Alyssa Lane
There is no universally accepted definition of medically necessary, and the term can be interpreted differently by insurance companies, healthcare providers, and patients. Medicare, for example, defines medically necessary as services or supplies that are required to diagnose or treat a medical condition and that adhere to accepted medical practice standards. Private insurers, on the other hand, can set their own criteria for determining medical necessity, which may vary from Medicare's criteria. This variation in definitions can lead to disputes about whether a particular treatment or procedure should be covered by insurance, with some insurers denying claims for treatments they deem unnecessary.
| Characteristics | Values |
|---|---|
| Medicare's definition of "medically necessary" | "Services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice" |
| Medicare Advantage plans | Set their own prior authorization and medical necessity guidelines, but their requirements cannot be more restrictive than those used by Original Medicare |
| Private insurers' criteria | Varying criteria based on the patient's circumstances |
| Cigna Healthcare's definition of "medically necessary" | "Health care services that a health care provider, exercising prudent clinical judgment, would provide to a patient" |
| Cigna Healthcare's service criteria | "For the purpose of evaluating, diagnosing, or treating an illness, injury, disease, or its symptoms", "In accordance with the generally accepted standards of medical practice", "Clinically appropriate, in terms of type, frequency, extent, site, and duration, and considered effective for the patient's illness, injury, or disease", "Not primarily for the convenience of the patient, health care provider, or other physicians or health care providers" |
| Medical necessity for continued hospitalization | Determined by the presence of a medical condition requiring ongoing diagnostic or therapeutic intervention, or careful monitoring |
| Peer review | In some markets, independent peer review by a specialist physician is possible in the event of a dispute about covering a particular element of treatment |
| Medical marijuana | Not covered by health insurance plans, regardless of state law or whether a healthcare provider deems it medically necessary, due to its classification as a Schedule I drug |
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What You'll Learn
Medicare and private insurers have varying criteria
Medicare Advantage plans can set their own prior authorization and medical necessity guidelines, but their requirements cannot be more restrictive than those of Original Medicare. Private insurers that offer non-Medicare plans can also set their own criteria, which may or may not align with Medicare's. However, they must provide coverage that complies with state and federal benefit mandates. For example, individual and small group health plans with effective dates of January 2014 or later must include coverage for the essential health benefits defined by the Affordable Care Act.
While Medicare and private insurers may have different criteria for determining medical necessity, they generally consider similar factors. These factors include the purpose of the service, whether it is for evaluating, diagnosing, or treating an illness, injury, or disease, and whether it meets generally accepted standards of medical practice. The service must also be clinically appropriate, considering the patient's needs, clinical and environmental factors, and personal values. Additionally, the service should not be primarily for the convenience of the patient or the healthcare provider.
It is important to note that what an individual or their healthcare provider defines as medically necessary may not always align with their health plan's coverage rules. For example, health insurance plans typically do not cover cosmetic procedures or treatments considered experimental or unproven. Therefore, it is essential to review the benefits handbook or contact the health plan's customer service representative before undergoing potentially expensive procedures.
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Preventative care may be medically necessary
Medicare Advantage plans have their own prior authorization and medical necessity guidelines, which cannot be more restrictive than those of Original Medicare. Similarly, private insurers can set their own criteria, but they must comply with state and federal mandates, such as the Affordable Care Act's essential health benefits.
The Affordable Care Act (ACA) has made significant investments in prevention and public health, aiming to prevent, detect early, and manage conditions before they become severe. This includes funding for community and clinical prevention, research, and increasing the number of primary care professionals. The ACA also eliminates cost-sharing for preventive services, ensuring that individuals have access to recommended preventive care without financial barriers.
It is important to note that definitions of "medically necessary" can vary between physicians and other providers, as well as between seniors and other adults. While preventative care may fall under medical necessity, it is subject to the specific terms of an individual's health plan.
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The patient's ability to benefit from treatments
The definition of "medical necessity" varies among insurance companies, physicians, and patients. Medicare, for instance, defines "medically necessary" as: "Services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice." However, Medicare Advantage plans have their own prior authorization and medical necessity guidelines, which may differ from those of Original Medicare. Private insurers that offer non-Medicare plans can also set their own criteria, which may or may not align with Medicare's.
For example, a patient with a history of cardiovascular disease may require ongoing evaluation and treatment to manage their condition effectively. In this case, regular check-ups, diagnostic tests, and medications may be deemed medically necessary by the patient's healthcare provider. The insurance company would then assess the provider's recommendations and determine coverage based on the patient's specific plan and its definitions of medical necessity.
In some cases, insurance companies may deny coverage for certain treatments or procedures that they deem not medically necessary. This could include experimental treatments that are not yet proven to be safe and effective, or cosmetic procedures such as Botox injections or tummy-tuck surgery. Patients have the right to appeal these decisions, and the Affordable Care Act guarantees the right to an external review if the initial appeal is unsuccessful.
It is important for patients to understand their insurance coverage and verify their benefits before undergoing any treatment. By reviewing their benefits handbook and staying informed about their insurance plan's definitions of medical necessity, patients can make more informed decisions about their healthcare and ensure they receive the treatments they need.
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Pre-authorisation requirements
Prior authorisation is typically required for admission to a hospital or skilled nursing facility. It is the responsibility of the doctor's office to obtain prior authorisation by submitting a request to the insurance provider, explaining why it is needed and providing additional information if necessary. This can take up to 30 days, and if approved, it is only valid for a specific time period. If the patient's medical situation is an emergency, prior authorisation is not required.
In the case of ongoing medication or treatment, doctors may need to request a renewal and provide proof to the insurance company that it is working. If a prior authorisation request is denied, patients and their healthcare providers have the right to appeal the decision, and if unsuccessful, they can request an external review. While the appeals process provides an opportunity for reconsideration, it can still delay patient care and increase the risk of bad outcomes.
The pre-authorisation process can be frustrating and complicated for both physicians and patients, as it introduces uncertainty into the treatment planning process. Physicians may not always know in advance which treatments or medications will be covered by insurance, and patients may face challenges in accessing necessary care. Therefore, it is essential for patients to be aware of the pre-authorisation requirements of their insurance plans and for physicians to predict which treatments are likely to be approved.
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Peer review
The concept of "medical necessity" is a critical aspect of health insurance, influencing the coverage and reimbursement of medical treatments and services. However, the definition of "medically necessary" can vary between different insurance companies and healthcare providers, leading to potential disputes about whether a particular treatment or procedure should be covered.
In certain markets, when disputes arise regarding the coverage of specific treatments, a process known as independent peer review can be initiated. This process typically involves a specialist physician, independent of the insurance company, patient, and treating physician, conducting a post-treatment review to evaluate the medical necessity of the treatment in question. The peer reviewer assesses the patient's complete medical records and treatment details against the latest best practice guidelines. This ensures that the treatment provided aligns with the accepted standards of medical practice and is deemed medically necessary.
The role of the peer reviewer is crucial in ensuring objectivity and clinical expertise in the evaluation process. They are responsible for analysing the specifics of the case and providing an impartial opinion on whether the treatment meets the criteria for medical necessity. This includes considering factors such as the patient's clinical and environmental factors, personal values, and individual needs, as emphasised by Cigna Healthcare. Additionally, the peer reviewer may identify instances of potential fraud or abuse and recommend the addition of specific policy language to address these issues.
While the peer reviewer's assessment is essential, it is worth noting that the final decision regarding coverage rests with the insurance company. The peer reviewer's role is to provide an expert opinion that assists the insurer in making an informed decision. This process helps ensure that treatments deemed medically necessary by qualified specialists are covered, promoting fair and transparent claim assessments.
The peer review process serves as a valuable tool for resolving disputes and ensuring that patients receive the necessary treatments. It highlights the importance of independent clinical expertise in navigating the complexities of determining medical necessity, ultimately contributing to a more robust and equitable healthcare system.
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Frequently asked questions
"Medically Necessary" or "Medical Necessity" refers to health care services that a health care provider, exercising prudent clinical judgment, would provide to a patient. The service must be for the purpose of evaluating, diagnosing, or treating an illness, injury, disease, or its symptoms.
Insurance companies define "medically necessary" differently depending on the insurer. Medicare, for example, defines "medically necessary" as: "Services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice."
Insurers use internal criteria to assess the medical necessity of claimed treatments. For example, the medical necessity of continued hospitalization is primarily determined by the presence of a medical condition of such severity that ongoing diagnostic or therapeutic intervention, or careful monitoring, is required. Criteria to evaluate a patient's condition and care should include vital signs such as temperature, blood pressure, and heart rate.
If a treatment is deemed not "medically necessary" by an insurance company, they can deny the claim even if the treatment is medically necessary from the perspective of the patient and their healthcare provider. Most health plans will not pay for healthcare services that they deem to be not medically necessary.
