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The rules say that plans must pay for a medical service or item if regular Medicare would pay for it in this case. 
You can find this rule at 42 Code of Federal Regulations (CFR) Section 422.101. 
 
The rules say that a lower limb prosthesis is covered when the beneficiary: 
 
    1. Will reach or maintain a defined functional state within a reasonable period of time; and 
 
    2. Is motivated to ambulate. 
 
FUNCTIONAL LEVELS: 
 
A determination of the medical necessity for certain components/additions to the prosthesis is based on the 
beneficiary's potential functional abilities. Potential functional ability is based on the reasonable expectations 
of the prosthetist, and treating practitioner, considering factors including, but not limited to: 
 
    1. The beneficiary's past history (including prior prosthetic use if applicable); and 
 
    2. The beneficiary's current condition including the status of the residual limb and the nature of other 
medical problems; and 
 
    3. The beneficiary's desire to ambulate. 
 
Clinical assessments of beneficiary rehabilitation potential must be based on the following classification levels: 
 
Level 0: Does not have the ability or potential to ambulate or transfer safely with or without assistance and a 
prosthesis does not enhance their quality of life or mobility. 
 
Level 1: Has the ability or potential to use a prosthesis for transfers or ambulation on level surfaces at fixed 
cadence. Typical of the limited and unlimited household ambulator. 
 
Level 2: Has the ability or potential for ambulation with the ability to traverse low level environmental barriers 
such as curbs, stairs or uneven surfaces. Typical of the limited community ambulator. 
 
Level 3: Has the ability or potential for ambulation with variable cadence. Typical of the community ambulator 
who has the ability to traverse most environmental barriers and may have vocational, therapeutic, or exercise 
activity that demands prosthetic utilization beyond simple locomotion. 
 
Level 4: Has the ability or potential for prosthetic ambulation that exceeds basic ambulation skills, exhibiting 
high impact, stress, or energy levels. Typical of the prosthetic demands of the child, active adult, or athlete. 
 
The records must document the beneficiary's current functional capabilities and his/her expected functional 
potential, including an explanation for the difference, if that is the case. It is recognized, within the functional 
classification hierarchy, that bilateral amputees often cannot be strictly bound by functional level 
classifications. 
 
GENERAL: 
 
If a prosthesis is denied as not reasonable and necessary, related additions will also be denied as not reasonable 
and necessary. 
 
When an initial below knee prosthesis (L5500) or a preparatory below knee prosthesis (L5510, L5520,L5530, 
L5540) is provided, prosthetic substitutions and/or additions of procedures and components are covered in 
accordance with the functional level assessment except for codes L5629, L5638, L5639, L5646, L5647, L5704, 
L5785, L5962, and L5980 which will be denied as not reasonable and necessary. When a below knee 
preparatory prefabricated prosthesis (L5535) is provided, prosthetic substitutions and/or additions of 
procedures are covered in accordance with the functional level assessment except for codes L5620, L5629, 
L5645, L5646, L5670, L5676, L5704, and L5962 which will be denied as not reasonable and necessary. 
 
When an above knee initial prosthesis (L5505) or an above knee preparatory (L5560, L5570, L5580, L5590, 
L5595, L5600) prosthesis is provided, prosthetic substitution and/or additions of procedures and components 
are covered in accordance with the functional level assessment except for codes L5610, L5631, L5640, L5642, 
L5644, L5648, L5705, L5706, L5964, L5980, and L5710, L5711, L5712, L5714, L5716, L5718, L5722, 
L5724, L5726, L5728, L5780, L5790, L5795 which will be denied as not reasonable and necessary. When an 
above knee preparatory prefabricated prosthesis (L5585) is provided, prosthetic substitution and/or additions of 
procedures and components are covered in accordance with the functional level assessment except for codes 
L5624, L5631, L5648, L5651, L5652, L5705, L5706, L5964, and L5966 which will be denied as not 
reasonable and necessary. 
 
In the following sections, the determination of coverage for selected prostheses and components with respect to 
potential functional levels represents the usual case. Exceptions will be considered in an individual case if 
additional documentation is included which justifies the medical necessity. Prostheses will be denied as not 
reasonable and necessary if the beneficiary's potential functional level is 0. 
Coverage is extended only if there is sufficient clinical documentation of functional need for the technologic or 
design feature of a given type of foot. This information must be retained in the treating practitioner's or 
prosthetist's files. 
 
Coverage is extended only if there is sufficient clinical documentation of functional need for the technologic or 
design feature of a given type of knee. This information must be retained in the treating practitioner's or 
prosthetist's files. 

You can find this information in Medicare's Local Coverage Determination (LCD): Lower Limb Prostheses 
(L33787). 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com