Medicare Coverage Determination (NCD / LCD)

Key facts

Coverage standard

Reasonable and necessary, Section 1862(a)(1)(A) of the Social Security Act

NCD issued by

CMS; applies nationwide

LCD issued by

A Medicare Administrative Contractor (MAC); applies in its jurisdiction

Published in

CMS Medicare Coverage Database

Medicare Advantage

Plans must follow applicable NCDs and LCDs

What is a Medicare coverage determination?

Medicare law does not list every covered test, device or procedure. Instead, the Social Security Act bars payment for items and services that are not reasonable and necessary for diagnosis or treatment, and coverage determinations spell out how that standard applies to specific technologies and conditions.

Most items and services have no NCD or LCD and are handled claim by claim. When a determination exists, it can set conditions such as qualifying diagnoses, patient criteria, provider requirements or frequency limits.

NCD vs LCD

The two types differ in who issues them and how far they reach:

• National Coverage Determination (NCD): issued by CMS after a national coverage analysis. CMS posts a proposed decision memo for a 30-day public comment period and issues a final decision within 60 days after comments close. NCDs bind MACs, other Medicare contractors and administrative law judges.
• Local Coverage Determination (LCD): issued by a MAC for its jurisdiction when no NCD exists or to add detail to one. The 21st Century Cures Act of 2016 requires MACs to publish proposed LCDs, hold open meetings and respond to comments before an LCD takes effect. LCDs bind only the issuing contractor, although appeal adjudicators give them substantial deference.
• Billing and coding articles: published alongside LCDs to list the codes, such as ICD-10-CM diagnosis codes and HCPCS codes, that support coverage.
• Coverage with Evidence Development (CED): an NCD can limit coverage to patients enrolled in approved studies or registries while evidence is gathered.

Why coverage determinations matter

For device, diagnostic and drug companies, a favorable NCD can open the entire Medicare market, while a restrictive one can limit adoption for years. Because LCDs are set by contractor jurisdiction, the same lab test or device can be covered in one group of states and not in another, so reimbursement strategy often starts with a map of MAC jurisdictions.

Coverage decisions also reach beyond Original Medicare. Medicare Advantage plans must follow applicable NCDs and LCDs, and commercial insurers frequently reference them in their own policies. CMS finalized the Transitional Coverage for Emerging Technologies (TCET) pathway in 2024 to speed national coverage reviews for certain FDA-designated breakthrough devices.

Medicare coverage determinations vs Part D coverage determinations

The same phrase means something different in Part D. There, a coverage determination is a plan decision on an individual drug request, such as a formulary exception or prior authorization, and it is the decision a Part D appeal challenges. NCDs and LCDs are policy decisions that apply to all beneficiaries within their scope.