I think the most important "limitation" to understand is the term medical necessity. Your whole policy revolves around those two words. You will want to check your benefit booklet's list of definitions to understand how your insurance carrier defines this term.
Medicare defines medical necessity as follows: "Services or items reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member."
It is important to understand that even if you have a benefit for a particular service, if you do not have a medical need for that benefit, it will not be covered by your insurance carrier.
Here's an example:
You are scheduled for an out-patient knee arthroscopy. You plan to have a friend pick you up after surgery and stay with you for a few days to help you around the house.
The day of the surgery arrives and you make it through with flying colors. You call your friend to let them know you are ready to be picked up. Unfortunately, your friend’s car is in the shop. They won’t be able to pick you up until the following day.
You know your policy covers hospitalization stays. You inform the hospital staff that you will be staying overnight because you are without transportation or assistance at home until the following morning.
In this case, even though you have a benefit for hospitalization and you feel you have a need to stay, your "need" is not medical in nature; it is more of a social need and therefore would not be covered by your insurance plan.
Let’s look at the same scenario but this time we will give you a "medical" need that removes the "medical necessity" limitation:
You undergo surgery for your knee and are doing fairly well until the physical therapist tries to get you up to walk. As soon as you sit up, the room starts to spin and you become sick to your stomach. On top of the horrible nausea and vomiting, you are in terrible pain.
Because of the nausea you are not able to take the pain pill the doctor prescribed. The nurse contacts your surgeon and receives an order to give you one injection for the pain and another for the nausea. Four hours later you are still nauseated and in pain.
Your healthcare team is not only concerned about your pain and nausea but the possibility of dehydration as well. Your doctor orders you to have intravenous hydration (IV hydration) and to continue giving you shots for pain and nausea as needed. You will be staying overnight.
Even though the surgery is considered an out-patient procedure, because of the pain out-of-control, vomiting and the dehydration from not being able to eat or drink, you have a medical need to keep you in the hospital overnight.
In this case, your stay would be covered by your insurance policy as being medically necessary.
It is very important to remember that you are able to access your benefits only if it is medically necessary! In order for your medical care to be covered, you must have the benefit, a physician's order and a medical need for your care.
Who Determines Medical Necessity?
A team of nurses, therapists and physicians from various fields of expertise have been hired by your insurance carrier to review medical care, requests, and claims to determine if they meet the definition of medical necessity. The tools they use to assist them include medical policies or guidelines, clinical experience and evidence-based guidelines (EBG).
Information to create EBGs is obtained from clinical trials and the consensus of specialists within a given field. Software programs such as Milliman Care Guidelines (created by Milliman) or Interqual (created by McKesson Corporation) are used by insurance companies, health maintenance organizations and hospitals as resource guides.
Evidence-based guidelines analyze the current practices and are reviewed and updated periodically. What was determined to be the standard of practice supporting medical necessity one day may no longer meet the criteria the next (and vice versa).
Your insurance carrier will also review their medical policies and guidelines on a routine basis. Policies and guidelines are revised as the standards in the medical communities change.
Here’s an example of how the review process works:
You have had difficulty breathing through your nose ever since you were hit with a softball as a child. You finally decide to see an ear, nose and throat (ENT) specialist to see if there is anything he/she can do to correct the problem.
After your examination, the ENT explains that your nose was broken by the softball. Because of the fracture your nasal septum (the wall that divides the right nostril from the left) is deviated (shifted from the middle). You both agree that a rhinoplasty (surgical repair of the nasal fracture) will resolve your breathing problem (this is the medical necessity).
The doctor submits the request for a rhinoplasty to your insurance carrier's nurse reviewer for approval. Based on the limited information provided by your physician, the nurse cannot determine if you are requesting a cosmetic repair of your nose or if there is a medical basis for the request. The nurse forwards the request to an ENT contracted with your insurance carrier for his/her input.
Unfortunately, the information provided by your physician is so limited that even the insurance carrier’s ENT is unable to determine if you are requesting a cosmetic "nose job" or if there is a real medical reason for the procedure. He/she calls your physician and finds out that the reason for the procedure is to repair the nasal fracture you sustained as a child.
Based on this information and the guidelines in place, the ENT physician advisor is able to approve the request for your rhinoplasty due to medical necessity. He/she forwards the Authorization for the procedure to the nurse reviewer. The nurse will forward both you and your physician a Letter of Approval for the procedure.
As you can see from the example, the nurse has to forward your request to either a physician within the same field as the ordering physician or to a doctor with similar clinical experience.
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