Who decides what's medically necessary?

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 and families, that statement raises an obvious question:

Who created these criteria in the first place—and who decides whether your care is medically necessary?

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

Health insurance companies may use clinical guidelines, medical policies, published evidence, government coverage requirements, health plan provisions, and clinical review when making medical necessity determinations.

Understanding where medical necessity criteria come from, how insurers use them, and what information reviewers evaluate can make a prior authorization or denial much easier to understand.

It can also help you identify one of the most important things to determine after a denial:

Was the treatment denied because it truly did not meet the applicable criteria—or because the information submitted did not clearly demonstrate that the criteria were met?

That distinction can matter when determining what to do next.

What Are Medical Necessity Criteria?

Medical necessity criteria are standards used during clinical review to evaluate whether a requested healthcare service is considered clinically appropriate based on the patient's circumstances and the information submitted for review.

Depending on the treatment and health plan, the review may consider factors such as:

• Your diagnosis

• Severity and duration of symptoms

• Previous treatments

• Whether previous treatments worked or failed

• Imaging, laboratory results, or other diagnostic findings

• Current functional limitations

• Type and intensity of treatment being requested

• Whether alternative or less intensive treatment has been attempted

• Contraindications to alternative treatment

• Whether the 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.

A treatment may make perfect sense to the physician who has been caring for the patient, but the insurance reviewer generally makes a determination based on the information available for review and the criteria or coverage requirements applicable to the request.

Who Creates Medical Necessity Criteria?

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

Different health plans—and sometimes different services within the same health plan—may rely on 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 may be used to evaluate hospital admissions, procedures, imaging, rehabilitation, behavioral healthcare, and other healthcare services.

An insurer's use of one of these tools does not mean that the guideline company made the final determination in an individual patient's case.

Instead, the criteria provide a framework that may be applied during the clinical review process.

2. The Insurance Company's Medical Policies

Health insurance companies may also develop their own clinical or medical policies.

These policies may incorporate:

• Published medical research

• Evidence-based clinical guidelines

• Recommendations from professional medical organizations

• Regulatory requirements

• Technology assessments

• Input from physicians and other clinical experts

A health plan may have a detailed medical policy describing the circumstances under which a particular procedure, medication, device, test, or treatment is considered medically necessary.

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

3. Medicare and Medicaid Coverage Requirements

Government healthcare programs also establish coverage requirements.

Medicare, for example, uses National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs) for certain services and circumstances.

Medicaid coverage requirements may vary by state, program, and service.

When someone receives coverage through a government healthcare program—or certain plans connected to those programs—the applicable government requirements may play an important role in determining coverage.

4. Medical Specialty Organizations and Clinical Guidelines

Professional medical societies publish clinical practice guidelines based on evolving medical evidence.

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

These guidelines may help inform insurer policies and clinical criteria.

However, an important distinction remains:

A professional medical society's treatment recommendation and a health plan's coverage policy are not necessarily the same thing.

So, Did My Insurance Company Write the Rules?

Sometimes—but not always.

An insurer may use internally developed medical policies, licensed clinical criteria, government coverage requirements, plan provisions, or a combination of different sources.

That's why one of the most useful questions to ask after receiving a medical necessity denial is:

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

You can also ask whether a copy of the applicable criteria or policy is available.

Knowing what standard was applied can help you, your healthcare provider, or someone assisting with an appeal better understand why the request was denied and which requirement the insurer says was not satisfied.

Your Doctor and Your Insurance Company May Be Answering Different Questions

This distinction is important.

Your doctor may be asking:

“What treatment do I believe is clinically 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 necessarily identical.

Your physician may strongly believe that a particular treatment is the most appropriate option while the insurer determines that the information 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 documentation.

The Documentation Gap: When the Care Happened but the Record Doesn't Show It

Imagine that a health plan's criteria require documentation showing that a patient completed a particular conservative treatment for a specified period before progressing to the requested treatment.

The patient may have completed that treatment.

The physician 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 Right to Care Solutions refers to as 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 and medical necessity review.

This is also why a strong medical necessity statement can be so valuable. It can help connect the patient's diagnosis, clinical findings, treatment history, requested treatment, and clinical rationale in a way that is easier for a reviewer to evaluate.

Related reading: [Crafting a Strong Medical Necessity Statement: A Guide for Non-Writers]

https://righttocaresolutions.com/blog-post26

Medical Necessity Is Not the Same as Insurance Coverage

There's another important distinction patients and families should understand.

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

For example, the plan may contain a specific exclusion, limitation, network requirement, or other coverage provision that affects the request.

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 from a denial involving:

• A plan exclusion

• Eligibility

• Lack of prior authorization

• Network requirements

• Benefit limitations

• Experimental or investigational provisions

• Another administrative or coverage requirement

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

What Should You Do After a Medical Necessity Denial?

Start by getting information.

Read the denial letter carefully and identify the specific reason given for the decision.

Then consider asking the insurance company:

What medical necessity criteria or medical policy was used?

Can you provide me with a copy?

Which specific requirement does the plan say 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?

Document the conversation.

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

Those details can become important if you need to make additional calls or pursue an appeal.

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

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

But don't stop at the words:

“Does not meet medical necessity criteria.”

Dig deeper.

Find out what criteria were used.

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

Review what clinical information was actually submitted.

Compare the documentation with the stated reason for the denial.

Then determine whether additional documentation, provider involvement, peer-to-peer review, or an appeal may be appropriate.

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

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

You don't have to approach the insurance process without information or a plan.

Right to Care Solutions provides nurse-led insurance advocacy and appeal support for patients and families dealing with prior authorization barriers and medical denials.

Support can include helping you understand the denial, identify potential documentation gaps, and determine the appropriate next steps based on the issue involved.

Prefer to Start on Your Own?

The Insurance Denial & Call Script Checklist helps you identify key information to gather from the insurance company, organize your call, and document important details.

Get the Insurance Denial & Call Script Checklist →

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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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