Generally, It’s Impossible To Generalize About MH Benefits

Definitions of “medical necessity” vary widely from health plan to health plan and are liable to encompass multiple factors and considerations—only one of which is a clinician’s professional judgment.

And since they are written into proprietary contracts with payers, definitions of medical necessity are rarely available to the public or to clinicians.

Those were among the findings of a report by the Substance Abuse and Mental Health Services Administration (SAMHSA) released last month. The report, “Medical Necessity in Private Health Plans: Implications for Behavioral Health Care,” relied on peer-reviewed medical and health services literature, expert opinion, and state-level investigations and legal settlements regarding medical necessity practices, among other sources.

The study was accompanied by two other reports, also by SAMHSA, on mental health services in managed care, and on Medicaid financing of psychiatric hospitals (Original article: see story above). Together, the three government reports provide an overview of mental health care in the public and private sectors.

The report on mental health services, titled “The Provision of Mental Health Services in Managed Care Organizations,” provides an overview of the private health insurance market and how patients receive mental health services in managed care plans.

The primary source for the report is the 1999 Brandeis University Survey on Alcohol, Drug Abuse, and Mental Health Services in Managed Care Organizations, funded by the National Institute on Drug Abuse and the National Institute on Alcohol Abuse and Alcoholism. The survey collected information from 434 managed care organizations in 60 market areas and was supplemented with additional data analysis and case studies on mental health services from SAMHSA.

Among that report’s findings are the following:

• HMOs are most likely to report using specialty contracts (“carveouts”) with managed behavioral health care organizations (MBHOs).

• About half of products [health care plans] with specialty contracts place the MBHO at some risk if claims costs exceed targeted amounts.

• HMOs are more likely than preferred provider organizations to include performance standards in their contracts.

• A majority of products have annual limits on outpatient mental health visits and on inpatient days, and cost sharing for outpatient visits is notably higher for mental health than for general medical care.

• About half of all products distribute practice guidelines for selected mental health disorders to primary care providers.

The medical necessity report underscores a fact that has been absorbed by many clinicians in the two decades since the advent of managed care, but may still run counter to intuition: criteria for medical necessity are not based solely—or even primarily—on clinicians’ professional judgment.

“What psychiatrists and health care practitioners in general should understand is that insurers are making decisions about medical necessity on the basis of multiple dimensions,” said co-author Brian Kamoie, J.D., M.P.H. “Professional judgment is still very important, but it isn’t the only dimension.”

The most important factor is one that might seem to be obvious enough: whether a service is covered by the contract.

“The primary determinant is the scope of the contract,” Kamoie said. “Whether or not an insurance contract provides any coverage for the service being rendered by a physician takes primacy in the sense that if the contract does not cover a service, it won’t be paid. This has nothing to do with clinical need for the service.”

Contractual scope is just one of five factors that typically go into definitions of medical necessity. These are the others:

• Standards of practice—whether the treatment accords with professional standards of practice.

• Patient safety and setting—whether the treatment will be delivered in the safest and and least-intrusive manner.

• Medical service—whether the treatment is considered medical as opposed to social or nonmedical.

• Cost—whether the insurer considers the treatment cost-effective.

Regulation of medical necessity criteria is rare and not uniform. The SAMHSA report cited 17 states that have definitions, ranging from the broad to the very specific. Accordingly, there are wide differences from health plan to health plan in how medical necessity is defined, Kamoie said.

“They are highly variable,” he told Psychiatric News. “And they are difficult to access because they are typically contained in private contracts, which are usually considered proprietary. Often they are unearthed through litigation.”

Where there is regulation, and liable to be more, is in the area of appeals, Kamoie said. According to the report, 40 states and the District of Columbia had by 2002 enacted external review laws that allow enrollees to appeal health plan decisions to deny, reduce, or terminate care to an independent review organization (IRO). Nearly half of these states have drafted regulations pursuant to statutes established by the IRO.

Kamoie said health plan definitions of medical necessity have evolved in the period since the advent of managed care as health plans have changed the way they review claims.

“It used to be that review was retrospective, after the service was provided,” Kamoie said. “As cost containment became a concern, the industry moved to prospective decision making. That’s where the use of medical necessity has evolved.”

Despite the fact that medical necessity criteria are often not publicly available, Kamoie said that he hopes the findings from the SAMHSA report will inform clinicians in their interactions with patients and with health plans. “Armed with the information that this process is going and that it typically involves the five dimensions outlined in the report, physicians should be able to start asking questions,” he said.

“Medical Necessity in Private Health Plans: Implications for Behavioral Health Care” is posted on the Web at www.mentalhealth.org/publications/allpubs/SMA03-3790/default.asp. This report and “The Provision of Mental Health Services in Managed Care Organizations” are also available from SAMHSA’s National Mental Health Information Center at (800) 789-2647. ▪