Doctors are trained to find out what is wrong with you. If you walk into a clinic with a headache, a cautious doctor might order an MRI just to be safe. They want to rule out the worst-case scenario.
But insurance companies do not pay for “just to be safe.” They only pay for what is strictly required to treat a known problem. If the insurance adjuster thinks the doctor is just guessing, they will deny the bill. Suddenly, the patient is stuck with a $3,000 surprise charge.
This is the silent war fought in the back office of every healthcare facility. It revolves around a strict rule called “Medical Necessity.” And the people fighting this war are not the doctors; they are the medical assistants and billing specialists.
How Do You Prove Medical Necessity to Insurance Companies?
To get an insurance company to open its wallet, you have to prove a logical link between the patient’s physical symptom and the doctor’s action. You cannot bill for an X-ray of the foot if the patient’s only complaint is a sore throat.
That is why the curriculum in top-tier online courses in medical assistant programs focuses heavily on chart auditing. You learn to read the doctor’s fast, messy notes and translate them into a solid argument. You act as the filter between the clinical exam room and the billing department.
If a doctor writes “rule out fracture” on the chart, you know the insurance company will reject the claim immediately. Insurance does not pay for “ruling out” a guess. You have to go back to the doctor and ask them to document the actual, visible symptom—like “acute left ankle pain and swelling”—before you send the bill out the door.
ICD-10 and CPT Codes: Matching the Diagnosis to the Treatment
To communicate with insurance companies, you do not use English paragraphs. You use a strict language of numbers and letters.
What this means is you must constantly juggle two different code sets. First, you have the ICD-10 codes. These explain the “Why.” They represent the patient’s diagnosis (like J02.9 for Acute Pharyngitis). Second, you have the CPT codes. These explain the “What.” They represent the physical procedure the doctor performed (like 87880 for a rapid strep test).
Medical necessity is simply the act of linking these two codes perfectly. If you link the strep test procedure code to a diagnosis code for a sprained ankle, the insurance computer system will automatically reject it. You have to ensure the “Why” directly justifies the “What.”
What is an Advance Beneficiary Notice (ABN) in Medicare?
Sometimes, a patient really wants a specific blood test, but you know Medicare’s computer system will not consider it medically necessary.
You cannot just draw the blood, send the bill, and surprise the patient with the cost weeks later. You have to use an Advance Beneficiary Notice (ABN).
An ABN is a physical form you hand to the patient before the doctor even touches them. It clearly states, “Medicare will likely deny this test, and you will have to pay $150 out of your own pocket. Do you still want us to do it?” Having the patient sign this paper transfers the financial risk from the clinic to the patient. Managing these forms is a daily, concrete task that ensures the clinic doesn’t bleed money.
What Happens When a Health Insurance Claim is Denied?
Even if you do everything right, an insurance company might still say no. They will send back a document with a rejection code stating the treatment lacked medical necessity.
So, what happens next? The clinic does not just give up. A trained assistant steps in to file an “Appeal.”
You gather the patient’s physical medical records. You highlight the doctor’s specific notes showing the patient had a fever of 103 degrees and swollen glands. You print out the lab results. You physically package this evidence and fax it back to the insurance adjuster to prove the doctor was making a targeted, evidence-based decision, not just throwing darts at a wall.
Why Medical Necessity Rules Prevent Healthcare Fraud
This strict system isn’t just about saving insurance companies money. It is a harsh legal boundary.
If a clinic habitually bills for expensive, unnecessary tests to inflate their profits, it is considered fraud. The FBI and Medicare audit clinics to find these exact patterns. By taking comprehensive medical assistant online classes, you learn the exact legal compliance rules that keep your clinic out of federal court.
You become the gatekeeper. When you review a chart and flag a test that lacks a matching diagnosis, you aren’t just doing paperwork. You are protecting the doctor’s medical license, saving the patient from crippling medical debt, and keeping the clinic’s doors open.