Medical necessity appeals indirectly shape the future of healthcare quality. Uncontested medical necessity denials result in a subtle shift in treatment availability to the next patient because insurance carriers aim to consistently apply medical necessity limitations. Effective medical necessity appeals, on the other hand, bring to the carrier’s attention necessary variations in care, emerging efficacy issues, and situations that reveal flaws in the day-to-day clinical application of the carrier’s written criteria. Appeals offer both parties—provider and carrier—the opportunity to discuss and ultimately improve the quality of care. Even when such appeals do not result in additional benefits, open discourse on denied claims improves both providers’ and carriers’ understanding of how medical necessity decisions are reached and provides an avenue for cooperative problem-solving.

Defining medical necessity
No universally accepted definition of medical necessity exists and the term takes on different meanings to those who encounter it. To carriers, assessing benefit availability on a “medically necessary” basis is a contractual obligation they must fulfill when a beneficiary seeks medical care. The term is necessarily flexible to give carriers decision-making room as claims are presented and medical treatment approaches evolve.

The ambiguity and importance of the term are reflected in the following statement made by Bernard Mansheim, MD, vice president and chief medical officer for Coventry Health Care, in a 2004 Corporate Address:“Our foremost challenge is to interpret the phrase ‘medical necessity,’ because how we define it dictates what we cover, or pay for. Though it has no useful literal meaning, it is a commonly used phrase that begs for definition. Once, but no longer, it may have meant ‘anything a doctor wants to do.’ Today, it means different things to different people. Since there is no universal definition, and in order to clarify our contractual responsibility, we must define what we mean.” (Source:

The extent of this contractual obligation is often determined by the judges involved in healthcare insurance litigation. It is a common theme in such litigation that because the carriers draft the terms of the insurance policy, they are also responsible and potentially legally liable for any ambiguities in insurance contract terms. State insurance mandates often include “readability” standards, which require policies to be written so that the average person can understand and interpret the terms of the contract.

A common requirement of health insurance contract law is that carriers must make treatment decisions consistently and be able to provide beneficiaries with an understanding of how those decisions are made. Therefore, most insurance policies will have a standard medical necessity definition roughly describing medically necessary care as being the most appropriate treatment, rendered in the most appropriate setting, and not provided for the convenience of the patient. To provide some structure to medical necessity decision-making, carriers use a number of means to limit the scope of the term, such as utilization review and case management procedures, written clinical guidelines, published evidence-based medicine, technology assessments, and expert or independent review panels. These supplemental resources, all of which change over time, shape how the term medical necessity is defined. Thus, once a claim is submitted, the carrier looks to the supplemental resources rather than to the broader medical necessity definition featured in the policy. As providers are well aware, such assessments restrict treatment by making certain procedures available for only specified diagnoses and have the impact of narrowing the concept of medical necessity.

Doctors and patients make joint decisions regarding treatment in a high-pressure, health-focused environment; therefore, they rely on the breadth and flexibility in the term medical necessity. Although medical literature and evidence-based medicine are regularly employed by treatment providers, doctors must give due consideration to each patient’s unique medical needs, lifestyle, abilities, limitations, and complicating treatment issues. As such, consistency in decision-making is not as important as providing high-quality care appropriate for that patient. As the malpractice insurance industry well knows, the courts weigh heavily against treatment providers who fail to provide quality medical care.

Given the dynamic nature of medical care and the various pressures related to treatment delivery, carriers and providers have much at stake in deciding what kinds of treatment fall under the coverage terms and what treatment should be denied. Because of these challenges, appeal and grievance procedures are highly important. Appeal and grievance procedures require the insurance carrier to specify which internal rules, guidelines, and protocols were relied upon in making the decision. The process gives the provider the opportunity to address the appropriateness of how this supplemental information was used and to explain the treatment provided. Once this discourse in underway, however, the satisfaction level of the parties and whether quality care is ultimately provided depend on the quality of the review process itself.

We have extensive information about what goes wrong with medical necessity appeals.  Our detailed instructions of Seeking A Quality Medical Necessity Review from Payers includes Three Components of a Winning Medical Necessity Appeals – Summarize, Cite and Demand.  Because each of these components of a successful medical necessity appeal is so important, we have detailed explanations for each as follows:

Summarize the Patient’s Care

Cite regulatory and/or compliance information

Demand disclosure of payer’s denial basis

Christine Taxin
36 Abington Avenue
Ardsley New York 10502
United States of America