What to do if a claim is denied due to lack of medical necessity? (2023)

How do you resolve a medical necessity denial?

A denial for “medical necessity” results in the diagnosis code being not valid for the procedure and will NOT get paid. Denials can be overturned by appeal and often have a high chance of being overturned.

Lack of medical necessity penalties

Loss of your medical license. Loss of DEA registration. Exclusion of your practice from Medicare and Medicaid. Restitution on top of FAC violation fines.

“Not medically necessary” means that they don't want to pay for it. needed this treatment or not. What you need medically is not at issue here. Your insurer pulled a copy of their medical policy statement for your requested treatment.

How is “medical necessity” determined? A doctor's attestation that a service is medically necessary is an important consideration. Your doctor or other provider may be asked to provide a “Letter of Medical Necessity” to your health plan as part of a “certification” or “utilization review” process.

Your right to appeal

Internal appeal: If your claim is denied or your health insurance coverage canceled, you have the right to an internal appeal. You may ask your insurance company to conduct a full and fair review of its decision. If the case is urgent, your insurance company must speed up this process.

While you have an obligation to file claims in a timely manner, you cannot do so without the patient providing correct information. If the claim is denied because the patient did not provide accurate information, but you acted in good faith, you should balance bill the patient.

Whether a denial is based on medical necessity or benefit limitations, patients or their authorized representatives (such as their treating physicians) can appeal to health plans to reverse adverse decisions. In most cases, patients have up to 180 days from the service denial date to file an appeal.

1 – Check Insurance Coverage and Authorization

Taking the time to ensure the patient has coverage and the visit or procedure is covered before they even see a provider can save the practice a significant amount of money in denied claims in the future.

Can insurance deny a medical necessity?

Health insurance providers often rely on “medical necessity” when denying insurance claims. They will tell you that your policy does not cover healthcare services that are not medically necessary and will disagree with your physician about what services you need for your medical issue.

A. Medical necessity or clinical denials are typically a top denial reasons for most providers and facilities. They are also known as hard denials, in that they require an appeal to request reconsideration.