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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 during recent years, there has been a considerable change in the treatment of diseases of the breast such as fibrocystic disease and cancer. While extirpation of the disease remains of primary importance, the quality of life following initial treatment is increasingly recognized as of great concern.

The increased use of breast reconstruction procedures is due to several factors: 

A change in epidemiology of breast cancer, including an apparent increase in incidence; 
Improved surgical skills and techniques; 
The continuing development of better prostheses; and 
Increasing awareness by physicians of the importance of postsurgical psychological adjustment.

Indications and Limitations of Coverage 

Reconstruction of the affected and the contralateral unaffected breast following a medically necessary mastectomy is considered a relatively safe and effective noncosmetic procedure. Accordingly, program payment may be made for breast reconstruction surgery following removal of a breast for any medical reason. 

You can find this information in Medicare's National Coverage Determination (NCD) for Breast Reconstruction Following Mastectomy (140.2). 

The rules say that for a patient who has had an implant(s) placed for reconstructive or cosmetic purposes, Medicare considers treatment of any 1 or more of the following conditions to be medically necessary:

Broken or failed implant 
Infection Implant extrusion 
Siliconoma or granuloma 
Interference with diagnosis of breast cancer 
Painful capsular contracture with disfigurement

Macromastia (breast hypertrophy) is disproportionate volume and weight of breast tissue relative to the general body habitus. Breast hypertrophy may adversely affect other body systems (e.g., musculoskeletal, respiratory, integumentary). Unilateral hypertrophy may result in symptoms following contralateral mastectomy.

Reduction mammoplasty is performed: 

To reduce the size of the breasts and help ameliorate symptoms caused by hypertrophy 
To reduce the size of a normal breast to bring it into symmetry with a breast reconstructed after cancer surgery

Medicare medical necessity for reduction mammoplasty is limited to circumstances in which: 

There are signs and/or symptoms resulting from the enlarged breasts (macromastia) that have not responded adequately to non-surgical interventions 
To improve symmetry following cancer surgery on one breast

NOTE: For coverage indications for contralateral reconstruction of an unaffected breast following a medically necessary mastectomy, refer to the CMS Internet-Only Manual, Pub. 100-03, Medicare National Coverage Determinations Manual, Chapter 1, Part 2, Section 140.2. 
Cosmetic surgery to reshape the breasts to improve appearance is not a Medicare benefit. Cosmetic signs and/or symptoms would include ptosis, poorly fitting clothing and beneficiary perception of unacceptable appearance. 
Non-surgical interventions preceding reduction mammoplasty should include as appropriate, but are not limited to, the following:

Determining the macromastia is not due to an active endocrine or metabolic process

Determining the symptoms are refractory to appropriately fitted supporting garments, or following unilateral mastectomy, persistent with an appropriately fitted prosthesis or reconstruction therapy at the site of the absent breast
Determining that dermatologic signs and/or symptoms are refractory to, or recurrent following, a completed course of medical management

For Medicare purposes, a reasonable and necessary reduction mammoplasty could be indicated in the presence of significantly enlarged breasts and the presence of at least 1 of the following signs and/or symptoms:

Back pain from macromastia, unrelieved by:

Conservative analgesiaSupportive measures (garment, etc.)Physical therapySignificant arthritic changes in the cervical or upper thoracic spine, optimally managed with persistent symptoms and/or significant restriction of activity
Intertriginous maceration or infection of the inframammary skin refractory to dermatologic measures 
Shoulder grooving with skin irritation by supporting garment (bra strap)

Considerable attention has been given to the amount of breast tissue removed in differentiating between cosmetic and medically necessary reduction mammoplasty. Arbitrary minimum weight breast tissue removed criteria do not consistently reflect the consequences of mammary hypertrophy in individuals with a unique body habitus. There are wide variations in the range of height, weight and associated breast size that cause symptoms. The amount of tissue that must be removed to relieve symptoms will vary and depend upon these variations. The following are guidelines (not rules) that address the patient's weight and the amount of breast tissue removed:

Table I

95-119 lbs. 300 grams excised per breast 
110-130 lbs. 400 grams excised per breast 
130+ lbs. 500 grams excised per breast

Medicare coverage of reduction mammoplasty is limited to those circumstances where the medical record supports the following:

The signs and/or symptoms have been present for at least 6 months
Medical treatment and/or physical interventions have not adequately alleviated symptoms

For all procedures:

Documentation supporting medical necessity should be legible, maintained in the patient's medical record and made available to the A/B MAC upon request.

For mammoplasty:

The beneficiary's medical record must contain the following information, and be available for review on request:

Height and weight
Clinical evaluation of the signs and/or symptoms ascribed to the macromastia, therapies prior to reduction mammoplasty and the responses to these therapies
The operative report with documentation of the weight of tissue removed from each breast, obtained in the operating room
The pathology report of the tissue removed from each breast

You can find this information in Medicare's Local Coverage Determination (LCD): Cosmetic and Reconstructive Surgery (L33428).

If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.