Insurers may ask if something is “medically necessary” before approving a claim. These companies may also deny coverage if something isn’t deemed so. Here’s what this means and what you can do about it.

You have options if your insurance company denies your medical claim for a test, procedure, product, or medication. This includes if they describe the denied claim as not being “medically necessary.”

That term is tossed around in insurance coverage and healthcare circles. But what it really means can be difficult to understand, especially if you’ve already been prescribed or advised for that by your doctor.

You can appeal any insurance denial, and proving something you medically need may not be as difficult or daunting as it might seem.

“Medical necessity” is the term long used by health insurance companies to determine if a healthcare service, treatment, or supply is needed and should be covered.

Each health insurance plan may have its own specific definition, but generally the American Medical Association defines this term as including:

  1. being in line with accepted clinical and medical practice standards;
  2. clinically appropriate in terms of type, frequency, extent, site, and duration; and
  3. is cost-effective, meaning it isn’t more expensive than an alternative treatment or service that could possibly work for that person’s same healthcare outcome;
  4. serves a medical purpose and isn’t considered experimental, investigational, or for cosmetic or non-essential reasons

Insurance companies often use a process called “prior authorization” to determine medical necessity, before approving it for coverage.

An important consideration to keep in mind: Just because an insurer initially denies a claim and determines “medical necessity” doesn’t exist, that does not mean it’s the final word.

For example, someone with diabetes may have a prescription from their doctor for a particular type of insulin that is not covered by their insurance company. There may be another insulin that the insurer believes is “preferred” or lower-cost, and they believe may work as well as the prescribed item.

However, this is a decision between you and your physician. There may be specific reasons why your doctor is prescribing the medication, versus another that your insurance company may prefer.

This may include different action times for the insulin, or how it works for you specifically, or that you’ve used the other type previously and found it isn’t as effective.

All of these may be grounds to appeal a medical necessity decision, with your healthcare team citing specific clinical guidance or doctor’s notes explaining why they believe this prescription is medically necessary for you.

If a claim is denied for lack of medical necessity, a patient or their doctor has the right to appeal the decision. This is a process that may have a clock, meaning you only have a certain amount of time after the insurance denial to file an appeal for that medical necessity and coverage.

This medical necessity requirement is a basis for many people not receiving the healthcare and services that they’ve discussed with their healthcare team and determined might be best for them.

While it’s a common and standard part of insurance coverage, there is no universally accepted definition that all insurers and policymakers agree on. As a result, insurance companies can craft their own policies and definitions that may be more difficult to understand when seeking coverage.

Think of an appeal as a contract dispute over the interpretation of the plan coverage details. Your health plan language defines your contract.

There are multiple levels of appeal and steps to take if you’ve been told something is not medically necessary.

  • find the reasoning for why it isn’t considered medically necessary
  • have your doctor appeal that with why they believe it’s needed

Remember, “medical necessity” is just one of many reasons your insurer may deny coverage or payment. Other reasons may include:

  • services are no longer appropriate in a specific healthcare setting or level of care
  • you’re not eligible for the benefit requested under your health plan
  • services are considered experimental or investigational for your condition
  • insurer may not believe the claim was filed in a timely manner

If the first appeal is denied, additional levels will be outlined in your denial documents.

Your insurance company may use “medical necessity” to determine what is and isn’t covered. Even if a doctor prescribes a medication, procedure, or service, your insurance may limit coverage if it’s determined that the prescribed item does not fit this definition.

There are different elements of what goes into medical necessity, but you have the right to appeal a decision by your insurance carrier. Work with your healthcare team on appealing a claim if that isn’t initially allowed as medically necessary.