Definition
A service meets medical necessity when it is reasonable and needed to diagnose or treat a condition. Medicare applies this test under Section 1862(a)(1)(A) of the Social Security Act, guided by national and local coverage determinations (NCDs and LCDs). Commercial payers publish their own medical policies.
Why it matters
The claim shows medical necessity through diagnosis codes linked to each procedure, backed by the record. A diagnosis outside an LCD’s covered list causes a denial. When Medicare coverage is uncertain, an Advance Beneficiary Notice signed before the service lets you bill the patient.
Example
A vitamin D test is billed with a diagnosis the MAC’s LCD does not list as covered. Medicare denies it, and without a signed ABN, the practice cannot bill the patient.