Medical Directors Often Apply Different Definitions of "Medical Necessity"

Research on medical necessity decision making in managed care

In this 2000–2001 project, Linda Bergthold, PhD, and researchers at Stanford University, Stanford, Calif., surveyed health plan medical directors in 48 states about medical necessity decision making. The study provides input for policy-making at the state and national levels.

The project was part of the Robert Wood Johnson Foundation (RWJF) Changes in Health Care Financing and Organization (HCFO) national program.

As the project came to a close, researchers tested the findings among attendees of a research dissemination conference funded by the federal Agency for Healthcare Research and Quality. They asked the attendees to consider the findings, discuss their day-to-day implications and outline potential policy initiatives.

Key Findings

  • Researchers reported the following findings:

    • Medical directors and state regulators hold significantly different views on the definitions of "medical necessity" and "coverage" and on how they should be applied.
    • Variation between medical directors and regulators, and among regulators, contributes to a lack of a cohesive "coverage-decision" framework for consumers, health plans and regulators and to a state-by-state patchwork of regulations.
    • Over 50 percent of medical directors prefer to consult technology assessment reports from both private and public organizations (such as the BlueCross BlueShield Technology Evaluation Center; Hayes; and Medicare) to evaluate new clinical interventions.
    • Regulators tend to make decisions based upon a pre-determined set of rules, rather than on clinical factors. As a result variability in consumer protection from state to state is likely and health plans' policies may not be based upon the best available clinical and cost-effectiveness data.
    • Participants in the research dissemination conference agreed that clarity and consistency are needed in defining medical necessity and making coverage decisions.

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