Medical Necessity

Medicaid Toolkit

Medical necessity is a critical factor for determining eligibility for Medicaid-reimbursable evaluation and treatment services.For services to be considered medically necessary, they must be reasonable and necessary for the treatment of illness, injury, disease, disability, or developmental condition.

Each state establishes its own medical necessity criteria for Medicaid reimbursement. Professionals must consult the state’s definition to ensure they are establishing medical necessity in a manner that aligns with payer requirements. ASHA's Speech-Language Pathology Medical Review Guidelines [PDF] may also assist clinicians in addition to the Medicaid guidelines to develop documentation that supports medical necessity.

How Is Medical Necessity Established?

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 an audiologist or speech-language pathologist (SLP).

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.

Documenting Medical Necessity

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

When justifying medical necessity, it is essential to thoroughly and accurately document the patient’s medical complexities and any coexisting conditions that require the provider’s skilled intervention. Instead of only listing diagnoses for justification, providers should 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.

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 Example Statements for the Audiologist

Examples of Insufficient Statements of Medical Necessity:

“Hearing device selection was completed today because the current device is out of warranty.”

“Existing hearing aid will be upgraded to newer technology.”

“Completed otoacoustic emissions per protocol.”

Examples of Sufficient Statements of Medical Necessity:

“Device selection was completed because existing hearing devices are no longer meeting patient’s hearing needs. Hearing devices do not meet DSL targets for soft, medium, and loud inputs from 1500-8000 Hz due to a change in hearing noted on the most recent audiological evaluation in both ears. Altering programming of current devices was unsuccessful in meeting targets verified with probe mic verification. Insufficient gain at these frequencies impedes access to key speech frequencies that are important for speech and language development, academic achievement, and understanding speech in noise. A hearing aid device selection was completed to replace the patient's current hearing devices.”

“Due to patient’s complaint of tinnitus and history of ototoxic medication exposure, extended frequency behavioral audiometry and comprehensive distortion product otoacoustic emissions were completed for both ears.”

Medical Necessity Example Statements for the Speech-Language Pathologist

Examples of Insufficient Statements of Medical Necessity:

"The client would benefit from speech therapy."

“Speech-language therapy services recommended for dysphagia.”

“Mom wants a speech-generating device (SGD) to help patient communicate.”

Examples of Sufficient Statements of Medical Necessity:

"Skilled speech-language pathology services are medically necessary due to a diagnosed expressive language disorder that significantly impairs the child's ability to communicate wants and needs, communicate health and safety information, participate in educational activities, and interact effectively with peers and adults. Skilled intervention from a licensed speech-language pathologist is required to improve functional communication and reduce the impact of the disorder on daily activities."

“Skilled speech-language pathology services are medically necessary to improve the patient’s oral and pharyngeal swallow function in order to safely consume a diet of IDDSI level 7 solids and IDDSI level 0 liquids independently without elevated risk of aspiration.”

“Client requires a speech-generating device (SGD) to communicate his daily personal, social, medical, and safety needs to family, caregivers, and peers. He is unable to verbally communicate his personal needs, safety issues, or discomfort to caregivers or to medical personnel, thus increasing the possibility of further harm or medical complications. An SGD will provide a means to explain the location of pain or illness and the need for immediate attention and will offer him the opportunity to have a confidential conversation with a medical professional.”

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)