Understanding Medical Necessity and its Effect on Health Insurance

When it comes to understanding health insurance and its coverages, knowing the concept of medical necessity is key. It is significant because if you undergo a medical procedure or received medical care and you don’t receive coverage for it, then it is simply because it was not medically necessary for you.

What is Medical Necessity?

Medical necessity is a medical procedure, service, or test that is required after a diagnosis of a healthcare practitioner. Under the Social Security Act, Medical Necessity is defined as “No Medicare payment shall be made for items or services that are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” And Medicare.org defines Medical Necessity as “health-care services or supplies needed to prevent, diagnose, or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine.”

Medical Necessity Criteria changes from Plan to Plan

When filing for a health insurance claim, you first need to be sure that healthcare service or medical procedures that you have obtained will be covered. You first need to understand what your health plans consider as a medical necessity to receive the reimbursement for a medical expense. However, there are lists of medical procedures or preventive care that fall under the category of medical necessity. Though there is some medical procedure that meets the medical necessity criteria or not is clear. For instance, plastic surgery in some of the cases may be considered necessary and may be covered under a health plan, but generally plastic surgery is not covered and is considered as an elective procedure.

Understand if a Medical Procedure or Test will be Covered

Before receiving medical treatment or tests, you should try to understand if that medical procedure or test will be covered by your health plan or not. You first need to ensure that your doctor has recommended or has approved the necessary test or treatment for you. Besides doctor approval, you also need to meet some additional criteria. Even if your doctor has advised you a test, it does not mean that health insurance providers will consider it a medical necessity for you.

Check Your Coverage Criteria

You should be aware of your coverage criteria by carefully reading your health insurance documents. You can even directly call your insurance provider to check if you have coverage for a specific procedure or test. The majority of the health insurance carriers have their websites where they list all the procedures and tests that are covered by them. You also need to understand the limitations and exclusions for the amount which the company will reimburse. You should also know how many times you will be covered for a specific test or medical services like scans and x-rays to have clarity on your claims. Some of the health insurance plans limit the number of times, or the amount payable for a medical procedure, so just knowing that the procedure is covered might mislead you.

A few of the medical procedures have partial coverage in some plans whereas some plans may reimburse the whole procedure. You need to check these limitations with your doctor too.  You should also know whether there are any alternative tests that are covered in your plan because opting for the most expensive option is not always the best course of action.

You need to carefully review your plan and find out whether you need to visit a specific in-network healthcare center or hospital to be covered or you can visit an out-of-network healthcare provider. It is essential because if you visit a doctor or hospital outside of your health network, then you may be denied coverage or can receive a limited amount of coverage.

Check your Plan’s Medical Necessity

You need to carefully go through the plan and also discuss with your health insurance provider to know about your coverage. For example, if you need to stay in a hospital for treatment, then you are allowed to stay in the hospital only for the health-plan or Medicare-approved length of stay. Besides, if you visit a hospital to receive treatment despite the availability of less expensive hospital will also refrain you from receiving the coverage from your insurer. Therefore, it becomes essential for you to check with your Medicare or health plan before receiving treatments or medical services. You will simply don’t want to spend your healthcare from your own pocket for going to the wrong place.

Even if physical therapy is covered or considered medically necessary in some of the plans, then also there is a limit on the number of treatments that fall into the medical necessity. You need to find out because there is always a limit on such type of services. There are some prescription drugs that are not considered medically necessary like drugs used for weight loss, or weight gain or drugs used for fertility treatment.

Who Determines Medical Necessity?

You should be aware that there is no difference in the medical necessity definition, irrespective of whether you are having a Medicare or Medicaid plan. The list of included services varies from plan to plan. Though, the guidelines on some levels are created by the federal government, but the local state guidelines or the individual plan provider also have their dictate in their covered services list. You can either check the National Coverage Determinations or can search on the Internet about the Local Coverage Determinations.

Preventative Services Are Covered

You should be aware that preventive services like annual wellness visit or certain medical tests or procedures that either identify them or prevent health issues may be covered by the health insurance carriers.

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