National and local coverage determinations
A national coverage determination (NCD) is a nationwide Medicare policy issued by the Centers for Medicare & Medicaid Services (CMS) stating whether — and under what conditions — a particular item or service is covered, while a local coverage determination (LCD) is a policy issued by a Medicare Administrative Contractor (MAC) that applies only within that contractor's jurisdiction. Both exist to translate the statutory "reasonable and necessary" standard into practical, documentable criteria. Where an NCD is silent, a MAC may develop an LCD; where an NCD speaks, contractors administer it consistently across the country. Because the exact criteria, covered indications, and effective dates differ by policy, contractor, and revision history, the authoritative wording should always be read from CMS sources rather than assumed, and coverage is never inferred from this educational overview.
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Key takeaways
- An NCD applies nationwide and is issued by CMS; an LCD applies only within a single MAC's jurisdiction and is issued by that contractor.
- Both types of policy operationalize the statutory "reasonable and necessary" standard, which underpins medical-necessity determinations for many items and services.
- LCDs are accompanied by billing and coding articles that describe which code sets and documentation support the policy, but the descriptors themselves are maintained by their respective code owners.
- Coverage criteria, covered indications, and effective dates vary by policy, contractor, and revision, so the current CMS text always governs.
- Claims that fall outside applicable NCD or LCD criteria are a common source of medical-necessity denials and may trigger advance beneficiary notice considerations.
What NCDs and LCDs are
Medicare coverage rests on a statutory foundation: Medicare generally pays only for items and services that are reasonable and necessary for the diagnosis or treatment of illness or injury. Coverage determinations are the documents that interpret that standard for specific clinical situations. An NCD establishes a single nationwide rule, so a covered indication described in an NCD is administered the same way by every contractor. An LCD fills gaps at the regional level, giving a MAC a documented basis for deciding whether a service is reasonable and necessary within its jurisdiction when no NCD addresses the question.
Both instruments feed directly into medical necessity review during claim adjudication. A service can be clinically appropriate and still fall outside a coverage policy's stated indications, which is why billing teams treat the applicable determination as a reference document rather than a formality.
Terminology varies over time
Who issues each, and how they relate
NCDs originate at the national level through CMS, which follows a defined process for opening, analyzing, and finalizing a determination. LCDs are developed by individual MACs under authority delegated by CMS and are constrained by any applicable NCD and by program guidance in the CMS Internet-Only Manuals. When an NCD exists, a MAC cannot contradict it; an LCD may add operational detail but not override national policy.
| Dimension | National coverage determination (NCD) | Local coverage determination (LCD) |
|---|---|---|
| Issuing body | CMS at the national level | A Medicare Administrative Contractor |
| Geographic scope | Nationwide, all jurisdictions | Limited to the issuing MAC's jurisdiction |
| Primary purpose | Set uniform national coverage policy | Address services an NCD does not cover |
| Relationship | Governs; LCDs must not conflict with it | Supplements where national policy is silent |
| Where to read it | CMS coverage resources | MAC and CMS coverage resources |
Scope and content of any specific policy vary; confirm the governing text on cms.gov.
Because jurisdiction assignments and contractor responsibilities can change, the MAC that administers a given claim — and therefore the LCDs that apply — depends on the service location and contract in effect. The MAC jurisdictions lookup and the broader article on how Medicare is structured provide context for identifying which contractor's policies are in force.
Coding, documentation, and how policies are applied
Coverage determinations are typically paired with billing and coding content that indicates which code sets support the policy and what documentation substantiates the covered indications. These articles reference the standard code sets — the CPT/HCPCS procedure sets and the ICD-10 diagnosis set — without this reference reproducing their descriptors, which are maintained by their respective owners. The practical effect is that a claim's diagnosis and procedure coding must align with the policy's stated criteria for the service to be considered reasonable and necessary.
Identify the governing policy
Determine whether an NCD addresses the service; if not, check for an LCD in the applicable MAC jurisdiction.Read the current criteria
Review the covered indications, limitations, and effective or revision dates directly from the CMS or MAC source, since these change over time.Align documentation and coding
Confirm that the clinical record supports the covered indication and that submitted codes reflect the documented service, consistent with the associated billing and coding article.Address non-covered scenarios
Where a service may not meet coverage criteria, consider whether an advance beneficiary notice is appropriate before the service is furnished.
No universal criteria
Impact on claims and denials
Coverage determinations are one of the most common reference points in medical-necessity denials. When a claim does not meet the criteria in an applicable NCD or LCD, the contractor may deny or adjust it, and the remittance advice typically carries reason and remark codes that point back to the policy. Reading those codes against the governing determination is central to deciding whether to correct, appeal, or write off the claim.
- Diagnosis coding that does not support a covered indication under the policy.
- Frequency or quantity beyond a policy's stated limitations.
- Missing documentation elements the policy identifies as required.
- Application of a policy from the wrong jurisdiction or an outdated revision.
Because coverage is decided at claim level, related processes — eligibility verification, prior authorization where applicable, and accurate provider enrollment — interact with, but do not replace, the medical-necessity review that coverage determinations drive. For Medicare Advantage, plan-level coverage rules add another layer, discussed in Medicare Advantage billing.
Dates and revisions matter
Frequently asked questions
What is the difference between an NCD and an LCD?
An NCD is a coverage policy issued by CMS that applies to all Medicare jurisdictions nationwide. An LCD is issued by a Medicare Administrative Contractor and applies only within that contractor's jurisdiction. An LCD is generally developed where no NCD addresses the service and may not conflict with national policy.
Do coverage determinations decide payment amounts?
No. NCDs and LCDs describe when a service is considered reasonable and necessary, not how much Medicare pays. Payment amounts are set through fee schedules and other payment rules, which are separate from coverage policy.
Why do coverage criteria differ from one contractor to another?
Where no NCD exists, each MAC may develop its own LCD for a service, so the covered indications and documentation expectations can differ between jurisdictions. This is why the applicable jurisdiction and the current policy text must be identified for each claim.
How do coverage determinations relate to an advance beneficiary notice?
When a service may not meet the criteria in an applicable coverage determination and could therefore be denied as not reasonable and necessary, an advance beneficiary notice may be appropriate before the service is furnished. The specific requirements depend on the situation and current CMS guidance.
Where should the authoritative text of a policy be read?
Coverage determinations and their associated billing and coding articles should be read directly from CMS and, for LCDs, the issuing MAC. Criteria and effective dates change over revisions, so secondary summaries — including this article — are educational context only.
Related glossary terms
Terms that appear throughout coverage-determination workflows and denial review.
Related reading
Continue with adjacent Medicare billing topics that intersect with coverage policy.
Medicare Administrative Contractors (MACs)
How contractors administer claims and issue local coverage determinations within their jurisdictions.
The Advance Beneficiary Notice (ABN)
When beneficiaries are notified that a service may not meet Medicare coverage criteria.
Common Medicare billing denials
Medical-necessity and coverage-related denials and how they surface on remittances.
Reading the Medicare remittance and MSN
Interpreting reason and remark codes that point back to coverage policy.
How Medicare is structured (Parts A, B, C, D)
Where coverage determinations fit within the broader Medicare program.