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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 medically necessary services are those that are reasonable and necessary for the diagnosis or 
treatment of an illness or injury. Medically necessary services include services to improve the functioning of a 
malformed body member. You can find this rule in the Social Security Act, Section 1862(a)(1)(A). 
 
The rules state that payment may be made for the replacement of a prosthetic device that is an artificial limb, or 
replacement part of a device if the ordering physician determines that the replacement device or part is 
necessary because of any of the following: 
1. A change in the physiological condition of the patient; 
2. An irreparable change in the condition of the device, or in a part of the device; or 
3. The condition of the device, or the part of the device, requires repairs and the cost of such 
repairs would be more than 60 percent of the cost of a replacement device, or, as the case may 
be, of the part being replaced. 
You can find this information in the Centers for Medicare and Medicaid Service, Internet-Only Manual, 
Publication 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 120. The rules say that a determination of the medical necessity for certain components/additions to the prosthesis is 
based on the beneficiarys 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 beneficiarys past history (including prior prosthetic use if applicable); and 
2. The beneficiarys current condition including the status of the residual limb and the nature of other 
medical problems; and 
3. The beneficiarys 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 beneficiarys 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. 
A determination of the type of knee for the prosthesis will be made by the treating practitioner and/or the 
prosthetist based upon the functional needs of the beneficiary. Basic lower extremity prostheses include a 
single axis, constant friction knee. Other prosthetic knees are considered for coverage based upon functional 
classification.  
 
A fluid, pneumatic, or electronic/microprocessor knee (L5610, L5613, L5614, L5722, L5724, L5726, L5728, 
L5780, L5814, L5822, L5824, L5826, L5828, L5830, L5840, L5848, L5856, L5857, L5858) is covered for 
beneficiaries whose functional level is 3 or above.  
 
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. 
An axial rotation unit (L5982, L5984, L5985, L5986) is covered for beneficiaries whose functional level is 2 or 
above. 
 
You can find this information in the Local Coverage Determination (LCD): Lower Limb Prostheses (L33787). 
 
The rules say that Medicare plans must make reasonable and diligent efforts to gather and forward information 
to the Independent Review Entity (IRE). You can find this information in the Centers for Medicare and Medicaid Services, Internet Only Manual, Parts C & D Enrollee Grievances, Organization/Coverage 
Determinations, and Appeals Grievance Manual, Section 50.12.1. 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com. 
 
The Plan contract says that the Plan covers items and services in accordance with Medicare rules.