Proving medical necessity can play an important role in a bad faith insurance case when a company denies a claim. Most health plans will not pay for healthcare services that are not deemed to be medically necessary. Medical evidence is required to show the validity of a claim. Even valid claims, however, are sometimes denied.
Understanding Medical Necessity
Health insurance companies provide coverage only for health-related services that are medically necessary, meaning medical services that are necessary to determine a diagnosis and supplies or services that are necessary for proper treatment. Such services must meet the accepted standards for medical practice and treatment.
Since medical necessity is a requirement for payment on claims by insurers, it is important to understand the meaning of “medical necessity.” Both private insurance companies and Medicare require that services and treatments are medically necessary, but the criteria for determining medical necessity often varies. Private insurers without Medicare plans can establish their own criteria. Basic Medicare plans and Medicare Advantage plans use national and local coverage determination standards. They are required to provide coverage that complies with federal and state mandates.
By understanding the different meanings of medical necessity, it will be easier to understand the reason that a claim is denied and how to handle an appeal with an insurance claim lawyer.
Standard Medical Practices
Accepted medical practices define medical necessity as any reasonable service, procedure, or treatment that will help to prevent the onset of a condition, reduce the effects of an illness or condition, or help a person reach and maintain maximum functional capacity. From an insurer’s perspective, the least invasive, most economical methods are preferred. If an invasive, surgical procedure is recommended by a physician, this means that it is medically necessary and other less invasive procedures, therapies, and drugs are not an option. With prescriptions, the medical necessity for more expensive brand-name drugs is typically not justified if over-the-counter or generic alternatives are available.
The Food and Drug Administration (FDA)
Medical services, treatments, and drugs that are not approved by the FDA are deemed not medically necessary. A list of accepted medications is published in the NCCN Drugs and Biologics Compendium, considered to be the standard bible of medications used by most insurance companies. Medications that are on the list, even off-label drugs that are not FDA-approved are usually covered by insurers.
The Physician’s Recommendation
If a physician prescribes a stronger prescription drug rather than an over-the-counter version of the drug, it is usually accepted by insurers as a medical necessity, even though it goes against standard medical practices. With some health conditions, a treating physician may opt for a stronger, faster approach to the medical condition to speed up treatment or recovery and protect the patient from harm.
The Physician’s Preferences
In some cases, physicians and other medical providers may recommend certain procedures and treatments and prescribe certain medications based on their own preferences or a patient’s preferences. This can happen as a matter of convenience, availability, or cost. Any procedures, treatments, and medications that are not supported by appropriate medical records will likely be deemed as not medically necessary and the insurance claim will likely be denied by the insurance company.
The Insurance Policy
Health-related Insurance policies can vary significantly from one insurer to another. It’s not uncommon for coverage of the same service, procedure, treatment, or medication to vary from insurer to insurer. Restrictions are often placed on medical procedures that offer less invasive, less expensive options. If an insurer can show that a policy holder’s condition can be managed with less expensive options, and the patient’s welfare is not at risk, the insurer will likely reject the more expensive treatment options, deeming them not to be a medical necessity. As an example, a physician may recommend immediate knee surgery, but the patient’s insurer may require physical therapy and prescription pain medications first. If therapy and drugs fail to improve the condition, surgery may be approved.
Health-Related Claim Denials
Health-related insurance claims that are commonly denied because they are deemed not to be a medical necessity are cosmetic surgical procedures such as facelifts, breast augmentations, tummy tucks, liposuction, and Botox injections. If rhinoplasty is recommended or performed, the insurance company will determine medical necessity based on the patient’s condition before surgery. If the nose job is done for cosmetic reasons, the claim will likely be denied. If it is done because of a nose deformity that affects the patient’s ability to breathe, it will likely be deemed medically necessary and covered by insurance.
Unfortunately, insurance companies sometimes deny claims for products and services that are medically necessary. An insurance claim lawyer can explain policy coverages and restrictions and help policyholders when their claims are wrongfully denied.