • Validate the presence of supporting documentation for appropriate patient status, inpatient versus outpatient status, and application of nationally recognized criteria.
  • Compare documentation to National Coverage Determination (NCD), Local Coverage Determination (LCD), and Conditions of Participation (CoP) including:
    • Presence of physician admission order for inpatient versus observation versus outpatient.
    • Signed and dated physician orders.
    • Documentation of legible and pertinent patient progress notes.
    • Evidence of appropriate discharge planning.
  • Review Universal Bill-04 (UB-04) claim forms and remittance advices.

Recent areas of focus include:

  • Acute care inpatient admission – inpatient, observation, and outpatient
  • Two Midnight Rule
  • Same day readmissions
  • Outpatient observation services during outpatient visits
  • Three day qualifying stay
  • Payments for canceled surgeries
  • Payments for mechanical ventilation
  • Peripheral blood stem cell transplants (PBSCT)
  • Cardiac catheterizations and other cardiac procedures
  • Blepharoplasty (cosmetic) procedures medical necessity validation
  • Inpatient readmissions measures used by the Centers for Medicare & Medicaid (CMS) Readmission Reduction Program for:
    • Acute myocardial infarction
    • Heart failure
    • Pneumonia
  • Additional readmission focus measures to be evaluated beginning 2015:
    • Chronic obstructive pulmonary disease (COPD)
    • Total hip arthroplasty
    • Total knee arthroplasty
  • Physician office medical procedures medical necessity and payment validation


PYA offers Clinical Advisory Services that include medical necessity analysis, RAC audit and appeals assistance, and other services as described below. PYA’s demonstrated client successes through clinical analysis, response, and rebuttal include:

  • RAC recoupment from appeals totaling more than $800,000 over a 36-month period.
  • Part B rebill assistance recouping more than $250,000 over a 36-month period.
  • U.S. District Attorney physician billing and medical necessity case disputing $3 million in potential recoupment, resulting in a reduced recoupment of less than $1,000 in overpayments.

Our team of experienced professionals has the breadth of knowledge to provide an array of specialized services. This expertise is reflected by the following certifications and credentials:

  • Registered Nurse (RN)
  • Certified Case Manager (CCM)
  • National Institutes of Health Stroke Scale (NIHSS) Certified
  • Trauma Nursing Core Course (TNCC) Certified

PYA has experience with multiple external review organizations such as:

  • Office of the Inspector General (OIG)
  • Recovery Auditors (RAC)
  • U.S. District Attorney
  • Medicare Administrative Contractors (MAC)
  • Zone Program Integrity Contractors (ZPIC)
  • Other third-party payers