2 NAIC / UNDERSTANDING HEALTH CARE BILLS: WHAT IS MEDICAL NECESSITY?
Self-funded plans that are not under state insurance regulatory authority
typically hire Third Party Administrators to administer their health benefits.
The Summary Plan Description, which describes the covered services
and issued to covered employees, may include a definition for medical
necessity.
Medicare defines “medically necessary” as health care services or supplies
needed to diagnose or treat an illness, injury, condition, disease, or its
symptoms and that meet accepted standards of medicine.
Each state may have a definition of “medical necessity” for Medicaid
services within their laws or regulations.
How is “medical necessity” determined?
A doctor’s attestation that a service is medically necessary is an important
consideration. Your doctor or other provider may be asked to provide a
“Letter of Medical Necessity” to your health plan as part of a “certification”
or “utilization review” process. This process allows the health plan to
review requested medical services to determine whether there is coverage
for the requested service. This can be done before, during, or after the
treatment.
A “precertification review” is conducted before the treatment has been
provided and allows the health plan to decide if the requested treatment
satisfies the plan’s requirements for medical necessity. This can be done
by reviewing the Letter of Medical Necessity, medical records, and the
plan’s medical policies for coverage.
A “concurrent review” occurs during the treatment to decide if the
ongoing treatment is medically necessary.
A “retrospective review” occurs after the treatment has been provided to
decide if the services were medically necessary, experimental, cosmetic or
sometimes whether there was truly a need for emergency services.
What is a medical policy?
Definitions for medical necessity include a requirement that the treatment
is within the accepted standards in the medical community. This is defined
in the health plan’s medical policy.
A health plan must make its medical policy available to you if it is used to
make a decision to deny you coverage.