What Is Considered Medically Necessary for Insurance?

The term "medically necessary" is used by public and private health insurance providers, and medical review boards to outline what medical treatments will be compensated by the patient's health plan. These cover general standards of health care, and may also define what is "medically necessary" according to each plan for specific serious medical conditions.

Acceptible Standards

• A health insurance plan will stipulate that the cost of medical care will be reimbursed by that plan if the medical services provided follow usual accepted standards of medicine regarding the particular illness or disease, or injury for which the patient is being treated. This stipulation is to protect the health insurance provider from outlaying any moneys for care that is not cost effective. Some plans further define "medically necessary" as being treatment that is not requested mainly for the convenience of the doctor or patient.

Determining Necessity

• What is "medically necessary" can be different for patients with varying medical conditions. A doctor might recommend a patient for an operation performed by a specialist for a particular condition, another may request home care or durable medical equipment. These must often be reviewed by the health insurance provider to certify that they are medically necessary for that condition.

Utilization Review

• Because treatment or prescriptions are ordered by a physician or health care provider does not alone determine medical necessity. In some cases, a request for coverage must undergo a utilization review, for which the patient and physician will need to provide proof that what is recommended is really required. Diagnostic tests and therapies are reviewed for compensability against other existing alternatives.

Experimental Treatment

• A health insurance provider may not choose to cover the costs of procedures or pharmaceuticals that are controversial or in the experimental stage, which would make them less certain of efficacy, and likely more expensive.

Reasons for Refusal

• In some cases, procedures which are not experimental, but which may still have a lower success rate depending on the patient's condition, could also be subject to limits of "medical necessity," for instance, in the case of organ transplants. Under certain circumstances, a patient might be refused coverage for an organ transplant if the patient has metastastic cancer, a systemic infection, a progressive disease or is abusing drugs or alcohol, all of which would compromise or negate the success of the transplant operation.

Reasonable Medical Necessity

• A basic rule of medical necessity is that the medical service or drug that is recommended for the patient's condition must be reasonably expected to treat that condition, and treat it in a manner that is cost effective.