Managed Care's Crimea: Medical Necessity, Therapeutic Benefit, and the Goals of Administrative Process in Health Insurance

75 Pages Posted: 13 Apr 2004

See all articles by William M. Sage

William M. Sage

University of Texas at Austin School of Law; University of Texas at Austin - Dell Medical School

Abstract

This essay explores the concept of medical necessity as it has evolved in the judicial and administrative oversight of managed care. The goals of the essay are to illustrate the range of plausible rationales for establishing administrative procedures to govern medical necessity disputes, and to demonstrate the difficulty of incorporating into those procedures the most important professional and social responsibilities of managed care in today's health care system. Part I of the essay explains the ideological and practical significance of medical necessity as managed care has evolved. Part II examines medical necessity as a legal problem, and questions whether current independent review programs match social needs. Part III offers an alternative perspective on oversight of decisionmaking in managed care that emphasizes therapeutic effect rather than contractual enforcement. Part IV describes improvements in both independent review and overall medical necessity policy that would better serve therapeutic objectives. Among other things, the essay suggests that independent review procedures should be different for insured individuals who are severely or chronically ill than for those who are only occasional users of health care services and those who are severely or chronically ill.

Keywords: health insurance, managed care, medical necessity, dispute resolution, mediation, therapeutic jurisprudence

JEL Classification: I18, K32, K41

Suggested Citation

Sage, William Matthew, Managed Care's Crimea: Medical Necessity, Therapeutic Benefit, and the Goals of Administrative Process in Health Insurance. Available at SSRN: https://ssrn.com/abstract=529143

William Matthew Sage (Contact Author)

University of Texas at Austin School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

University of Texas at Austin - Dell Medical School ( email )

Austin, TX 78712

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