Medical Necessity

The determination that a healthcare service or procedure is clinically appropriate, necessary for the diagnosis or treatment of a condition, and meets accepted standards of medical practice.

Medical necessity is the standard payers use to decide whether they will pay for a service. It is not enough that you performed a procedure correctly. The payer needs to agree that the procedure was needed in the first place based on the patient's clinical condition. Every payer defines medical necessity slightly differently, but the common elements are: the service must be appropriate for the patient's symptoms or diagnosis, consistent with accepted standards of medical practice, not primarily for the convenience of the patient or provider, and the most cost-effective option available that is clinically appropriate. Medical necessity denials are among the most frustrating for providers because they feel like the payer is second-guessing your clinical judgment. And in some ways, they are. The payer's medical director or utilization review nurse reviews your documentation and decides whether the service met their criteria. The key to winning medical necessity battles is documentation. Your chart note needs to clearly explain why the service was needed for that specific patient at that specific time. "Patient has back pain" is not enough to justify an MRI. "Patient has progressive lumbar radiculopathy with six weeks of failed conservative treatment including physical therapy and NSAIDs, and new onset of left foot drop suggesting possible disc herniation requiring urgent imaging" tells the story. When a service requires prior authorization, the payer is making a prospective medical necessity determination. When a claim is denied after the fact for medical necessity, you can appeal with additional clinical documentation. First-level appeals for medical necessity denials are reviewed by a physician, which often results in a different outcome than the initial review by a nurse or algorithm. Some payers publish their medical necessity criteria, often based on InterQual or Milliman Care Guidelines. Knowing which criteria set your payer uses helps you document to their standard and reduces denials.