Medical Necessity and External Review
What is medical necessity?
Wyoming state law provides little guidance to the definition of "medical necessity." There are some references in laws concerning Worker's Compensation and children's health insurance. Otherwise, most definitions of medical necessity are in individual health insurance policies.
Consumers have a general understanding of what "medical necessity" means: it is a service or product ordered by their health care provider, who considers it necessary to treat a health problem. They rely on the judgment of their health care provider to make that determination. They may be surprised to learn that, without a definition in state law, interpretation of the term "medical necessity" may be left to the sole discretion of the medical directors of health insurance companies.
Why do we need a definition of Medical Necessity in Wyoming law regarding health insurance?
The definition of medical necessity is very important, because insurance companies will use that definition in
their determination of whether to pay or deny benefits. When people buy health insurance, they should know
what to expect from the coverage of "medically necessary" services in the policy they are buying. The insurance policy is a contract and all parties involved should understand basic provisions of the agreement. Conflicts arise when insured individuals and their health care providers disagree with insurance companies about what is, in fact, medically necessary for their situation. As a result, a definition written into state law would help consumers know what benefits they could reasonably expect to receive and what benefits would be denied or challenged by insurance companies on the basis of medical necessity. Some disputes over medical necessity are inevitable, but a definition in law would make claims review a more predictable process for consumers and would assure them the process was not arbitrary. The state has a legitimate interest in making sure basic consumer rights are protected in provisions of health insurance policy language. This is an appropriate oversight duty of state regulators. Eighteen states have put a definition of medical necessity in their statutes and regulations.
Elements of a definition that should be considered by Wyoming policy makers:
1. Medical necessity is determination based on sound medical judgment and that is safe and effective if utilized in the manner prescribed.
2. The definition should provide an appropriate consideration for approval based on current peer reviewed science available regarding the requested treatment, service or supply and whether or not these items are approved by Medicare.*
3. The definition should be considered in concert with a mandated requirement for external review of denied benefits, banning of discretionary clauses, and a requirement to use case management in complex cases, for instance cancer treatment.
Examples of definitions of Medical Necessity:
Medical Necessity or Medically Necessary means health care services that are consistent with generally accepted principles of professional medical practice as determined by whether the service:
1. Is the most appropriate available supply or level of service for the insured in question considering potential benefits and harms to the individual; or
2. Is shown to be effective, based on scientific evidence, professional standards and expert opinion, in improving health outcomes; or
3. For services and interventions not in widespread use, is based on scientific evidence.
District of Columbia:
Medically Necessary care - means care which, in the opinion of the treating physician, is reasonably needed to (I) prevent the onset or worsening of an illness, condition, or disability; (II) establish a diagnosis; (III) provide palliative, curative, or restorative treatment for physical and/or mental health conditions; and (IV) assist the individual to achieve or maintain maximum functional capacity in performing daily activities, taking into account both the functional capacity of the individual and those functional capacities are appropriate for individuals of the same age.
"Peer reviewed medical literature" means scientific studies published in at least two articles from major
peer-reviewed medical journals that present supporting data that the proposed use of a drug or device is safe and effective.
What is external review?
The External Review Process allows a consumer who had been denied coverage a chance to have a neutral medical expert review the facts of his case. It is not unusual for an insurance company and a consumer to disagree about what is covered under a policy, so this neutral person is referred to as an “independent review agent.”
According to educational materials published by one state that offers external review, “The consumers and their providers can challenge the carrier’s denial of medical coverage. The external review process provides the opportunity to have an external resource—or as we refer to it—’an independent review agent’ examine the files involved in a denied medical claim. The independent review agent—a certified specialist in his or her field—has the authority to make a determination as to whether the medical claim should be covered.
In Wyoming, we do not require an external review process when there is a disagreement between the consumer and the insurance carrier. Our group, the Coalition for Wyoming Insurance Solutions in Healthcare (C-WISH), is interested in this issue because we believe that some Wyoming insurance consumers have suffered unnecessarily both emotionally and physically. We are concerned about patients who were either denied treatment or were burdened with medical bills which should have been paid by their insurance carriers.
How does the External Review Process work?
Generally, if the consumer is denied coverage for services that both the consumer and the healthcare provider (a doctor, physician’s assistant or advanced practice nurse, for example) believe are of a medical necessity, then there is an appeal process which governs the state’s insurance division. The consumer can request a review for these five services: hospitalization, surgery, mental health and substance abuse, physical therapy and outpatient services.
More information about External Review:
· Our research shows that forty-five states plus the District of Columbia mandate External Review as a patient’s right.
· Legislators should be interested in external review because the process helps to avoid litigation.
· The President’s Advisory Commission on Consumer Protection and Quality in the Health Care Industry recently concluded that all consumers should have a right to a fair and efficient process to resolve disputes with health plans, providers, and institutional, serving the, including a rigorous system of internal review and an independent system of external review.
What was the final version of the bill that was signed into law?
Here is the link to the PDF file of Senate File 95 (Senate Enacted Act 35) that Governor Fruedenthal signed into law on March 02, 2009:
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