Utilization Review and Medical Necessity in Healthcare

There are two trends which are shaping how health care is being managed in the country as manifested in the actions of providers and medical practitioners. One trend is the use of utilization review which includes presentation, prospective and simultaneous review system in the allocations of health care resources evaluated for necessity and appropriateness of corresponding services. Its main point is to provide health insurance and governing regulations with the vision of providing universal coverage.

Utilization review also covers medical health care services and specific surgery services that are supposed to be given to the patients that may possibly be covered by a health care insurer. The health care insurer reviews the availability of contract benefits and applies clinical guidelines to medical circumstances of individual patients. After the review, physicians are informed of the results and encouraged to make judgments from the perspective of medical necessity and not according to terms stipulated in the health coverage.

An undesirable decision may result in such a manner with the patient foregoing the recommended procedure altogether because the basis of decision is according to the provision of the insurance or health care package and not on the medical conditions of the patients. A utilization review judgment is most often based on clinical guidelines. The clinical guidelines also known as clinical pathways clearly stated that, “The final decision for treatment for specific individuals should be made only in conjunction with the application of professional medical judgment”.

Originally, these guidelines were developed by academic institutions in an effort to aid in the education of house staff and medical students. Washington Manual of medical Therapeutics is actually one of the famous and most comprehensive of these pathways. Through time, the practice has spread and is becoming the standard in the health care industry. Medical necessity meanwhile, means diagnosing or treating an injury or sickness to the required extent. It is the shortest, the least intense and inexpensive level of treatment, care or rendered services.

The medical situation of insured patients should be considered at the time the service or supply is rendered and should not be based on the criteria for convenient indemnification of the medical provider. The term medical necessity whenever used in the medical profession is taken in the context of evaluating or treating patients, out of the necessity of providing medical care. Medical necessity however has been equated with the catchphrase “at the lowest cost” raising the concern that third party payer are basing their payments on medical necessity determination which lowers the standard of medical service being provided.

Medical necessity is also directly related to health care products or services including diagnosis and treatment of specific illness, symptom, complaint, or an injury. Most medical programs consider only health care items and services that are necessary for improving or maintaining the beneficiaries’ health. The Social Security Act Section 1862(a)(1) forbids or does not cover payments that are not reasonable and necessary for treatment of an illness or an injury. This prevents abuse of the health care program.

Medical organizations and medical carriers are in general guided by certain criteria in determining medical necessity as well as determining specific items and services applicable to the patients under treatment. As a whole these criteria formulated are consistent with the accepted professional medical standards of providing the most appropriate level of convenience, safety and effectiveness. Over the years, most private insurers have aligned their view on medical necessity along the precepts of medical practice and prevailing standard of health care.

Specified processes and review criteria are used to determine medical necessity in which clinical peer to peer review is the accepted norm. But some hospitals encounter many problems associated with clarifying the criteria of medical necessity. This confusion led to a Federal Law to make the utilization review of the hospital obligatory. This utilization review is conducted for the purpose of efficient use of available health facilities with respect to the health necessities.

To improve the health care organization’s ability in making utilization decisions, written criteria are mainly used and developed with the cooperation of attending physicians and medical doctors. These written criteria are typically based on some clinical evidences and practices. The health care organizations also included some procedures to apply these criteria to clearly determine medical necessity. Health care organizations allow health care providers to innovate and adapt to new ideas on health care.

Physicians engaged in continuing education, which includes conferences and committee work with the objective of coming up with better patients care and while minimizing possible errors and mistreatments. Medical necessities are being addressed by evaluating all of the health care interventions and its outcome. Utilization review has had the most direct impact on patient care and is often linked with treatment protocols or code of behavior with the most potential and offers the most promising treatment decision standard.

Clarification and adaption of criteria to determine medical necessity and the utilization review being adapted by the health care industry. Medical necessity defines the minimum medical requirement while utilization review assesses the tenability of providing the corresponding medical service. While there is the danger of interpreting medical necessity in terms of cost and not in terms of the patient’s well being, medical necessity standards and utilization reviews are creating an impact in rationalizing the health care delivery system for the benefit of the patients through improved quality and efficiency in service delivery.


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