What is Medical Necessity

What is the definition of Medical Necessity

Medicare uses medical necessity as a way to determine if they should pay for goods or services. They consider medical necessity to include that which is reasonable and necessary for the diagnosis or treatment of illness, injury, or to improve the function of a malformed body member.

If a service is accepted as reasonable and necessary, coverage may be limited if the service is provided more frequently than allowed under standard policies or standards of care. Often a Letter of Medical Necessity has to be written to justify the need for the equipment by a medical doctor.

If you are a member of an HMO, your primary care physician is responsible for deciding if a proposed treatment or service is medically necessary.  However, the HMO may require the primary care physician to obtain approval from its Medical Director.

Examples of hospitalizations and other health care services and supplies that are not considered Medically Necessary include:

• Inpatient hospitalizations for treatment that could be safely and adequately provided on an outpatient basis;
• Continued inpatient hospital care, when the patient’s medical symptoms and condition no longer required a continued stay in the hospital;
• Cosmetic surgery;
• Treatment provided for the convenience of the patient, such as an elective Caesarean Section;
• An advanced procedure or treatment provided without first trying less invasive, less expensive treatments.

Most major medical policies and all HMOs require that you pre-authorize elective inpatient hospital stays and major surgical procedures.  Failure to pre-authorize the service can result in a penalty or denial of the claim.  If your policy requires pre-authorization, follow the proper procedure so you know whether or not coverage is available.  If your policy does not require pre-authorization of the service, you will not know if it is covered until the claim is submitted. 

NOTE:  Preauthorization by an insurance company is not a guarantee that benefits will be paid.  All policy provisions, such as preexisting condition waiting periods apply.  Additionally, benefits are only payable if you are eligible for coverage on the date the service is provided. 

Resources

http://www.idfpr.com/DOI/HealthInsurance/Medical_Necessity.asp

http://download.ncadi.samhsa.gov/ken/pdf/SMA03-3790/SMA03-3790.PDF

http://en.wikipedia.org/wiki/Medical_necessity

http://www.physiciansnews.com/law/802.miller.html

Samples of medical necessity letters http://www.doctorbach.com/letters/