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Table of Contents
Criteria
Medical Uses of Marijuana
Understand Your Right to Appeal
Health insuranceplans provide coverage only for health-related services that they consider to be medically necessary. This article will explain what medical necessity means and how health insurance plans determine whether a particular service is considered medically necessary.
Keep in mind that “covered” doesn’t mean the health plan pays for it. You still have to pay your required cost-sharing—copay, deductible, and/or coinsurance—before the health plan starts to pay any of the cost, even for covered services. And you’ll likely be responsible for at least some of the cost until you’ve met your health plan’sout-of-pocket maximumfor the year.
Medicare, for example, defines “medically necessary” as: “Services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice.”
(Note that whileMedicare Advantageplans are required to cover the same services that are covered under Original Medicare, Advantage plans typically haveprior authorizationrequirements for certain services—which includes a determination of medical necessity—before coverage can be provided. But prior authorization is almost never needed with Original Medicare.)
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 asBotox, to decrease facial wrinkles ortummy-tucksurgery. Many health insurance companies also will not cover procedures that they determine to be experimental or not proven to work.
PhotoAlto / Frederic Cirou / Getty Images
Criteria to Determine Medical Necessity
Private insurers that offer non-Medicare plans can set their own criteria (which may or may not mirror Medicare’s criteria), although they’re required to provide coverage that complies with state and federalbenefit mandates.
But regardless of the type of coverage or the applicable state/federal rules, no plan will cover care that isn’t considered medically necessary. Prior authorization is often used to make this determination. If not, the plan will have a protocol that’s used during the processing of claims to ensure that the procedure was medically necessary.
Medical marijuana first became legal under state statute with the passage of California’s Proposition 215 in 1996. As of 2024, the medical use of cannabis is legal in 38 states and the District of Columbia, as well as three of the five U.S. territories.
However, as a Schedule I drug under the Controlled Substance Act, marijuana is illegal under federal law. The Department of Justice proposed a rule change in 2021 that would reclassify marijuana as a Schedule III drug. If finalized, this would not change federal rules about the legality of marijuana for recreational use, but would put it in the same category as drugs like Tylenol with codeine, ketamine, buprenorphine, and anabolic steroids.
(Interestingly, cocaine and methamphetamine are both classified as Schedule II drugs, putting them one rungloweron the DEA’s system for classifying “acceptable medical use and the drug’s abuse or dependency potential.” If and when the proposed rule change is finalized for marijuana, it would move down to a lower level than cocaine and methamphetamine.)
Over the last four decades, there have been repeated proposals to change the Schedule 1 classification for marijuana, and it appears likely that will happen in the near future, given the proposed rule that was issued in May 2024. It’s also noteworthy that the DEA did downgrade certainFDA-approvedCBD products (with THC content below 0.1%) from Schedule 1 to Schedule 5 in 2018.
In 2021, the DEA indicated that “a number of [additional] manufacturers’ applications to cultivate marijuana for research needs in the United States appears to be consistent with applicable legal standards and relevant laws,” and that the DEA was continuing the process of working with those manufacturers to complete the approval process.
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 healthcare provider deems it medically necessary. However, certain FDA-approvedsyntheticTHC can be included in a health insurance plan’s covered drug list.
It’s important to remember that what you or your healthcare provider 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 benefits handbook to make sure it is covered. If you are not sure, call your health plan’s customer service representative.
Depending on your health plan’s rules, you may also have to obtain areferral from your primary carehealthcare provider and/or receive your treatment from a medical providerwithin the health plan’s network. If you don’t follow the rules your plan has in place, they can deny the claim even if the treatment is medically necessary.
For certain expensive prescriptions, your health plan might have a step therapy protocol in place. This would mean that you have to try lower-cost medications first, and the health plan would only pay for the more expensive drug if and when the other options don’t work.
Health plans have appeals processes (made more robust under the Affordable Care Act) that allow patients and their healthcare providers to appeal when a pre-authorization request is rejected or a claim is denied.
While there’s no guarantee that the appeal will be successful,the Affordable Care Act (ACA)guarantees your right to an external review if your appeal isn’t successful via your health insurer’s internal review process, assuming you don’t have a grandfathered health plan.
Even if you do have a grandfathered plan, you have the right to an external appeal if the insurer’s adverse decision (i.e., claim or prior authorization denial) is for a scenario that falls under the scope of theNo Surprises Act(i.e., an out-of-network provider sending a balance bill for emergency care or services that were provided at an in-network facility).
Summary
Even if a service is medically necessary, the patient may have to pay for some or all of the cost due to copays, deductibles, and coinsurance. And the patient may have to pay for a medically necessary service if the health plan’s rules for prior authorization or step therapy are not followed.
21 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
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