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3 Ways To Reduce Denials Due To Medical Necessity

Denials have always remained a major challenge for healthcare providers and medical billing and coding companies that handle the backend processes for their clients. When a claim is denied, the client is not only refused payment for services rendered, but the after-process of challenging the denial and appealing becomes tiresome and expensive.

Did you know that it takes up to $188 for each denied claim to finally get paid? No wonder that a majority of the denied claims go uncontested. Studies show that up to 65% of denied claims don’t get resubmitted at all.

If your denials rate is high and your team does not have the expertise to pick the right denials and challenge them, it means you are constantly losing revenue and not being paid for services offered.

While there can be many reasons why claims get denied, one important reason is the lack of medical necessity.

What is medical necessity, and why is it important? 

Medicare and Medicaid first created medical necessity to help manage the rising costs of healthcare. Medical necessity included a set of terms and conditions to ensure the provided medical care was actually required and was of expected quality.

For instance, hospitals shouldn’t admit patients who would have gotten better with just outpatient treatment. This puts an unwanted financial burden on the payers. While Medicare and Medicaid were the first payers to deny claims based on medical necessity, other payers quickly followed suit.

Right now, every payer has their own set of terms and conditions concerning medical necessity. Healthcare providers and medical billing and coding companies have to be aware of these to ensure they provide the right kind of service and bill these appropriately.

While medical necessities are definitely needed guidelines to ensure hospitals and providers don’t push unnecessary treatments and tests on patients, from the service provider’s side, these are additional legislation burdens that must be handled.

Ways to reduce denials due to medical necessity

We have put together three practical and expert-suggested tips to follow to reduce the number of claims that are denied stating a lack of medical necessity.

  1. Work on your clinical documentation processes

When it comes to documentation, the billers and coders who are a part of in-house or third-party medical billing and coding companies have to work hand-in-hand with physicians and nurses. The physicians and nurses who meet a patient first start recording the concern, diagnosis, and further treatment plans. Sometimes, due to excessive workload, they may not be able to give you a precise idea of the condition and the treatment, and that’s why as billers, you need to be able to spot documentation gaps and try and fill them.

Is your billing team simply copying whatever documentation was provided and creating claims? Being proactive here is very important. The documentation team should be able to create a thorough case that insists on medical necessity. If your team is doubtful about the gaps, then they should be able to reach out to the physicians and clarify quickly.

Quintessence’s Doctor’s Portal is a free tool that all our clients get to use. We have tried to close the communication gap between physicians and the billing team by creating a portal where tickets can be raised and issues clarified.

Using the portal, you will easily be able to identify communication bottlenecks and know where there is a delay.

  1. Invest in the right technology

Technology can do so much to bring down denial rates. The problem with medical necessity-based denials is that the medical necessity rules change for each provider. That means your team needs to remember extensive information to be able to put together claims. Human errors are unavoidable parts of billing and coding.

That’s why human skills need to be backed by technological precision.

This is important if you want to improve vitals and grow as a profitable healthcare brand. If you can afford to invest in an in-house billing and coding team that’s equipped with the latest skills and technology, then that would definitely help in the long run.

However, not a lot of hospitals or practices do this because this is an expensive, time-consuming, and effort-ridden approach.

Medical billing and coding companies like Quintessence come backed with decades of experience, highly talented expertise, and access to high-end, latest technological skills and tools. Hiring such third-party service providers will help you improve your RCM processes without heavy investments.

In fact, most of our clients work with us on a contingency-fee model and stay risk-free and contended while they get to use our tools and technology.

  1. Improve coding efficiencies

There are two ways a claim could get denied because of coding/coder issues.

  1. Medical billing and coding companies have coding teams who convert clinical documents into codes, which the payers refer to when they are processing claims. When your coders mix up or miss codes and modifiers, then it becomes very easy to deny a claim.
  2. Coders need to be aware of Local and National Coverage Determinations (LCDs and NCDs) and individual payer policies. The tools that they use need to guide them to ensure medical necessity requirements are met while creating codes. All these would help avoid errors from the coding end of the RCM process. If not, even if a procedure was performed based on medical necessity, the backing codes wouldn’t reflect this, and the claim would get denied.


When it comes to medical necessity-based denials, precision, process expertise, and accountability all matter. As a healthcare provider who is busy all through the year, it is only fair that your efforts are financially compensated. You can achieve this by improving your RCM processes and getting the help of experienced medical billing and coding companies to take over backend processes.

Analyze your denials trend and determine what percentage of claims gets denied because of medical necessity. Start working on bringing down the numbers.

Get in touch with QBSS if you want to know how to approach and tackle denials due to medical necessity.