Non-Medically Necessary vs. Statutorily Excluded Services: Understanding the Differences
Written by: Jennifer McNamara
“That’s not covered.”
It’s a phrase we hear all the time—but what does it really mean? There’s a definite distinction between non-medically necessary services and those that are statutorily excluded.
Understanding the difference between non-medically necessary and statutorily excluded services is essential for proper coding, billing, and patient financial responsibility.
What Are Non-Medically Necessary Services?
These are services that may be covered under a patient’s policy if medical necessity can be supported through documentation, appropriate coding, and payer guidelines. They’re typically denied because the payer didn’t see enough evidence to justify the service for that specific patient encounter. These determinations are typically based on:
- Medical Necessity Guidelines – Payers define medical necessity based on evidence-based practices, local and national coverage determinations (LCDs/NCDs), and policies that outline what is considered appropriate care.
- Lack of Supporting Documentation – If a claim lacks sufficient documentation to justify the necessity of a procedure, it may be denied.
- Frequency Limitations – Some services, such as diagnostic tests or therapy sessions, may only be covered a certain number of times within a given period.
Examples of Non-Medically Necessary Services
- A knee MRI for mild pain without prior conservative treatment.
- Vitamin D screening for a patient without an applicable diagnosis.
- Repeated lab tests without changes in clinical presentation.
Medicare contractors evaluate necessity based on Local Coverage Determinations (LCDs) and National Coverage Determinations (NCDs), as well as their own internal policies. That’s where a good audit process comes in order to identify documentation gaps before they become costly denials.
Key compliance Spotlight: For Medicare patients, If there’s a chance the service might be denied due to lack of medical necessity, an ABN (Advance Beneficiary Notice) should be provided to the patient ahead of time. This protects the provider and ensures transparency with the patient.
What Are Statutorily Excluded Services?
A statutorily excluded service is one that Medicare and other payers do not cover under any circumstances, regardless of medical necessity. These exclusions are dictated by law, meaning they are not subject to appeal based on medical justification
Since coverage is barred outright, patients are typically responsible for the full cost of statutorily excluded services. Providers must recognize these exclusions, document them properly, and inform patients of any potential out-of-pocket expenses before the service is rendered.
Examples of Statutorily Excluded Services
- Routine dental, vision, and hearing services (e.g., eye exams for glasses, dental cleanings).
- Cosmetic procedures (unless deemed medically necessary, such as reconstructive surgery after trauma).
- Most over-the-counter drugs and non-prescription supplies (unless specified otherwise by a particular insurance plan).
- Personal comfort items (e.g., hospital televisions, private rooms unless medically necessary).
Because these services are excluded by law, an ABN is not required for Medicare beneficiaries, though providers may still opt to inform patients in writing.
For more information on using the ABN Form please review the tutorial provided by CMS
Routine Foot Care: The Grey Zone of Coverage
Routine foot care is however, an example of how a single service can fall into different coverage categories depending on the circumstances. When provided strictly for general grooming or comfort, routine foot care is statutorily excluded—meaning Medicare will not cover it under any circumstances.
According to Medicare guidelines, routine foot care is statutorily excluded when performed for general hygiene or cosmetic reasons, including but not limited to:
- Cutting or trimming of normal nails
- Removal of corns and calluses
- Hygienic or preventive maintenance (e.g., soaking feet, applying lotions)
In such instances, no matter how well-documented the service might be, payment is simply not available. Patients remain financially responsible for the entire cost.
On the other hand, routine foot care can be considered medically necessary if the patient’s condition places them at increased risk for infection or complications—commonly due to a systemic disease such as diabetes. Documentation that clearly shows the patient’s elevated risk or compromised foot health is critical to support medical necessity. When the evidence is sufficient, insurers often cover routine foot care services, reflecting the need for preventive treatment rather than mere cosmetic maintenance.
Medicare may cover foot care when a systemic condition is present that results in compromised circulation, sensation, or function, such as:
- Diabetes mellitus
- Peripheral vascular disease
- Chronic venous insufficiency
- Neuropathy (documented cause)
For Medicare to cover routine foot care, documentation must support medical necessity by showing:
- The presence of a systemic condition affecting the lower extremities.
- Clinical evidence of neuropathy, diminished circulation, or complications (e.g., ulcers, infections).
- Provider qualifications—typically, a podiatrist or physician must perform or supervise the care.
If you’re an auditor, you’ve seen it: CPT 11720 or 11721 billed for nail debridement, possibly linked with a diagnosis of diabetes or PVD—but without a clear tie-in to medical necessity.
If documentation is insufficient, Medicare may deny the service as non-medically necessary, even if the patient has a qualifying condition.
The Role of the “Q” Modifiers in Coverage
To differentiate between covered and non-covered foot care, providers must use Q7, Q8, or Q9 modifiers when billing:
- Q7 – One Class A finding (e.g., non-traumatic amputation of the foot or toe)
- Q8 – Two Class B findings (e.g., absent dorsalis pedis pulse, hair growth changes)
- Q9 – One Class B and two Class C findings (e.g., nail thickening, claudication, Temperature changes, edema)
These modifiers indicate the presence of clinical findings that may support medical necessity, but improper use or lack of supporting documentation can still result in denials.
For a detailed review of coverage, documentation and medical necessity please review LCD L35138
Key Differences at a Glance
| Criteria | Non-Medically Necessary | Statutorily Excluded |
| Coverage Possibility | May be covered if criteria is met | Never covered by Medicare |
| Reason for Denial | Lacks medical necessity per payer guidelines | Explicitly excluded by law |
| Appeal Potential? | Yes, if sufficient documentation is provided | No, unless due to a billing error |
| ABN Required? | Yes, if Medicare may deny payment | No, but informing patients is recommended |
| Common Examples | Excessive testing, unnecessary imaging | Routine dental, hearing aids, cosmetic surgery |
Audit Tip: Dig Beyond the Denial
When reviewing charts, look closely at services that fall into these gray zones. Ask:
- Was an ABN provided if needed?
- Is the documentation consistent with medical necessity?
- Are we coding based on statute or assumption?
If we don’t call out these distinctions during audits, we risk perpetuating coding habits that could lead to compliance exposure. And as auditors, our role isn’t just about accuracy—it’s about advocacy.
Don’t just look for a Q modifier—confirm that the findings are documented in the medical record. Many payers now cross-reference diagnosis codes, modifiers, and documentation when reviewing foot care claims, especially as foot care is a known target for fraud and overuse audits.
Audit red flags include:
- Repeated use of Q modifiers with no variation in findings
- Missing systemic condition documentation
- Use of modifiers without corresponding ICD-10 support
- Services billed more frequently than every 60 days without justification
Why This Distinction Matters
Not all denials are created equal. Understanding why a service was denied is just as important as knowing how it was coded.
Educating teams on the difference between non-medically necessary and statutorily excluded services can dramatically reduce inappropriate write-offs, protect revenue, and strengthen patient communication.
At the end of the day, getting it right means digging deeper, asking the tough questions, and always staying one step ahead of risk.
Need to train your team on this?
We offer customized group training designed for your specific documentation, coding, and billing needs.
Whether it’s distinguishing denials, understanding ABN requirements, or preventing foot care overuse—
our audit experts will bring clarity directly to your practice.
About the Author: Jennifer McNamara
With 22 years of experience in healthcare compliance and data analysis, I lead Healthcare Inspired LLC, a consulting firm that helps medical practices optimize their performance, enhance their patient care, and achieve their strategic goals. I hold multiple credentials, including CCS, CPC, CDEO, CRC, CPMA, COSC,CGSC, COPC, and CPCI, demonstrating my expertise in navigating the complex landscape of healthcare regulations and coding.
