I recently spoke at high level about denials at the DMA conference, including Medical Necessity—specifically, how to defend claims when a payer alleges services fail to meet the “reasonable and necessary” standard.
In FY 2025, DOJ reported record False Claims Act recoveries exceeding $5.7 billion tied to healthcare matters, with enforcement heavily focused on medically unnecessary or substandard care, including whether services met the definition of reasonable and necessary under 42 U.S.C. § 1395y(a)(1)(A).
For dermatology, the defense almost always hinges on strong, contemporaneous documentation. Clear records are the foundational safeguard against FCA exposure. CMS and the OIG have long emphasized core principles of medical necessity documentation, chief among them:
the record must clearly demonstrate that the service was reasonable and necessary for the diagnosis or treatment of illness or injury—not cosmetic preference, screening alone, or routine care without clinical justification.
I consistently stress that CMS and the MACs prioritize objective evidence over conclusory statements. “Clinically indicated” or “medically necessary” without factual support will not withstand audit or enforcement scrutiny.
Below are essential documentation elements dermatology practices should consistently capture.
Key Elements to Support Medical Necessity in Dermatology
Patient History
Document onset, duration, progression, prior occurrences, severity, symptoms (e.g., pain, bleeding, pruritus, ulceration), impact on daily activities, prior treatment attempts, and relevant risk factors (UV exposure, immunosuppression, personal/family history of skin cancer).
Physical Examination
Objective descriptive findings are critical:
– Lesion size (cm/mm), location, color, borders, asymmetry
– Texture (scaly, indurated, ulcerated, verrucous)
– Evidence of infection, inflammation, bleeding, or rapid change
– Body surface area (BSA) involvement when relevant (psoriasis, dermatitis)
Avoid vague descriptors like “suspicious lesion” without specifics.
Diagnostic Testing / Pathology
Clearly document the clinical rationale for biopsies, cultures, patch testing, or lab work.
Pathology reports must be linked back to the clinical concern and fully incorporated into the chart.
Failed Conservative Management
For inflammatory or chronic conditions, specify:
– Topical agents tried (drug, strength, frequency, duration)
– Systemic therapies, phototherapy, injections when applicable
– Document patient response (ineffective, intolerable, contraindicated)
Procedure‑Specific Medical Necessity
Explicitly tie the procedure to the diagnosis and risk if untreated. Cosmetic exclusions must be addressed when applicable.
Risk/Benefit and Clinical Judgment
Document patient‑specific factors (comorbidities, anticoagulation, immunosuppression, adherence risks) and why the selected treatment is appropriate over alternatives.
Attestation and Timeliness
Ensure legible signatures, dates, and contemporaneous documentation. Late addenda—especially after audits—raise red flags.
High‑Risk Dermatology Services Requiring Elevated Documentation
Skin Biopsies
Document malignancy risk factors, lesion evolution, ABCDE criteria, non‑healing wounds, bleeding, or rapid change. Avoid standing or “rule‑out” phrasing without clinical detail.
Excision of Benign Lesions
Medical necessity must be clear: recurrent bleeding, infection, ulceration, impairment of function, or high‑risk location. Pure cosmetic removals are non‑covered.
Mohs Micrographic Surgery
Support with tumor type, size, location, aggressive histology, recurrence, ill‑defined borders, and why tissue‑sparing is clinically indicated over standard excision.
Actinic Keratoses Treatment
Document number, distribution, severity, symptoms, and cancer risk factors. Avoid treating AKs as “routine” without supporting detail.
Systemic Therapies (e.g., Isotretinoin, Biologics)
Diagnosis severity, BSA, PASI/IGA where applicable, failed prior therapies, baseline labs, monitoring compliance, and risk counseling must be clearly reflected.
Phototherapy
Diagnosis, failed topical/systemic therapy, frequency, duration, response, and ongoing necessity should be documented, with periodic reassessment.
The takeaway:
Defending medical necessity in dermatology is not about volume—it is about precision, specificity, and clinical logic clearly reflected in the record. Documentation should tell the full clinical story to an outside reviewer who has never seen the patient.
Take the time to educate your physicians and non‑clinical staff on what compliance‑grade documentation looks like. In today’s enforcement climate, strong records are not just good medicine—they are risk mitigation
Jennie Hitchcock
President, Compass Healthcare Consulting
