Mastering Medical Necessity: Coding Strategies to Support Medical Necessity Requirements

Blog post description.

8/26/20252 min read

Medical necessity: it’s the phrase that can make or break a claim. Yet, it’s still one of the most misunderstood concepts in coding and billing. To ensure full reimbursement and minimize denials, coders and billers must know how to effectively align their work with medical necessity requirements.

What is Medical Necessity?

Medical necessity refers to healthcare services or procedures deemed essential for diagnosing or treating a patient’s condition. Payers, including Medicare and commercial insurers, have strict definitions and policies on what they consider necessary.

Failing to meet these criteria results in claim denials, delays, and revenue loss. But coders play a pivotal role in safeguarding against this with proper documentation and coding techniques.

Strategies to Support Medical Necessity:

Know the Payer Policies Different payers have varying definitions and rules for medical necessity. Familiarizing yourself with payer-specific policies, including Local Coverage Determinations (LCDs) and National Coverage Determinations (NCDs), is essential.

Strengthen Documentation Ensure the provider’s documentation clearly supports the diagnosis and rationale for each procedure. The “story” in the medical record should align with the codes submitted.

Code to the Highest Specificity Using the most specific ICD-10 codes available not only improves claim accuracy but also supports the medical necessity narrative. Avoid unspecified codes unless absolutely necessary.

Use Appropriate Linking Between Diagnosis and Procedure Codes Make sure CPT/HCPCS codes are appropriately linked to the diagnosis codes that justify the service performed. This connection helps explain the “why” to the payer.

Educate Providers on Documentation Gaps Providers might not always realize the level of detail required in their notes. Coders can act as valuable partners by identifying patterns in denials and providing feedback for improvement.

Stay Updated on Coding Guidelines Coding standards evolve regularly. Keep current on updates to ICD-10, CPT, and payer policies to ensure ongoing compliance.

Mastering these strategies can reduce denial rates, accelerate payments, and maintain payer compliance. Remember: accurate coding isn’t just about numbers—it’s about telling the patient’s clinical story in a way that satisfies the payer’s criteria.