Medical Necessity

Medicaid Toolkit

For services to be considered medically necessary, they must be reasonable and necessary for the treatment of illness, injury, disease, disability, or developmental condition.

A medical necessity statement is critical because it explains why a service is required for a specific patient and demonstrates that the designated service meets payer requirements for coverage and reimbursement. When seeking reimbursement from a payer (such as Medicaid) and using medical coding systems (CPT, ICD-10, HCPCS), clinicians need evidence that the intervention provided supports health and safety.

A medical necessity statement must answer the following questions:

Why does this patient need the service and/or equipment?
Why does the service and/or equipment require the skills of a qualified audiologist and/or speech-language pathologist?

Medical necessity is a critical factor for determining eligibility for Medicaid-reimbursable therapy and treatment services. Each state determines its own medical necessity criteria for Medicaid reimbursement. According to ASHA's Speech-Language Pathology Medical Review Guidelines [PDF], Medicaid claims may be supported when providers document the following basic elements:

Reasonable: Appropriate amount, frequency, and duration of treatment in accordance with standards of practice
Necessary: Appropriate treatment for the patient's diagnosis and condition
Specific: Treatment targeted to particular goals
Effective: Treatment expected to yield improvement within a reasonable amount of time
Skilled: Treatment requiring the knowledge, skills, and judgment of a speech-language pathologist (SLP) or audiologist

A medical necessity statement documents clinical rationale for services and/or equipment, ensures compliance with payer requirements, and justifies appropriate reimbursement.

When justifying medical necessity, it is essential to thoroughly and accurately document the patient’s medical complexities and any coexisting conditions that require your skilled intervention. Instead of only listing diagnoses for justification, describe why the patient’s medical complexity and coexisting conditions significantly increase risk of negative outcomes without intervention. Insurers and reviewers will approve the least costly yet equally effective method of intervention. It is the provider’s responsibility to explain the patient’s need for requested services or intervention and detail any risks associated with not receiving these services.

Audiology and speech-language pathology services are medically necessary to treat speech-language, hearing, balance, swallowing, voice, fluency, and cognitive-communication disorders. Many disorders have a neurological basis, including head injury, Parkinson's disease, stroke, autism, and cerebral palsy. Children who require services as part of their individualized education programs (IEPs) and are identified as having a disability under the Individuals with Disabilities Education Act (IDEA) are also generally considered to have met the requirements.

Medical necessity for audiology services varies from state to state for hearing aid and cochlear implant evaluation and fitting. Most states establish minimum hearing loss criteria for initial and replacement hearing aids, and many require a medical exam as well as an audiologic evaluation to determine whether a hearing aid is medically appropriate. Some states limit the types of hearing aids covered, and many establish a limit on the number of aids and accessories, such as batteries, that beneficiaries may receive within a specified period of time. Some states allow interim replacements or repair of aids that are lost or broken.

Considerations

Although each state establishes a state plan, including specific requirements, relevant documentation for establishing medical necessity may include:

medical history, such as pertinent medical history, brief description of functional status, and relevant prior treatment;
diagnosed speech, language, swallowing, hearing, or balance disorder;
identification of a child with a disability as eligible for services under the Individuals with Disabilities Education Act (IDEA) or determination by an IEP team that services are required;
date of onset;
physician referral, if required (reauthorization may be required);
initial assessment and date—the procedure(s) used by the audiologist or SLP to diagnose a speech, language, voice, fluency, cognitive-communication, swallowing, hearing, or balance disorder and the date the initial assessment is completed;
plan of treatment or a treatment program and date established; and
progress notes and/or reports.

Durable Medical Equipment (DME)

Avoid using “upgrade” when describing the need for a new speech-generating device (SGD), hearing aid, cochlear implant processor, or osseointegrated device. Wanting to replace “old” technology is not a justification for new technology. If it works and meets your client’s needs, it will not be replaced. Avoid using language such as “patient wants a new device.”

Devices should not be duplicative. You cannot request a second device for use in a different location (school or work). That makes it an item of convenience, which is not covered.

Just because a patient is “eligible” for a new device (because of the timeline dictated by the payer) doesn’t mean they automatically get one. If their device is still functional, they must continue to use it. If not, document why the existing device is no longer sufficient to meet the medical needs of the client. For example:

The device is broken beyond repair. Often a requirement for replacement is to report the history of device repair, that the need for repair is not due to abuse or neglect of the device, and that repair of the device is no longer available through the manufacturer.
The client has experienced a significant change in health status resulting in improvement or decline in access (dexterity limitations, eye gaze, direct select, switch scanning) or required language system (significant improvement or decline in language skills due to medical improvement or chronic medical decline, significant change in hearing or listening needs). This should not be for an anticipated short-term change.

Advocacy

Professionals may work with their state association leadership, local education agencies, state education agencies, and state Medicaid offices to address specific topics or questions. Successful efforts to improve efficiency for professionals in some states include:

streamlining paperwork;
establishing evaluation or IEP by a qualified professional as adequate to establish medical necessity and eliminating need for physician signature;
expediting physician referral and examination process;
clarifying medical necessity criteria and documentation requirements;
updating states policy and procedure information;
advocating for services not covered (i.e., private practice and telepractice)