Medical necessity

Medical necessity is the question behind every coverage decision: whether the patient needed the service. HealthCare.gov’s glossary defines medically necessary services as health care services or supplies needed to diagnose or treat an illness, injury, condition, disease or its symptoms and that meet accepted standards of medicine. Each payer turns that idea into written policy: Medicare through its published coverage determinations, Medicaid programs through their provider manuals, commercial plans through clinical policies. The policy names the diagnoses, frequencies, prior treatments and documentation that make a service payable.

On a claim, medical necessity is argued by codes. The diagnosis codes on each line, in the order they are pointed, tell the payer why the service was performed; the procedure codes and units say what was done; the policy decides whether the two fit. When they do not, the remittance carries CARC 50, which X12 describes as non-covered services because the payer did not deem them a medical necessity. The denial is about the claim’s story, not necessarily the clinical truth.

The mistake is coding the visit from the superbill without reading the policy. A diagnosis that is clinically accurate but not on the payer’s covered list, a screening billed as diagnostic, a frequency the policy does not allow or a missing prior treatment history will deny no matter how good the care was. Check the policy before the service for anything high-cost or frequency-limited, have an ABN or waiver signed when Medicare or the payer is expected to deny, and appeal with the record and the policy text, not a corrected claim.