Yes, they can do that. For us the issue was test strips. Once we found the magic way for the endo's office to write the script so that the DME supplier would even SUBMIT it to the insurance along with a letter of medical necessity from the endo we had no problems. Literally once those things were submitted we had an approval within hours.
Good luck, it was still an extremely frustrating process, though for us it was all due to the horrible DME supplier we used (and soon dumped).
Mom to Lia Grace, 13 yrs, dx 1/13/06 at age 5.
Started with NPH and Regular, switched to Lantus and Novolog after three months and then started pumping after 1.5 years.
CURRENTLY Pumping with the Animas Ping and using the Dexcom G4.