Pa. Glassman et al., MEDICAL NECESSITY AND DEFINED COVERAGE BENEFITS IN THE OREGON-HEALTH-PLAN, American journal of public health, 87(6), 1997, pp. 1053-1058
The policy debate in Oregon has primarily focused on the Prioritized L
ist of Services. However, little information is available on how defin
ed coverage benefits and managed care affect the role of medical neces
sity in determining care for Medicaid patients. This issue is importan
t because medical necessity determinations are currently used by many
states to limit extraneous health care costs but require resource-inte
nsive oversight, are open to wide variance, and frequently prompt liti
gation challenging interpretations of what is necessary and what is no
t. The qualitative study described here addressed whether medical nece
ssity remains a salient and useful concept in the Oregon Health Plan.
Our results indicate that defined coverage benefits, as described by t
he funded portion of the Prioritized List of Services, supplant medica
l necessity determinations for coverage, while managed care incentives
Limit the need for medical necessity determinations at the provider l
evel. Clinical choices are, for the most part, guided by providers' ju
dgment within the financial constraints of capitation and by targeted
use management techniques. The combination of capitated care and Orego
n's defined coverage benefits package has marginalized the use of medi
cal necessity, albeit with consequences for state oversight of Medicai
d services.