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Part I of this article provides an overview of the medical necessity test, and examines the decision-making process pursuant to the test, including who makes coverage determinations and what criteria are used in making them. Part I also sets forth examples of conventional treatments that insurers routinely cover despite their questionable efficacy from a medical necessity perspective. Part II explores CAM disciplines and describes how they differ from conventional medicine. Part III discusses the legal challenges CAM faces and explores the limited extent to which CAM is covered by health insurance and the failure of state laws to provide mandates for such coverage. Part III also examines the need for expanded state licensing laws for CAM providers and highlights state laws that are designed to keep CAM dollars in the pockets of conventional medical doctors instead. Part IV analyzes the inability of traditional methods of insurance decision-making to adequately determine whether CAM should also be covered, and sets forth a new paradigm for determining whether CAM should be covered by health insurers. Part IV proposes a shift from the current medical necessity test to a reasonable necessity standard. The term “medical” suggests decisions made solely by medical doctors. The reasonable necessity test, on the other hand, will encompass treatments that are necessary in the opinion of any licensed health care provider, including CAM providers. This would correct two problems. First, it would allow all licensed health care providers to determine what treatments are reasonably necessary. Second, it would acknowledge the limitations on the current state of knowledge and place more power back in the hands of health care providers, both conventional and CAM, rather than insurers, in making coverage determinations.