Medicaid Managed Care - U.S. Senate Special Committee on Aging

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Responsibility for most home health skilled interventions and therapies was shifted
to managed care plans. During the early phase of implementation, HMOs applied a
"medically necessary" threshold to what they saw as overutilization. When services
were reduced or terminated because they did not meet the medically appropriate
criteria, beneficiaries complained. To help clarify the difference between fee-forservice
practice, the supportive philosophy of the long term care system and
managed care authorization based on medical necessity, Oregon has introduced the
term "medically appropriate" which means a service is needed because of the
medical condition though it may not be directly related to treatment of a medical
condition. This clarification was expected to increase access to home health benefits
as a <strong>Medicaid</strong> service.
In 1997, the Maine Department of Human Services proposed the "MaineNet"
demonstration program, which will phase in the integration of acute and long term
care services, using the following definition of medical necessity.
Medically necessary means a services that is consistent with a beneficiary's
diagnosis or condition and:
* Is appropriate and effective for the diagnosis and treatment of pain,
illness, disease or injury;
* Includes preventive services that avoid or minimize the occurrence of
pain, illness, infection, injury, disease, disability or other health
condition; or,
* Maintains or improves functional quality of life or minimizes the
deterioration of progressive disease.
The definition of medical necessity is particularly important for vulnerable
populations if the long term care benefits are not included in the scope of service
and the capitation payment. This creates a requirement for managed care plans to
make referrals to the long term care system when services may not meet strict
medical necessity definitions yet they may be effective in preventing deterioration
or reducing risk. Regardless of the definition of medical necessity, a plan may
provide additional services at its discretion, and many do so. Of course, the
application of the definition of medical necessity is closely tied to projected
utilization and the capitation rate.
Highlights
* It is important to program success that the array of providers in plan
networks is suitable to the needs of the population to be served and the
scope of covered benefits.
The National Academy for State Health Policy 0 0 8/97 IV-32