HealthCare.gov defines medically necessary services as “healthcare services or supplies that are needed to diagnose or treat an illness, injury, condition, disease, or its symptoms – and that meet accepted standards of medicine.” According to the CMS (Centers for Medicare and Medicaid Services), medically necessary services or supplies as they apply to one’s Medicare coverage,
- Are appropriate and needed for the diagnosis or treatment of one’s medical condition.
- Are provided for the diagnosis, direct care and treatment of one’s medical condition.
- Meet the standards of good medical practice in the local area and are not mainly for the convenience of the patient or his/her doctor.
When a medical claim is submitted to the insurance company, they need to verify that the billed procedures and services are medically necessary for the patient. Health insurance companies determine medical necessity via a medical record review. The review is performed by a medical review team comprising physicians, legal nurse consultants and documentation specialists.
Criteria to Determine Medical Necessity
Medicare and private payers may have different criteria to determine medical necessity. The former uses National Coverage Determinations and private Medicare plans such as Medicare Advantage use Local Coverage Determinations to ensure that the medical necessity criteria are met. Private payers that offer non-Medicare plans can set their own criteria that may/may not be similar to Medicare’s criteria. However, they are required to be compliant with state and federal benefit mandates.
A comprehensive review will consider whether the claim is accompanied by a doctor’s attestation that a service is medically necessary. The treating doctor or other provider may be requested to provide a “Letter of Medical Necessity” to the insurer as part of a certification process. This enables the health plan to review the requested medical services and determine whether the service requested is covered by the plan. This may be done prior to, during, or after the treatment.
- Pre-certification review: This is done before the treatment is provided. It involves reviewing the Letter of Medical Necessity, medical records, and the health plan’s coverage policy.
- Concurrent review: This is performed during the treatment to decide whether the ongoing treatment is medically necessary.
- Retrospective review: This occurs after the treatment has been provided to determine whether the services were medically necessary, or experimental, cosmetic, or whether there was indeed a need for emergency services.
Medical necessity, with regard to some health plans, may include the requirement that the services are “not for experimental, investigational, or cosmetic purposes.” Health plans typically use their medical policies to determine whether a treatment is experimental for the patient’s condition. While medical chart review is the primary process for medical necessity determination, decisions may be made based on available scientific literature also.
Medical necessity determination via a medical records review focus on the patient receiving medically necessary and apt services. The medical review team refers to the latest, industry-accepted guidelines supported by evidence-based medicine to make sure their reviews are flawless.
Some Important Factors to Consider
Patients and their healthcare providers must understand that what they consider medically necessary may not be consistent with the health plan’s coverage mandates. That is why it is important to review the benefits handbook to ensure that a service is covered before undergoing the same. Or, better still, this can be clarified by contacting the health plan’s representative.
Health plans may also have rules regarding pre-authorization and other requirements.
- The plan member or his/her healthcare provider will have to get approval from the health plan before a non-emergency procedure is performed. This holds true even if the procedure is considered medically necessary and is covered by the insurance. If pre-authorization is not obtained, the health insurer may deny the claim.
- Another consideration is whether the health plan requires the plan member to get a referral from his/her primary care provider, and/or receive their treatment from a healthcare provider within the health plan’s network. If rules related to this are not followed, the insurer may deny the claim even if the treatment is medically necessary.
- Yet another consideration is whether the health plan has a step therapy protocol in place. In other words, the plan may require the patient to try lower cost medications first. The health plan would pay for the more expensive medicines only when other lower cost options are not effective.
- Even for a medically necessary service, the patient may have to pay for some or even all of the cost. This is because of factors such as deductibles, co-insurance, and co-pays.
Health insurance companies and insurance attorneys hire the services of medical review companies to obtain an accurate review of the claimant’s medical records to determine medical necessity. The detailed analysis of the medical records provides a clear insight regarding the claimant’s health condition, the treatments requested or already provided, and medical necessity. Medical review services make the review process easy and hassle-free for claim handlers and investigators who may be unfamiliar with the complex medical jargon and the specific healthcare requirements of patients. A professional medical record analysis will help provide a complete picture of the health condition and requirements of the claimant so that the right decision can be made on the claim.