Decoding 'Medically Necessary' in Your Health Insurance: Who Really Decides and How to Fight Back

Introduction: The Vague Clause That Gets Your Claim Denied

Picture this: you or a loved one are finally home from the hospital. The worst is over, and you feel a sense of relief. You have health insurance for moments just like this. You file the claim, expecting your insurance to cover the bills you've paid premiums for. But instead, you get a letter. Your claim has been denied. The reason? "Treatment not medically necessary."

This is a frustratingly common experience for people all over India. The "medically necessary" clause is a powerful tool for insurance companies, and they use it to reject a large number of claims. The wording is so vague that it gives the insurer an unfair advantage, leaving you feeling helpless and worried about the cost. The insurance company, a big corporation, has made a one-sided decision about a treatment your own doctor said you needed.

I will explain in simple terms what "medically necessary" means, break down how these decisions are made, and will tell you how to fight back based on the law and how you can challenge an unfair rejection—and often win.

Part 1: The Official Rulebook: What 'Medically Necessary' Means

The first step in fighting back is to understand the official definition. The Insurance Regulatory and Development Authority of India (IRDAI), which sets the rules for insurance, has created a standard definition that is in almost every health policy. Knowing this definition is key to building a strong case.

The Four Conditions for 'Medically Necessary'

A treatment, test, or hospital stay is considered "medically necessary" only if it meets all four of these conditions:

• It's Required for Your Condition: The treatment must be essential to treat the specific illness or injury you have. It can't be for something you choose to have done (like cosmetic surgery) or for a different, unrelated condition.
• It's the Right Amount of Care: The treatment shouldn't be more than what's needed to give you safe and proper medical care. This is a common reason for disagreement. An insurer might argue that you only needed to be in the hospital for three days, not five, or that an ICU bed wasn't required.
• A Doctor Prescribed It: The entire treatment must be recommended and overseen by a qualified doctor. You can't claim for treatments you decided on yourself.
• It Follows Accepted Medical Practices: The treatment must be in line with professional standards widely accepted by doctors in India or around the world. This rule is used to deny claims for treatments that are considered experimental or unproven.

These four points might seem clear, but they are full of words like "appropriate," "necessary," and "widely accepted" that can be interpreted in different ways. This is where disagreements start. For example, your doctor might say you need to stay in the hospital for 7 days to recover safely. But the insurer's medical team, looking only at your paperwork, might decide that 4 days was enough and refuse to pay for the extra 3 days. Or, they might deny a new, effective treatment because it's not yet a standard procedure, calling it "unproven".

There's a difference between what a doctor feels is their duty and what the insurance contract covers. A doctor's main goal is to prevent you from getting worse and help you get back to good health. They will prescribe the best treatment to achieve that. But the insurance company looks only at the strict, four-part definition in the policy. This gap is where many problems begin. The system is built in a way that gives insurers the flexibility to question claims, which means you and your doctor are the ones who have to prove why every part of the treatment was necessary.

Part 2: The Key Players: Your Doctor, the TPA, and the Insurer

Your Doctor: Your Main Supporter

Your doctor is the medical expert and your most important ally. Their job is to diagnose you, decide on the best treatment, and explain why it's medically necessary. Their professional opinion is the foundation of your insurance claim.

The most important document they can provide is a "Letter of Medical Necessity". If your claim is questioned, this letter is your main piece of evidence. You should ask your doctor to be very detailed in this letter. It should do more than just name your illness and treatment. It should build a strong argument, explaining how the treatment meets the four official conditions. For example, it should state why a certain number of days in the hospital was needed for a safe recovery (addressing "right amount of care") and why the chosen treatment is the standard for your condition (addressing "follows accepted medical practices").

The Third-Party Administrator (TPA): The Middleman

A Third-Party Administrator (TPA) is a company licensed by IRDAI to handle the paperwork for insurance companies. Insurers hire them to manage tasks like setting up hospital networks and processing claims. When you go to a network hospital for cashless treatment, the TPA is usually the first to review your request.

A common mistake that makes people feel powerless is thinking the TPA makes the final decision. Many people give up if they get a rejection letter from a TPA. But it's important to know that the TPA's job is mainly paperwork. They can suggest that a claim be approved or denied, but the final decision is always made by the insurance company. The TPA processes the papers, but they are not the judge.

The Insurer: The One Who Pays

The insurance company is the one that provides the policy, takes on the financial risk, and has the final say on all claims. They have their own team of doctors who review the TPA's suggestion and your hospital documents to make a final decision.

There is a natural conflict here. The insurer's job is to be profitable, which means controlling how much money is paid out in claims. Your goal is to get the best possible medical care covered. This tension is why most arguments over "medically necessary" treatment happen.

In these situations, Indian consumer courts have made it clear whose medical opinion matters more. Past court decisions consistently show that the in-person examination by your treating doctor is given more importance than the review of paperwork by an insurer's doctor from a distance. In one important case, a court rejected the opinion of an insurer's doctor who said a hospital stay wasn't needed. The court said that a doctor who never even saw the patient cannot overrule the opinion of the doctors who actually treated them. This is a powerful idea. It means your best weapon is a detailed and clear report from your own doctor.

Part 3: Lessons from Real Court Cases

Case Study 1: The "Too Long in Hospital" Argument - Mr. Purshotam Murarka vs. The New India Assurance Co. Ltd. & Anr.

In this case, a man named Mr. Murarka was in the hospital for 11 days. His insurance company only agreed to pay for 8 days, deciding on its own that the last 3 days were an "unjustified stay". The first court dismissed his complaint.

But a higher court reversed that decision. It smartly pointed out that the problem wasn't the policy's rules, but a "deficiency in service"—meaning the insurer failed to provide proper service. The insurance company couldn't give a strong medical reason for overriding the treating doctor's judgment about how long the hospital stay should be.

What You Can Learn: This case shows that an insurer can't just cut the number of hospital days you're approved for without providing solid medical proof. It's up to the insurer to prove why its remote review of your file is more valid than your doctor's in-person decision.

Case Study 2: The "Cosmetic vs. Necessary" Fight - The New India Assurance Company Ltd. vs. Vikram Goyal

Mr. Vikram Goyal had his claim for Lasik eye surgery denied. The insurance company said it was a cosmetic procedure, which the policy didn't cover. The consumer court sided with Mr. Goyal, and its decision gives us a two-part strategy.

First, the court looked at the meaning of the rule. It decided that Lasik surgery to correct a medical problem like poor vision is not cosmetic; it's a treatment. It's meant to restore an important function—eyesight—not just to improve appearance. The court used medical books and past cases to decide the treatment was medically necessary.

Second, the court found a major mistake in the insurer's process. The company could not prove that it had ever given Mr. Goyal the full policy document, including the specific rule it was using to deny the claim.

What You Can Learn: This case gives you a two-part strategy. First, you can argue that a procedure that fixes a problem or restores a function is a necessary treatment, not just cosmetic. Second, you can hold the insurer accountable. You have the right to demand that the insurer prove they gave you the full policy terms. An insurer cannot enforce a rule they never told you about.

Part 4: Your Step-by-Step Action Plan to Fight a Denial

Now that you understand the definition, the key players, and what the courts say, you can effectively fight a claim denial. The trick is to be organized, not give up, and keep detailed records. Before you start, make a file for every bill, report, prescription, and letter. All communication with the insurer or TPA should be in writing (like email) to create a solid written record.

Step 1: The First Appeal - The Complaint Officer

Your first official step is to file a written complaint with the insurance company's own Grievance Redressal Officer (GRO), or Complaint Officer. Every insurer is required by law to have one.

How to Write the Complaint:
Your email or letter should be polite but firm. Include your policy number, claim details, and clearly state the problem. Argue against the insurer's reason for denial, using the ideas discussed above. For example: "Your decision to deny payment for my extended three-day hospital stay goes against the expert opinion of my surgeon, who was in the best position to know what I needed to recover. As consumer courts have decided in the past, the treating doctor's opinion should be valued more than a remote assessment of my file." Attach all your documents, especially a detailed Letter of Medical Necessity from your doctor.

The insurer must reply to your complaint within three working days and give you a final answer within 15 to 30 days.

Step 2: Taking It to the Regulator - IRDAI's Bima Bharosa Website

If the Complaint Officer doesn't reply in time or gives you a solution you're not happy with, the next step is to take the complaint to the regulator, IRDAI. The best way to do this is through their online complaint system, called the Bima Bharosa portal (https://bimabharosa.irdai.gov.in/). You can also complain by email or by calling their toll-free number.

It's important to know what IRDAI does. IRDAI doesn't act as a judge in your case. Instead, it acts as a helper and keeps a record of complaints. It sends your complaint to the insurance company's senior management and makes sure they give you a formal reply. This puts pressure on the insurer to look at your case again, and it often helps to solve the problem.

Step 3: The Independent Decision-Maker - The Insurance Ombudsman

For many people, this is the most effective step. The Insurance Ombudsman is an independent official appointed by the government to solve insurance disputes fairly and without the cost and complexity of a formal court.

The Ombudsman process is powerful because it's free, the process is simple, and any decision made is legally binding on the insurance company if you accept it. You can go to the Ombudsman if the insurer has rejected your complaint, hasn't replied within 30 days, or has given you an answer you don't agree with.

The rules for filing a complaint with the Ombudsman are specific. Here is a simple table to explain them:

Question	Answer
Who can complain?	You, your legal heir, or the person you named in your policy.
When can I complain?	Within 1 year of the insurer's final rejection, or if they don't reply to you within 30 days.
Where do I complain?	To the Ombudsman office that covers the area where your insurer's branch is or where you live.
Is there a claim limit?	Yes, the total claim amount cannot be more than ₹50 Lakhs.
Does it cost anything?	No, it is completely free.
What papers do I need?	A complaint form, a copy of your complaint to the insurer, their rejection letter, your policy copy, and your ID/address proof.
What is the process?	The Ombudsman will first try to help you and the insurer agree on a solution. If that doesn't work, the Ombudsman will make a final decision within 3 months.
What happens next?	The insurance company must follow the final decision within 30 days.

Step 4: The Last Option - The Consumer Court

If you are not happy with the Ombudsman's decision, or if your claim is for more than ₹50 Lakhs, your final option is the Consumer Court. You don't have to go to the Ombudsman before going to court. You can go straight to a consumer court after the insurer's Complaint Officer has rejected your complaint. But since the Ombudsman is faster and free, it's usually the better first choice.

Filing a case in a consumer court is a formal legal process, and you will likely need a lawyer. Which court you go to depends on the value of your claim:

• District Court: For claims up to ₹50 Lakhs.
• State Court: For claims between ₹50 Lakhs and ₹2 Crores.
• National Court: For claims over ₹2 Crores.

The court will hear from both you and the insurance company, look at the evidence, and make a final, legally binding decision.

Conclusion: From Worried Patient to Confident Advocate

The phrase "medically necessary" might be confusing, but the steps to fight a claim denial are clear. You can go from being a worried patient to a confident advocate for your rights by using knowledge and a smart plan. The action plan is simple:

• Know the Rules: Understand the four conditions for a "medically necessary" treatment.
• Use Your Best Ally: Remember that a detailed letter from your doctor is your most powerful tool.
• Build Your Case: Keep a record of everything to create a solid paper trail.
• Follow the Steps: Use the four-step complaint system in order—from the insurer's own complaint officer to IRDAI, the Ombudsman, and finally, the Consumer Court if needed.

The system has checks and balances designed to protect you. A claim rejection is not the final word; it's just the start of a process. By understanding the rules, using past court cases as a guide, and following a clear plan, you can successfully challenge an unfair decision and get the fair outcome you deserve.

Stay insured, stay secure. 💙