Medical necessity and the law

One more thing about that paper by Baicker and Chandra I blogged about this morning, this bit caught my eye:

U.S. corporate laws also make it difficult for individual insurers and hospitals to reduce the use of technologies with variable payments: insurers and hospitals are not permitted to interfere with the medical judgment of physicians.  State laws also require insurers to pay for any service deemed medically necessary by a physician.

Since there was no citation at the end of this passage, I didn’t know where to look for the support. By email, Chandra pointed me to a 1997 paper by Einer Elhauge (ungated PDF).

As a matter of state insurance law, courts have held that an insurance con-tract cannot define “medically necessary” to exclude beneficial care normally provided by medical providers. Courts have also refused to enforce contract provisions giving insurers the power to decide what procedures are “medically necessary.” […]

Courts read any contractual ambiguity against the insurer. This has always been true as a matter of state insurance law. […]

The real battleground has been over denials of coverage for “experimental” treatments, and even there insurers often lose even if a treatment has no proven health benefit at all. […]

When an insurer responds by making the exclusion more specific and detailed, courts have still denied enforcement on the grounds that the detail makes the exclusion too complex and technical for insureds to understand. […]

The hospital’s legal duty is to provide the services the physician orders or the support the physician needs to perform the services herself. No matter what cost pressures they might be under, hospitals have little legal power to interfere with the judgment of treating physicians. […]

As a result studies find, not just legally but in actual practice, that “hospitals must cater to physicians’ desire for new technology.”

Nor is there much difference when physicians are hired as employees. [Citations omitted.]

This echos the 1993 paper by Ferguson, Dubinsky, and Kirsch. But both papers are relatively old. Is it still the case that US and state laws make it impossible for insurers and hospitals to control the use of health technologies? If so, this is a substantial problem for translation of comparative effectiveness research (CER) into practice. It seems that physicians, as well as hospitals and insurers, would need some legal safe harbor to put CER to use. Who is thinking or talking about this? Anyone?


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