Managed Care Reform


"Medical Necessity"

The AMA points in support of legislation that enables prudent physicians, not health plan bureaucrats, to determine "medical necessity"

"Medical necessity" refers to the standard by which proposed medical treatment is deemed fitting and appropriate for a particular patient's medical condition. Whether treatment is medically necessary has been and must remain solely a medical determination. Plans, however, have for their own purposes sought to redefine this term. In their contracts with participating physicians and in their other plan documents, health plans are increasingly defining "medical necessity" in an arbitrary manner, often focusing primarily, if not exclusively, on their own cost considerations. The AMA believes, though, that prudent physicians, not health plan bureaucrats, should determine medical necessity according to generally accepted standards of medical practice.

The AMA believes that any patient protection legislation must incorporate the following principles relating to medical necessity:

bullet"Medical necessity" should be decided in a manner consistent with generally accepted standards of medical practice that a prudent physician (medical doctor or doctor of osteopathy) would provide to a patient for the purpose of preventing, diagnosing or treating an illness, injury, disease or its symptoms.

bulletReasonably prudent physicians must be able to make medical necessity decisions for their patients, without unreasonable interference from health plans or insurers. Patients need to be able to trust that their physicians are making medical decisions and recommendations for them based solely on their medical needs. If plans or insurers wish to exclude coverage for specific services, they must explicitly identify those non-covered services prior to the patient's enrollment in that plan or with that insurer.

bulletPatients should not be treated unfairly by health plans or insurers denying coverage for medically necessary treatment, based on information the plan or insurer obtains only later in the course of treatment. Any review of a medical necessity decision must be based solely on the information that the health care professional had at the time that medical services were rendered.

bulletSome plans and insurers have expressed concern that allowing anyone other than themselves to make medical necessity decisions will eventually lead to such abuses as health club memberships being deemed "medically necessary." This "slippery slope" argument, however, is nothing more than a red herring. "Medical necessity" should be determined according to a "prudent physician standard," which legally and medically is an objective standard – not subject to the abuses alleged by plans and insurers.

bulletThe "prudent physician standard" can—and should—be applied in utilization review (UR) processes, including health plans' UR programs. The AMA does not object to health plans reviewing treating physicians' recommendations to confirm that they comport with generally accepted standards of medical practice. Patients however must also have access to an independent, binding external review process, conducted by properly qualified physicians.


Legislation Return
Legislation Return