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Denials Due to "Lack of Medical Necessity"

Denials Medical Necessity

"Lack of medical necessity" means the payer disagrees with the provider's opinion that a procedure was justified given the patient's diagnosis.

I think we can all agree that if the doctor performs an appendectomy because the patient's diagnosis is halitosis (bad breath) the payer has good reason to issue a denial. The procedure won't fix the problem. That's a clear case of lack of medical necessity.

Less clear are other reasons:

  • The insurance company believes there is a newer, better, and less expensive procedure that is safer and/or more effective than the one the provider performed.
  • The physician reviewing the claim for the insurance company is not an expert in the medical specialty involved and doesn't realize the procedure makes sense given the diagnosis. Do you really think the insurance company has claim reviewers familiar with every single specialty?
  • The rules for determining medical necessity vary from one locality to another. What is reimbursed in New Jersey may not be reimbursed just across the Hudson River in New York. Furthermore, these Local Coverage Determination (LCD) rules are updated weekly (you read that correctly) by the Centers for Medicare and Medicaid Services (the CMS). We will have a much more in-depth discussion of these rules in a future blog post. So stay tuned. The Coding Advisor constantly monitors these changes so you don't have to.

How do you find out "if the punishment fits the crime"? Sorry, I meant to say "if the procedure is justified for the diagnosis?"  Well, you can go on the CMS website and perform a query. We got so tired of that exercise that we built our own tool to do it faster and better. It's our LCD lookup tool, and it will find the answer lickety-split using the exact same database the CMS uses.

But I have some good news for you (Nirvana!):

Using the Coding Advisor, you'll never have to look up the medical necessity rules. Just enter your claim (just the codes, no personally identifiable information) and our software will instantly look up the rules and alert you to any medical necessity problems. It will even help you fix the problem. Yeah, really!

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