Medical Necessity and Prior Authorization: The Unregulated Power of Insurers

The absence of a uniform federal definition of “medical necessity” in employer-sponsored health plans has allowed insurers to create their own coverage standards, often resulting in inconsistent and opaque determinations that limit access to essential care. This Note argues that ERISA’s silence on medical necessity grants insurers excessive discretion, enabling restrictive prior authorization policies that disadvantage patients and providers alike. By analyzing judicial interpretations, regulatory gaps, and the disparate standards imposed by insurers, this Note makes the case for a federally mandated definition of medical necessity applicable to all employer-sponsored plans. A standardized definition would promote transparency, reduce litigation, and ensure that coverage determinations are based on medical evidence rather than cost-containment strategies.