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Physician's News Digest article on Certificates of Medical Necessity; Statutory definition of a CMN at the SSA website; Medicare manual that provides exhaustive information about the practical use of CMNs, particularly section 5.3. This is the official source of information for contractors administering the Medicare system about the use of CMNs.
It is a form of utilization management and forms a medical guideline on treatment. Medicare coverage is limited to items and services that are considered "reasonable and necessary" for the diagnosis or treatment of an illness or injury (and within the scope of a Medicare benefit category). [2]
A medical biller then takes the coded information, combined with the patient's insurance details, and forms a claim that is submitted to the payors. [2] Payors evaluate claims by verifying the patient's insurance details, medical necessity of the recommended medical management plan, and adherence to insurance policy guidelines. [4]
Medicare pays for medical items and services that are "reasonable and necessary" or "appropriate" for a variety of purposes. [1] By statute, Medicare may pay only for items and services that are "reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member" unless there is another statutory authorization for payment.
The process to obtain prior authorization varies from insurer to insurer but typically involves the completion and faxing of a prior authorization form; according to a 2018 report, 88% are either partially or entirely manual. [5] At this point, the medical service may be approved or rejected, or additional information may be requested.
However, deferment of this authority is not required. For example, the Department of Housing and Urban Development (HUD) issued the following determination: HUD conducts the same analysis of need whether or not the state has a CON process. There is wide variation in the methods CON states use to decide whether or not to issue a certificate.
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Fee-for-service is a traditional kind of health care policy: insurance companies pay medical staff fees for each service provided to an insured patient. Such plans offer a wide choice of doctors and hospitals. Fee-for-service coverage falls into Basic and Major Medical Protection categories.
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