Medical Necessity - American Health Lawyers Association

Characteristics of an Ideal Policymaking/Rulemaking
System for Medical Neccesity Determinations
a number of state Medicaid
programs include cost effectiveness
in their definitions of
medical necessity, but that
Medicare is precluded from
considering the cost/benefit
tradeoffs of new treatments.
The topic of cost effectiveness
was not directly addressed in the
discussion of an ideal system for
rulemaking, but several panelists
interjected noteworthy comments.
In calling on the Medicare
program to issue “a better definition
of the criteria for decision
making on coverage rules,” a
consumer representative stated,
“One of the reasons this debate
about cost effectiveness is such
a problem is that Medicare has
never been willing to address the
issue. It’s very controversial, of
course, but in the absence of rules
that identify the factors that go
into coverage determinations, [the
cost effectiveness element can’t be
determined].”
In response to the facilitator’s
question, “How can we make sure
that the right thing is done for
every patient? Is there an economic
factor to that?,” a physician
representative replied, “There’s an
economic factor only in this sense:
if there are two equal treatments,
certainly the least expensive
should be chosen.” The speaker
also noted that economic considerations
contributed to some
Medicaid programs’ initial decisions
not to pay for heart transplants,
“but I think gradually, that’s
been overcome and, at least in our
state, they have realized that
[heart transplants] are an appropriate,
reasonably safe, and worthwhile
procedure.”
Is the Rulemaking System
Broken and, If So, How Can It
Be Fixed?
The facilitator next asked the
panel, “How broken is the current
rulemaking system? I’ve heard
suggestions about establishing
medical necessity guidelines, or
perhaps national rules, but not a
lot of, ‘It’s broken, and here’s what
we need to do to fix things.’” The
facilitator clarified that for purposes
of the Colloquium discussion
the term “rulemaking” would be
used as shorthand for policymaking
or the general standards and
criteria that govern medical necessity
determinations, in contrast to
the application of medical necessity
to individual healthcare cases.
A physician representative suggested
there really is no coherent
national system for determining
medical necessity and hence
nothing to focus on as ‘broken.’
He suggested that the panel look
upon the discussion as “an opportunity
to build something.” That
“something” is to empower physicians
by “concentrating on the
physician-patient relationship as
being the key, individual people
as being the key—and build from
that.” A key regulatory change,
the speaker suggested, would be
“to improve the reimbursement
of primary care physicians and
primary care services so that it’s
not lost money for physicians to
take enough time to [explain
treatment options and potential
consequences].”
A panelist who is both a researcher
and a physician commented that
“rulemaking processes for medical
necessity as they’ve evolved are
largely irrelevant to current
problems in the U.S. healthcare
systems.” The remedies suggested
by the previous speaker “in reality
do not relate to medical necessity
rulemaking, they have to do with
the whole process with which
healthcare is delivered.” The
panelist argued for a solution
under which “necessity has to be
defined in terms of patient preferences
[within a health plan’s
covered services], not committees
who decide what they need.”
The facilitator then asked the
panel, “So, it appears that the
answer to stakeholders’ concerns
is bigger than just the rulemaking
process. Is that correct?” A panelist
who represents institutional
healthcare providers replied, “Yes,
an image that comes to mind is
that baseball umpires are on the
field, debating about whether the
strike zone should be moved a
little bit—and actually the whole
stadium is on fire. So, if you’re
asking, can the rulemaking process
be used to transform the system,
starting with using scientific
evidence to develop standards for
medical necessity, yes, that’s a
fundamental question. And can
it start with rulemaking? I think
it can. But that’s the strike zone,
and while it’s worth talking about,
I believe there are bigger issues
here.”
A payor representative expressed
the opinion that there is “tremendous
physician dissatisfaction” in
healthcare generally and, to the
extent that medical necessity rules
contribute to that, then “it would
be a positive thing if we could
develop processes that engage
physicians and empower them,
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