I know several colleagues who, like me, trained to be doctors but they later pivoted to take on largely administrative roles working for health plans. Many have a central role in adjudicating what the health plan will pay for, a set of activities often referred to as “utilization management.” Their training as physicians helps them to navigate through the contours of “medical necessity,” which most insurers use as basis for what is covered under a health insurance policy.
Medical necessity generally refers to services used for the diagnosis, treatment, and cure of a disease or the relief of a health condition, although it may be influenced by state law. It generally excludes care that is investigational or cosmetic. Coverage will consider the extent to which the service is “evidence based,” is generally considered to conform with accepted standards of care, is cost-effective compared with alternatives, and some additional finer points such as the setting in which care is delivered. Notably, this definition is not entirely aligned to support the definition of “health” as proposed by the World Health Organization: “Health is a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.” Such a definition recognizes dimensions of health (such as disease prevention and social determinants of health) that are not captured explicitly in a framework of medical necessity.
Medical necessity criteria offer considerable latitude in how they are created and interpreted. For example, most healthcare decisions are made without the benefit of large, consistent gold-standard studies leaving substantial murkiness as to what is sufficiently proven to represent a standard of care. Treatments not formally approved by a regulatory body (and hence uncovered) may be the only option for life-threatening conditions. Adding to the complexity, guidelines from national societies and other organizations (which may be considered in determining medical necessity) sometimes differ and are not always up to date.
Health plans rely on their own guidelines, or those licensed from third parties, which have been designed to help them control costs. They do not always agree with guidelines that were designed to be used directly by healthcare professionals. This creates a shadow healthcare delivery process. Health plans may make the case that they are not in the business of delivering care, but in reality, controlling what gets paid for is tantamount to having an active role in care delivery.
Conflicts that arise regularly between front-line healthcare professionals, patients (“members,” from payers’ perspective) and health insurance policies are referred to as abrasion. Health plans consider thresholds for abrasion that providers and members will accept and that can help control costs. All of this may be too familiar to anyone who has tried to navigate frustrating utilization management processes such as prior authorization, copayments, deductibles, denied claims, and appeals.
Historically, health plans have operated under the belief that they have an instrumental role in ensuring that only scientifically proven, effective care is delivered, thereby controlling costs and unwanted healthcare variability including inappropriate care. They are right; our current, predominantly fee-for-service healthcare system is supportive of excessive and inappropriate utilization. They are also right in seeking providers to take on more financial risk to help curtail expensive, inappropriate utilization, though adoption of shared risk-taking models has been slow.
The current paradigm has made a major contribution to the dystopia experienced by burned out healthcare professionals and their patients as payment has become the central strategic focus of most healthcare systems, which are struggling with thin operating margins. Electronic medical record systems, clinical documentation platforms, case managers, coding experts, sophisticated revenue cycle software, training of healthcare professionals to maximize billing codes, and aggressive billing practices are some of tools of the tradecraft.
What is being lost? A focus on high-quality care; it needs to be defined, updated regularly, measured, paid for, and, ideally, left in the hands of healthcare professionals caring for their patients. The nation is embarking on accelerated experimentation in new care delivery models as costs continue to rise and the consumer’s experience remains far less than optimal. The experiments are taking place in traditional healthcare systems and with new entrants in retail and virtual care. All must put the focus back on defining and implementing high-quality, consumer-friendly, consistent, and safe patient care while working with the health plans to illuminate the shadows.
Peter Bonis, M.D., is the chief medical officer of Wolters Kluwer Health and adjunct professor of medicine at Tufts University School of Medicine.