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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 FUNCTIONAL LEVELS: 
 
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: 
 
    The beneficiarys past history (including prior prosthetic use if applicable); and 
 
    The beneficiarys current condition including the status of the residual limb and the nature of other medical 
problems; and 
 
    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 microprocessor controlled ankle foot system (L5973), energy storing foot (L5976), dynamic 
response foot with multi-axial ankle (L5979), flex foot system (L5980), flex-walk system or equal (L5981), or 
shank foot system with vertical loading pylon (L5987) is covered for beneficiaries whose functional level is 3 
or above. You can find this information in Medicare's Local Coverage Determination (LCD): Lower Limb 
Prostheses (L33787). 
 
The rules say that in the event of a claim review, information contained directly in the contemporaneous 
medical record is the source required to justify payment except as noted elsewhere for prescriptions and CMNs. 
The medical record is not limited to treating practitioners office records but may include records from 
hospitals, nursing facilities, home health agencies, other healthcare professionals, etc. (not all-inclusive). 
Records from suppliers or healthcare professionals with a financial interest in the claim outcome are not 
considered sufficient by themselves for determining that an item is reasonable and necessary. DMEPOS 
suppliers are reminded that: 
 
    Supplier-produced records, even if signed by the treating practitioner, and attestation letters (e.g. letters of 
medical necessity) are deemed not to be part of a medical record for Medicare payment purposes. 
    Templates and forms, including CMS CMNs, are subject to corroboration with information in the medical 
record. 
    A prescription is not considered to be part of the medical record. Medical information intended to 
demonstrate compliance with coverage criteria may be included on the prescription but must be corroborated 
by information contained in the medical record. 
    The beneficiarys medical record must contain sufficient documentation of the beneficiarys medical 
condition to substantiate the necessity for the type and quantity of items ordered and for the frequency of use or 
replacement (if applicable). The information should include the beneficiarys diagnosis and other pertinent 
information including, but not limited to, duration of the beneficiarys condition, clinical course (worsening or 
improvement), prognosis, nature and extent of functional limitations, other therapeutic interventions and 
results, past experience with related items, etc. In addition to the general requirements discussed above, certain 
DMEPOS items may have specific documentation requirements. Details regarding these policy specific 
requirements are contained in the applicable LCD-related Policy Article. You can find this information in 
Medicare's Local Coverage Article Standard Documentation Requirements for All Claims Submitted to DME 
MACs (A55426). 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.