© 2018 Southwest Labs, All rights reserved

4261 Balloon Park Road NE, Albuquerque, NM 87109

  • LinkedIn - White Circle
  • Facebook - White Circle



Medical Necessity is the doctrine in which the Medicare program believes shows evidence-based utilization of healthcare services. “Reasonable and Necessary” describes services that are:

  • Safe and effective (not experimental and investigational)

  • Appropriate, including the duration and frequency in terms of whether the service or item is:

  • Furnished in accordance with accepted standards of medical practice for the diagnosis or treatment of the beneficiary’s condition or to improve the function of a malformed body member;

  • Furnished in a setting appropriate to the beneficiary’s medical needs and condition;

  • Ordered and furnished by qualified personnel; and

  • Once that meets, but does not exceed, the beneficiary’s medical need.

There are several exceptions to the requirement that a service be reasonable and necessary for diagnosis or treatment of illness or injury. However, clinical toxicology testing must always be reasonable and necessary.

CMS issues national coverage determinations (NCDs) that specify whether certain items, services, procedures, or technologies are reasonable and necessary under §1862(a) (1) (A) of the Act. Payment through Medicare can only be made if a physician certifies the need for services and establishes a plan of care.


The Medicare Contractor’s decision on whether care is reasonable and necessary is based on information reflected in the home health plan of care, the OASIS as required by 42 CFR 484.55, or a medical record of the individual patient. Medicare does not deny coverage solely on the basis of the reviewer’s general inferences about patients with similar diagnoses or on data related to utilization generally, but bases it upon objective clinical evidence regarding the patient’s individual need for care.


It is the Laboratory’s duty to educate and communicate that claims submitted for services will only be paid if the service is covered, reasonable, and necessary for the beneficiary, given his or her clinical condition.

Upon request, a laboratory should be able to produce or obtain from the treating physician, authorized person on the physician’s staff, or other individual authorized by law to order tests, the documentation to support medical necessity of the service the laboratory has provided and billed to a Federal or private health care program.

As a laboratory, we have to ensure that physicians are made aware that Medicare will only pay for tests that meet the Medicare coverage criteria and are reasonable and necessary to treat or diagnose an individual patient. Section 1862(a)(1)(A) of the Social Security Act states, “no payment may be made under Part A or Part b for any expenses incurred for items or services which are not reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of the malformed body member.”

Therefore, Medicare may deny payment for a test that the physician believes is appropriate, but which does not meet the Medicare coverage criteria, or where documentation in the entire patient record, including that maintained in the physician’s records, does not support that the tests were reasonable and necessary for a given patient.

Laboratories can and should advise their clients that tests submitted for Medicare reimbursements must meet program requirements or the claim may be denied. Laboratories should implement the following steps through their compliance programs or some other appropriate mechanism to ensure that the claims they submit to Federal or private health care programs meet the appropriate program requirements:

  • Requisition design

  • Notices to physicians

  • Physician acknowledgements

  • Advance Beneficiary Notices


A qualitative drug screen is used to detect the presence of a drug in the body. A blood or urine sample may be used. However, urine is the best specimen for broad qualitative screening, as blood is relatively insensitive for many common drugs, including psychotropic agents, opioids, and stimulants.

Common methods of drug analysis include chromatography, immunoassay, chemical ("spot") tests, and spectrometry. Analysis is comparative, matching the properties or behavior of a substance with that of a valid reference compound (a laboratory must possess a valid reference agent for every substance that it identifies). Drugs or classes of drugs are commonly assayed by qualitative testing.

A qualitative test may be followed by confirmation with a second confirmatory method, when there is a positive inconsistent finding from the qualitative test.

Typically, "spot" chemical tests are urine dipsticks or multiple drug cup devices.

Confirmatory techniques are most appropriately performed in independent laboratories where there is an adequate quality control infrastructure to guarantee the viability and proficiency of such quantitative confirmation testing.

Examples of drugs or classes of drugs that are commonly assayed by qualitative tests, followed by confirmation with a second method, are: alcohols, amphetamines, barbiturates/sedatives, benzodiazepines, cocaine and metabolites, methadone, antihistamines, stimulants, opioid analgesics, salicylates, cardiovascular drugs, antipsychotics, cyclic antidepressants, and others.

There should typically be a direct correlation between those positive findings generated from initial qualitative testing and those requested quantitative tests to confirm such qualitative findings.


  1. A qualitative drug test may be reasonable and necessary for patients with known substance abuse or dependence, when the results of such testing may impact their ongoing treatment.

  2. A qualitative drug test may be reasonable and necessary for patients with symptoms of schizophrenia suspected to be secondary to drug or substance intoxication.

  3. A qualitative drug test may be reasonable and necessary for chronic pain patients:

  4. In whom other illicit drug use is suspected, when there has been an acute change in physical or mental status that meets the indications above.

  5. To demonstrate abnormal findings, including the presence or absence of prescribed drugs, presence of non-prescribed substances, detection of illicit substances and adulterated urine samples.

Drugs or drug classes for which testing is performed should reflect only those likely to be present, based on the patient's medical history or current clinical presentation.


Drugs for which specimens are being tested must be indicated by the referring provider in a written order.


The New Mexico Medical Board has issued the following guidance to be used by the board to determine whether a health care practitioner’s prescriptive practices are consistent with the appropriate treatment of pain. This guidance is consistent with CMS, other States, and the American Academy of Pain Medicine.

A. The treatment of pain with various medicines or controlled substances is a legitimate medical practice when accomplished in the usual course of professional practice. It does not preclude treatment of patients with addiction, physical dependence or tolerance who have legitimate pain. However, such patients do require very close monitoring and precise documentation.

B. The prescribing, ordering, administering or dispensing of controlled substances to meet the individual needs of the patient for management of chronic pain is appropriate if prescribed, ordered, administered or dispensed in compliance with the following.

i. A practitioner shall complete a physical examination and include an evaluation of the patient's psychological and pain status. The medical history shall include any previous history of significant pain, past history of alternate treatments for pain, potential for substance abuse, coexisting disease or medical conditions, and the presence of a medical indication or contra-indication against the use of controlled substances.

ii. A practitioner shall be familiar with and employ screening tools as appropriate, as well as the spectrum of available modalities, in the evaluation and management of pain. The practitioner shall consider an integrative approach to pain management.

iii. A written treatment plan shall be developed and tailored to the individual needs of the patient, taking age, gender, culture, and ethnicity into consideration, with stated objectives by which treatment can be evaluated, e.g. by degree of pain relief, improved physical and psychological function, or other accepted measure. Such a plan shall include a statement of the need for further testing, consultation, referral or use of other treatment modalities.

iv. The practitioner shall discuss the risks and benefits of using controlled substances with the patient or surrogate or guardian, and shall document this discussion in the record.

v. Complete and accurate records of care provided and drugs prescribed shall be maintained. When controlled substances are prescribed, the name of the drug, quantity, prescribed dosage and number of refills authorized shall be recorded. Prescriptions for opioids shall include indications for use. For chronic pain patients treated with controlled substance analgesic(s), the prescribing practitioner shall use a written agreement for treatment with the patient outlining patient responsibilities. As part of a written agreement, chronic pain patients shall receive all chronic pain management prescriptions from one practitioner and one pharmacy whenever possible.

vi. The management of patients needing chronic pain control requires monitoring by the attending or the consulting practitioner. The practitioner shall periodically review the course of treatment for chronic pain, the patient’s state of health, and any new information about the etiology of the chronic pain at least every six months. In addition, a practitioner shall consult, when indicated by the patient’s condition, with health care professionals who are experienced by the length and type of their practice in the area of chronic pain control; such professionals need not be those who specialize in pain control.

vii. When prescribing opioids for chronic pain, practitioners shall require urine drug testing when starting opioid therapy and shall use urine drug testing at least every six months to assess for prescribed medications as well as other controlled prescription drugs and illicit drugs.

viii. If, in a practitioner’s medical opinion, a patient is seeking pain medication for reasons that are not medically justified, the practitioner is not required to prescribe controlled substances for the patient.

C. Pain management for patients with substance use disorders shall include:

i. a contractual agreement;
ii. appropriate consultation;
iii. drug screening when other factors suggest an elevated risk of misuse or diversion; and
iv. a schedule for re-evaluation at appropriate time intervals at least every six months.

D. The board will evaluate the quality of care on the following basis: appropriate diagnosis and evaluation; appropriate medical indication for the treatment prescribed; documented change or persistence of the recognized medical indication; and, follow-up evaluation with appropriate continuity of care. The board will judge the validity of prescribing based on the practitioner’s treatment of the patient and on available documentation, rather than on the quantity and chronicity of prescribing. The goal is to control the patient’s pain for its duration while effectively addressing other aspects of the patient’s functioning, including physical, psychological, social, and work-related factors.

E. The board will review both over-prescription and under-prescription of pain medications using the same standard of patient protection.

F. A practitioner who appropriately prescribes controlled substances and who follows this section would be considered to be in compliance with this rule and not be subject to discipline by the board, unless there is some violation of the Medical Practice Act or board rules.


It is not considered reasonable or necessary to test for the same drug with both a blood and a urine specimen simultaneously.

Drug screening for medico-legal purposes (e.g., court-ordered drug screening) or for employment purposes (e.g., as a pre-requisite for employment or as a requirement for continuation of employment) is not covered by Medicare, Medicaid or health insurance.

CMS prohibits coverage of “screening” services, including laboratory test services furnished in the absence of signs, symptoms, or personal history of disease or injury, except as explicitly authorized by statute.



Introduction to Medical Necessity

i. Medical Necessity Definition in Health Insurance – Verywell https://www.verywell.com/medical-necessity-1738748
ii. Medical necessity | definition of medical necessity by Medical Dictionary http://medical-dictionary.thefreedictionary.com/Medical+necessity
iii. What is medical necessity or medically necessary care? http://www.chpw.org/for-members/common-questions/what-is-medical-necessity-or-medically-necessary-care
iv. A Refresher on Medical Necessity http://www.aafp.org/fpm/2006/0700/p28.html
v. Medical Necessity Definitions | Cigna https://www.cigna.com/healthcare-professionals/resources-for-health-care-professionals/clinical-payment-and-reimbursement-policies/medical-necessity-definitions
vi. Medical Necessity – NASHP http://www.nashp.org/medical-necessity
vii. New Mexico Medical Board: Management of Pain and Other Conditions with Controlled Substances