Insights From Our Editors

Medically Necessary: When You & Third-Party Payers Disagree

By Mark Wright, OD, FCOVD,
and Carole Burns, OD, FCOVD

June 7, 2017

Have you ever delivered a service that appeared to meet the technical requirements for third-party coverage, but was denied as “not medically necessary”? If so, then your definition of medical necessity probably does not match the insurance company’s definition.

Here’s what you need to know. Third parties declare services “not medically necessary” when they meet one of the following conditions:

•    The service is not medically necessary for a specific diagnosis.

•    The service is not generally accepted as safe and effective.

•    The service is not supported in peer-reviewed medical literature.

•    The service is furnished at a level, dosage, duration, or frequency, not appropriate for a specific patient or a specific clinical condition.

•    The service is not furnished in a manner consistent with current standards of care.

•    The service is not furnished in an appropriate place of service.

•    The service is furnished in manner primarily for either the patient’s, or provider’s, convenience.

•    The service, drug or device is not approved by FDA.

Sometimes the third party makes the right call. Sacrificing a small animal under a full moon to cure glaucoma should not be considered “medically necessary,” but there are times when we differ with the call being made by a third party. Sometimes a third party calls something “not medically necessary” when they simply do not want to pay for it.

What can you do when you run into the “not medically necessary” wall? We used to spend a lot of time trying to convince the medical director that they needed to update their medical necessity definition, but now we can use the power route.

What is the power route? It is where the power lies in the relationship between the patient, doctor, insurance company and purchaser of care. The power in the relationship does not lie with the doctor, or even the patient. The power lies with the purchaser of care.

Third parties look at doctors the same way doctors look at frame companies. If you don’t like the one in front of you there are plenty more who want to do business with you. The attitude most doctors have is if the frame company treats you badly, then throw the bums out and get another one in the practice. In the same vein, third parties often disregard what doctors are trying to tell them because of the lack of power in the relationship.

On the other hand, the purchaser of care holds true power in the relationship. The greatest fear any third party has is that the purchaser of care will choose a different insurance company to do business with instead of them. The insurance company is afraid the purchaser of care will take their business elsewhere.
So, who is the purchaser of care?

In the U.S., employers purchase the majority of care. Employers purchase care for their employees.  Employees may be given the choice of options within a plan, but it is the employer who picks the plan.  Employees are not given unlimited choices of health care or vision care plans. Employers pick the plan for their employees.

Patients don’t know what they don’t know. In fact, employers don’t know what they don’t know, so, in the case where a third party unjustly denies a claim, and you’ve made an attempt to get the third party to correct their mistake, and the third party just won’t listen, then explain to the patient that if they had their insurance with Company A or Company B, their claim would have been approved, but because they have it with Company C, their claim has been unreasonably denied. That is a message they should take back to their employer – the purchaser of care.

Now you’ve started to use the power route. You’ve tapped into the real power in the relationship between the patient, doctor, insurance company and purchaser of care. You’ve increased the odds that your patient is going to get the coverage they deserve.

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