Medical Necessity

How Do I Know If My Insurance Will Pay?

Health insurance helps patients get the medical care they require
Medical necessity in health insurance. PhotoAlto/Frederic Cirou / Getty Images

Health insurance companies provide coverage only for health-related serves that they define or determine to be medically necessary. Medicare, for example, defines medically necessary as: “Services or supplies that are needed for the diagnosis or treatment of your medical condition and meet accepted standards of medical practice.”
 

Medical necessity refers to a decision by your health plan that your treatment, test, or procedure is necessary for your health or to treat a diagnosed medical problem.

Most health plans will not pay for healthcare services that they deem to be not medically necessary. The most common example is a cosmetic procedure, such as the injection of medications (such as Botox) to decrease facial wrinkles or tummy-tuck surgery. Many health insurance companies also will not cover procedures that they determine to be experimental, or not proven to work.

Medical Uses of Marijuana

The use of marijuana for medical reasons is a prominent 'medical necessity' case. Cannabis is a plant with active ingredients that are widely reported by sufferers to be effective in pain control for various conditions, usually neuropathic in nature, where common painkillers have not worked well.

Medical marijuana first became legal under state statute with the passage of California's Proposition 215 in 1996. By November 2016, there were 28 states that had legalized the medical use of cannabis.

However, as a Schedule I drug under the Controlled Substance Act, marijuana is illegal under federal law. Schedule I drugs are defined by the Drug Enforcement Administration as  having "no currently accepted medical use and a high potential for abuse." Interestingly, cocaine and methamphetamine are both classified as Schedule II drugs, putting them one rung lower on the DEA's system for classifying "acceptable medical use and the drug’s abuse or dependency potential."

Marijuana has also not been approved by the FDA, in part because its Schedule 1 classification has made it difficult for the FDA to conduct adequate trials to determine safety and efficacy. Over the last four decades, there have been repeated proposals to change the Schedule 1 classification for marijuana, but as recently as August 2016, the DEA refused to change the classification.

The DEA did agree, however, to ​increase the number of DEA-approved facilities growing marijuana for research purposes. Previously, there was just one (at the University of Mississippi), but the DEA noted that additional approved suppliers will be able to provide FDA-approved researchers with "a more varied and robust supply of marijuana."

For the time being, however, due to marijuana's classification as a Schedule I drug (with "no currently accepted medical use"), its illegality under federal laws, and the lack of any FDA approval, health insurance plans do not cover medical marijuana, regardless of whether state law deems it legal, and regardless of whether a doctor deems it medically necessary.

 

Check with Your Health Plan

It’s important to remember that what you or your doctor defines as medically necessary may not be consistent with your health plan’s coverage rules. Before you have any procedure, especially one that is potentially expensive, review your benefit handbook to make sure it is covered. If you are not sure, call your health plan’s customer service representative.

Understand Your Right to Appeal

Health plans have appeals processes (made more robust under the Affordable Care Act) that allow patients and their doctors to appeal when a pre-authorization request is rejected. While there's no guarantee that the appeal will be successful, the ACA guarantees your right to an external review if your appeal isn't successful via your health insurer's internal review process.

Updated by Louise Norris.

Sources:

BallotPedia, California Proposition 215, The Medical Marijuana Initiative (1996).

Patient Advocate Foundation, A Patient's Guide to Navigating the Insurance Appeals Process.

United States Drug Enforcement Administration, DEA Announces Actions Related to Marijuana and Industrial Hemp. August 11, 2016.

United States Drug Enforcement Administration, Drug Scheduling.

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