Opinion ID: 4518720
Heading Depth: 2
Heading Rank: 1

Heading: The “Medical Necessity” Requirement

Text: The Medicare program provides basic health insurance for individuals who are 65 or older, disabled, or have endstage renal disease. 42 U.S.C. § 1395c. “[N]o payment may be made . . . for any expenses incurred for items or services . . . [that] are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member[.]” 42 U.S.C. § 1395y(a)(1)(A). Medicare reimburses providers for inpatient hospitalization only if “a physician certifies that such services are required to be given on an inpatient basis for such individual’s medical treatment, or that inpatient diagnostic study is medically required and such services are necessary for such purpose[.]” 42 U.S.C. § 1395f(a)(3). The Department of Health and Human Services, Centers for Medicare & Medicaid Services (“CMS”), administers the 2 The FCA covers claims that are “false or fraudulent.” 31 U.S.C. § 3729(a)(1). For convenience, we will generally use “false” to mean “false or fraudulent.” WINTER V. GARDENS REGIONAL HOSP. & MED. CTR. 7 Medicare program and issues guidance governing reimbursement. CMS defines a “reasonable and necessary” service as one that “meets, but does not exceed, the patient’s medical need,” and is furnished “in accordance with accepted standards of medical practice for the diagnosis or treatment of the patient’s condition . . . in a setting appropriate to the patient’s medical needs and condition[.]” CMS, Medicare Program Integrity Manual § 13.5.4 (2019). The Medicare program tells patients that “medically necessary” means health care services that are “needed to diagnose or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine.” CMS, Medicare & You 2020: The Official U.S. Government Medicare Handbook 114 (2019). Admitting a patient to the hospital for inpatient—as opposed to outpatient—treatment requires a formal admission order from a doctor “who is knowledgeable about the patient’s hospital course, medical plan of care, and current condition.” 42 C.F.R. § 412.3(b). Inpatient admission “is generally appropriate for payment under Medicare Part A when the admitting physician expects the patient to require hospital care that crosses two midnights,” but inpatient admission can also be appropriate under other circumstances if “supported by the medical record.” Id. § 412.3(d)(1), (3). The Medicare program trusts doctors to use their clinical judgment based on “complex medical factors,” but does not give them unfettered discretion to decide whether inpatient admission is medically necessary: “The factors that lead to a particular clinical expectation must be documented in the medical record in order to be granted consideration.” Id. § 412.3(d)(1)(i) (emphasis added). And the regulations consider medical necessity a question of fact: “No 8 WINTER V. GARDENS REGIONAL HOSP. & MED. CTR. presumptive weight shall be assigned to the physician’s order under § 412.3 or the physician’s certification . . . in determining the medical necessity of inpatient hospital services . . . . A physician’s order or certification will be evaluated in the context of the evidence in the medical record.” Id. § 412.46(b).