‘MEDICAL NECESSITY’: Stanford Workshop Builds Consensus

      Managed care executives, doctors, consumers and regulators last week arrived at a "surprising degree" of consensus on what "medical necessity" means and how it should be applied in managed care. Co-sponsored by the Integrated Healthcare Association and Stanford University's Center for Health Policy, the workshop was based on the "Decreasing Variation in Medical Necessity Decision Making" research project, which was funded by the California HealthCare Foundation and the Sierra Health Foundation. Lead investigator Sara Singer of Stanford said that "in practice, physician decision-makers are not applying contractual definitions" of medical necessity. But at the workshop, participants were able to agree on a model contractual definition, including who makes the decision, what evidence they use and whether it should include cost considerations. Project Director Dr. Linda Bergthold said the "workshop demonstrated that it is possible to come to agreement among different stakeholders on what these terms should actually mean." Although some participants remained concerned about how these "conceptual" criteria would be applied in practice, the workshop produced more than 35 recommendations to improve the approval process for treatment authorization and also proposed a pilot study to standardize the process. Mark Smith, CEO of CHCF, said "this effort created an opportunity to document the real variance and then get managed care decision-makers together to focus on it so as to agree upon what should go into defining 'medically necessary' patient care." Key findings of the research project:

• Most consumers don't know who makes the decisions about their care. For example, in California only doctors can make denial decisions.
• Only about 1% to 20% of treatment requests are denied, and of those cases, about 30% to 80% are overturned in favor of the patient upon initial appeal.
• There is a high degree (44% to 72%) of variance in medical directors' approval or denial of the same case, and many of these decisions are not consistent with plan guidelines.
• Every health plan's contract has a slightly different, and often vague, definition of medical necessity, which produces variation that may not benefit the patient.
• There is "good" variation in the form of best practices, which may improve the decision-making process for consumers and providers.