Inside the Criteria Health Insurance Companies Use

Your doctor recommends a treatment, medication, procedure, or test.

Then your insurance company responds:

“The requested service does not meet medical necessity criteria.”

For many patients, that statement raises an obvious question:

Who created these criteria in the first place?

And no—it’s not the insurance company CEO sitting in an office deciding which treatments are medically necessary.

The criteria used to make these decisions typically come from a much more structured process involving clinical guidelines, medical evidence, health plan policies, government requirements, and healthcare professionals. Understanding who actually creates these criteria—and how insurance companies use them can make the prior authorization and denial process a lot less mysterious.

It can feel as though an insurance company has simply decided that you don't need the treatment your doctor says you need. But medical necessity decisions are usually more complicated than that.

Health plans may rely on nationally developed clinical guidelines, government coverage requirements, professional medical recommendations, published research, their own medical policies, and the specific terms of your health plan.

Understanding where these rules come from can also help you better understand a denial—and what options may be available next.

What Are Medical Necessity Criteria?

Medical necessity criteria are standards used to determine whether a healthcare service is considered clinically appropriate based on the information submitted for review.

Depending on the treatment, criteria may consider things such as:

• Your diagnosis

• The severity and duration of your symptoms

• Previous treatments you've tried

• Whether those treatments worked or failed

• Imaging, laboratory results, or other diagnostic findings

• Your current level of functioning

• The type and intensity of treatment being requested

• Whether a less intensive or alternative treatment has already been attempted

• Whether your medical record contains the documentation required to support the request

This is one reason prior authorization involves much more than simply asking an insurance company for permission.

The documentation submitted with the request matters.

So, Who Actually Creates the Criteria?

There isn't one universal set of medical necessity criteria used by every insurance company.

Different health plans—and sometimes different types of services within the same health plan—may use different sources.

1. Independent Clinical Guideline Companies

Some health insurance companies license clinical decision-support criteria developed by outside organizations.

Two commonly recognized examples are InterQual and MCG (Milliman Care Guidelines).

These organizations develop evidence-based criteria that can be used to evaluate areas such as hospital admissions, procedures, imaging, rehabilitation, behavioral healthcare, and other services.

An insurer using one of these tools doesn't necessarily mean the guideline company made the final decision about your particular case. The criteria provide a framework that can be applied during the review process.

2. The Insurance Company's Own Medical Policies

Insurance companies may also develop their own clinical policies.

These policies can be based on medical research, evidence-based guidelines, recommendations from professional medical organizations, regulatory requirements, technology assessments, and input from physicians and other clinical experts.

A health plan may have a detailed policy explaining when a particular procedure, medication, device, or treatment is considered medically necessary.

That policy can become extremely important when a prior authorization is reviewed or a denial is appealed.

3. Medicare and Medicaid

Government healthcare programs also establish coverage requirements.

Medicare, for example, uses National Coverage Determinations and Local Coverage Determinations for certain services and circumstances.

Medicaid requirements can vary by state and program.

When someone is covered through a government program—or through certain plans connected to those programs—the applicable government coverage rules can play an important role in determining whether a service is covered.

4. Medical Specialty Organizations

Professional medical societies also publish clinical practice guidelines.

Organizations representing specialties such as cardiology, oncology, orthopedics, neurology, psychiatry, and other areas regularly evaluate medical evidence and publish recommendations regarding diagnosis and treatment.

These guidelines may help inform the policies and criteria used by insurers, although a professional society's recommendation and an insurance company's coverage policy are not necessarily identical.

Wait—So My Insurance Company Didn't Necessarily Write These Rules?

Correct.

Sometimes an insurer uses internally developed medical policies. Other times it may use licensed clinical criteria or government coverage requirements. In some situations, several different sources can influence the review.

That's why one of the most useful questions after receiving a medical necessity denial can be:

“What specific clinical criteria or medical policy was used to make this decision?”

Don't be afraid to ask for a copy of the applicable criteria or policy.

Knowing what standard was applied can help your healthcare provider—and anyone assisting with your appeal—better understand why the request was denied.

Your Doctor and Your Insurance Company Are Answering Different Questions

This distinction is important.

Your doctor may be asking:

“What treatment do I believe is appropriate for this patient?”

The insurance reviewer may be asking:

“Does the information submitted demonstrate that this patient meets the applicable criteria for coverage of this treatment under this health plan?”

Those questions sound similar, but they aren't always the same.

Your physician can strongly believe that a particular treatment is the best option for you while the insurer determines that the documentation submitted does not demonstrate that its coverage requirements have been met.

That doesn't necessarily mean your doctor is wrong.

And it doesn't automatically mean the insurer is correct.

Sometimes the issue is the documentation.

The Documentation Gap

Imagine that a particular policy requires documentation showing that a patient tried a specific type of conservative treatment for a certain period before moving to the requested treatment.

The patient may have actually completed that treatment.

The doctor may know it.

The patient certainly remembers it.

But if that history isn't clearly documented in the records submitted with the authorization request, the reviewer may not have the information needed to determine that the requirement was satisfied.

This is what I call the documentation gap:

Something happened clinically, but the information available to the reviewer doesn't clearly demonstrate it.

That gap can have significant consequences during prior authorization.

Medical Necessity Isn't the Same as Coverage

There's another important distinction patients should understand.

A treatment can be medically appropriate and still not be covered under a particular health plan.

For example, a plan may contain a specific exclusion or limitation.

That's why it's important to understand exactly why something was denied.

A denial based on medical necessity may require a very different response than a denial based on a plan exclusion, eligibility issue, lack of prior authorization, or another administrative requirement.

Before beginning an appeal, identify what you're actually appealing.

What Should You Do If You're Told You Don't Meet the Criteria?

Start by getting information.

Read your denial letter carefully and look for the specific reason for the decision.

Then consider asking the insurance company:

What medical necessity criteria or policy was used?

Can you provide me with a copy?

Which specific requirement was not met?

Was the decision based on the clinical information submitted, or is there a coverage limitation in my plan?

Can my provider submit additional clinical information?

Is a peer-to-peer review available?

What are my appeal rights and deadlines?

Write down the representative's name, the date and time of the call, the reference number, and what you were told.

That documentation can become important later.

A Denial Is a Decision—Not an Explanation of Your Entire Case

Receiving a denial can be discouraging, especially when your healthcare provider believes the treatment is necessary.

But don't stop at the words “does not meet medical necessity criteria.”

Find out what criteria were used.

Find out which requirement the insurer says wasn't met.

Review what clinical information was actually submitted.

And determine whether additional documentation or an appeal may be appropriate.

The more you understand about how the decision was made, the better equipped you are to decide what to do next.

Denied Because You “Didn't Meet Medical Necessity Criteria”?

You don't have to figure out the insurance process alone.

Right to Care Solutions helps patients, families, and healthcare providers understand prior authorization requirements and medical denials, identify potential documentation gaps, and determine appropriate next steps for challenging an adverse decision.

Whether you're dealing with a prior authorization that hasn't been approved or a treatment that has already been denied, understanding the reason behind the decision is an important place to start.

The Insurance Denial & Call Script Checklist walks you through the key details to review so you can approach your next steps more prepared and organized.

Get the Insurance Denial & Call Script Checklist →

Need help with a prior authorization or medical denial?

Contact Right to Care Solutions →

Right to Care Solutions provides healthcare advocacy and administrative support. Information provided in this article is for educational purposes and is not legal or medical advice. Coverage requirements and appeal rights vary by health plan.

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