This term has different means depending on its usage. Many are inter-related.
Clinical: It refers to whether treatment of a disease or condition is warranted medically. This is in regard to published Clinical Practice Guidelines (CPGs) for care for a particular condition. There are clinical guidelines for many conditions including diabetes, IBS, BPH, chronic pain management and many others; it has nothing to do with reimbursement–but what is medically warranted. High-quality, evidence-informed clinical practice guidelines (CPGs) offer a way of bridging the gap between policy, best practice, local contexts and patient choice. A long list of guidelines for many conditions is listed below as an example:
https://nccih.nih.gov/health/providers/clinicalpractice.htm
These are important because all medical insurance companies use the strength of the research, and subsequent guidelines related to services and procedures to create reimbursement policy.
Reimbursement: Based on the clinical efficacy and outcomes research, medical necessity is what determines if a service or procedure for a specific diagnosis is reimbursed by a medical insurance carrier. Medicare has numerous Local Coverage Determinations (LCD’s) that outline specific procedures and a list of ICD-10 codes that support medical necessity. Some procedures are determined to be cosmetic, designed to improve appearance or psychological well-being and therefore not considered to be medically necessary. Some cosmetic procedures can be determined to be reconstructive based on the ICD-10 or specific circumstances.
To be considered reconstructive (and medically necessary) the procedure must be proven to:
- Improve or restore normal function, mobility, or gait).
- Restore the patient to a normal appearance.
- Improve the quality of life (QOL) of the patient.
Do not include the psychological benefits from the procedure. This is statutorily documented in numerous policies as “not supporting medical necessity.”
A service or procedure must be determined to not be experimental, investigative, or unproven. These terms are also often used as either justifying or not justifying medically necessary. Most healthcare carriers have a specific policy concerning what they consider experimental, investigative, or unproven.
Another factor impacting whether a procedure or service is medically necessary is whether the patient is well enough to tolerate the procedure. If the patient has significant comorbidities then he/she may not be well enough to be approved for surgery based on the “medical necessity” of performing the procedure versus not performing it.
Another coding and documentation
use of medical necessity is the selection and use of office visit codes. Per
Medicare, medical necessity determines the level and frequency of office visit
codes. In other words, more complex, worsening, and severe conditions warrant
higher level codes than simple and self-limited ones.