Government News
`Medical Necessity' Definition Could Set Harmful Precedent
Psychiatric News
Volume 39 Number 16 page 1-34

Tennessee state officials have developed a definition of the term" medical necessity" that could weaken federal requirements concerning access to care through its Medicaid program called TennCare.

At the urging of Gov. Phil Bredesen (D), the legislature passed a bill in May that would result in copayments of $1 to $40 for certain services for most beneficiaries, cap coverage at six prescription drugs a month, and require most beneficiaries to use the cheapest prescription drugs available. It would also limit days of hospitalization and doctor's visits annually, according to<www.kaisernetwork.org> (June 30).

Before implementation, those changes must be approved by the Centers for Medicare and Medicaid Services (CMS) as a waiver.

The limitations proposed are not new, although the combination exceeds the cost cutting measures undertaken in most states.

The real threat to access, notes the National Health Law Program (NHLP), is the unprecedented definition of "medical necessity" contained in the legislation. The NHLP is a public interest law firm in Washington, D.C., that focuses on health issues for the poor.

The new definition contains four parts, all of which must be met for the patient to receive care.


Peter Frizzell, M.D., president of the Tennessee Psychiatric Association, told Psychiatric News that there was concern among psychiatrists about the proposed definition.

Karen Rhea, M.D., vice president for medical services for Centerstone, gave Psychiatric News the following statement. Centerstone is a multisite community mental health center in Tennessee.

"The rising role of the uninsured defines our national health care crisis. Tennessee through TennCare has approached more closely than any other state, except Hawaii, the goal of universal health insurance coverage. We do understand, however, that there are budgetary constraints, which will precipitate tradeoffs between coverage and scope of benefits.

"We are especially concerned about the patient population with serious and persistent mental illness and their potential for recovery with continued access to cutting edge pharmacotherapy and efficacious psychosocial services. However, we are cautiously optimistic and have been promised the opportunity to participate as providers in the dialogue, which will define the working details of medical necessity."

Forensic psychiatrist and former APA president Paul Appelbaum, M.D., identified several problems with the proposed definition (see box).

David Fassler, M.D., a child psychiatrist in Vermont and member of APA's Board of Trustees, told Psychiatric News, "The proposal appears particularly problematic with respect to child and adolescent psychiatric treatment. Under the revised definition of medical necessity, many of our routine clinical interventions would be classified as `experimental' and thereby excluded from coverage. In an attempt to save money, the legislation would create barriers to access. Whatever modest savings might be achieved likely will be more than offset by increased spending on special education, juvenile justice, and social service programs.

"In addition, while the legislation purports to emphasize `evidence-based medicine,' it imposes random and arbitrary limits on monthly prescriptions and annual visits, procedures, or lab tests. The primary emphasis clearly is on cost containment, as opposed to access to necessary and appropriate clinical services."


Ron Pollack, executive director of Families USA, and other health care advocates fear that approval of the definition by the CMS eventually could result in a weakening of federal requirements nationally concerning care for Medicaid beneficiaries.

Senate Majority Leader Bill Frist (R-Tenn.) backs the change, according to an article in the July 7 USA Today.

Reporter Skip Cauthorn speculated in the Nashville City Paper on July 6 that the proposal would be particularly appealing to Republicans as a way of setting a precedent because it was developed by a Democratic governor and supported by a Democratic state legislature.

The Bush administration, in early 2003, proposed changes to Medicaid that would have given states greater flexibility in terms of cutting beneficiaries and services in exchange for a short-term infusion of funds. The proposal was withdrawn when it failed to secure support from the National Governors Association (Psychiatric News, March 7, 2003). ▪

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