HMO Group’s “Model Language” for Medical Necessity Hurts Consumers

Published on

Legislation To Ensure Only Doctors Who Examine Patients Make Decisions

The “Model Contractual Language for Medical Necessity,” released today by a group of medical theorists and HMO executives meeting at Stanford, clearly demonstrates the marks of its parentage, Consumers For Quality Care said today. If, as intended, the language were to be adopted by HMOs and inserted into their adhesionary contracts, patients would be even worse off than they are now.

Consumers For Quality Care has sponsored state legislation — SB 18 (Figueroa) — to ensure that if a doctor recommends treatment for a seriously ill patient, then an HMO must produce another equally qualified doctor who examines the patient before denying care.

“Only doctors who examine patients should be determining medical necessity, not a group of HMO executives sitting around a conference room table,” said Jamie Court, director of Consumers For Quality Care, a national health care watchdog project of the Santa Monica-based Foundation For Taxpayer and Consumer Rights. “This proposal is of the Blue Crosses, by the Kaisers, and for the United Health Cares.”

The model language may be considered by legislators who are proposing mandating definitions of medical necessity for state licensed plans. Below is a critique of a just a few of its dangerous provisions:



There is no requirement that the Medical Director or his designee have at least the training or qualifications of the doctor whose decision they are over-ruling, nor is there any requirement that they be free of conflicts of interest, such as direct or indirect financial benefit from treatment denials. By giving final discretion to administrators, this clause also assures that a subsequent independent tribunal will not review the decision on its merits, but reverse it only if it was arbitrary and capricious.



“Appropriate” level of service is undefined, and is susceptible to self-serving interpretations. History has demonstrated that if such interpretations CAN be made, they WILL be made. The Administrator may consider potential benefits and harms to the patient. Is no consideration to be given to his preferences or life-style requirements?

If a man with prostatic hypertrophy and urinary obstruction can be “treated” with an chronically indwelling urethral catheter, is it “appropriate” to do expensive surgery which will enable him to regain a normal life-style?



The evidence must show that the procedure is “Known” to be effective. Known By whom? No mention is made of who has the responsibility of searching the literature and presenting the case to the review board. Now it is often the patient who has this responsibility.

There is also no mention of who has burden of proof. Burden should be on the non-treating reviewer to prove that the decision of the treating doctor is medically unnecessary.

What level of proof is required? This is also subject to manipulation. HMOs now often cover cheap, unproven “natural” remedies, while excluding better proven but more expensive scientific ones. The definitions here could well curtail the use of new treatments, by being a surrogate for cost control.

The hierarchy of evidence of footnote 7 has the same problem. In the absence of an adequate double-blind study, MUST the HMO consider anything further, such as widespread community practice, or are they free to do whatever is cheapest?



“Cost-Effective” has no place in an analysis of Medical Necessity. It is a financial and administrative analysis that must be separate. Is there any way that spending one cent on saving the life of someone no longer in the workforce could be considered “cost-effective”? Is this just a euphemism for rationing?

If a patient with an inguinal hernia could be cheaply treated by making him wear a truss for the rest of his life, is it cost-effective to do a surgical repair? Who should decide?

Cost-effective for what? No mention is made of alternative uses of the money to be saved by denying a procedure. May it be used for executive salaries and dividends, or must it be used for other medical care. Should the same criteria be used in each case?

What about promptness of treatment? How long may a member be left with a painful or inconvenient medical condition before an ‘elective’ corrective procedure is scheduled? Long waiting lists are cheaper than capital expenditures. Is cost-effectiveness an admissible excuse for a 4 year wait for an elective hemorrhoidectomy? No mention, in fact, is made of trade-offs of effectiveness, speed of action, safety, cost, side-effects, cure, morbidity, etc.


Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Articles

In The News

Latest Report

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More articles