Who Defines 'Medical Necessity'?

Many states require insurance to pay for seeing chiropractors. A few cover marriage counseling, and a handful reimburse for massage therapy. Increasingly, health experts rely on the political system to decide what should be reimbursable by insurers, Medicare, and Medicaid. The results haven't been promising for the expanding definition of care.

Lounging on the beach one afternoon, my wife suggested that health insurers be required to reimburse women for breast reshaping after childbirth. After all, we treat delivery as a medical procedure and recommend breast-feeding for the health of infants. Why shouldn't fixing a "side effect" of this necessary biological activity—sagging breasts—also be deserving of insurance coverage? Reconstructive surgery after other medical procedures is reimbursed.

In my gut, something tells me breast reshaping isn't really healthcare. But why? We already reimburse for a broad variety of cosmetic procedures, usually to fix a congenital deformity, an injury, or the effects of a disease. And no one disputes that breast reconstruction after a mastectomy is a reimbursable procedure, even though its primary function is cosmetic.

We have a vague definition of medical necessity in the back of our minds: if the mastectomy was necessary, doesn't that mean the reconstruction is, too? Should we pay for prosthetic limbs only if they are functional, or are cosmetic attributes alone worthy of reimbursement? If cosmetic surgery helps a woman develop greater self-esteem or avoid postpartum blues, wouldn't it serve the same purpose as an antidepressant? And following that logic, shouldn't it be reimbursed just like a prescription?

Increasingly, health experts rely on the political system to answer the difficult questions of what should be reimbursable by insurers, Medicare, and Medicaid, but the results haven't been promising in terms of consistency or principle, not to mention control over the expanding definition of care. The fifty states have imposed on health insurers more than 2,000 mandates—requirements to reimburse certain procedures—and the regulations required by the Affordable Care Act will include additional mandates on a national level.

Many of these mandates cover treatments that used to be thought of as cosmetic, optional, or at the very least not medically necessary. In 2008, ten states required coverage for hair prostheses; thirteen for in vitro fertilization. Thirty-one mandated contraceptive reimbursement. Forty-six required reimbursement for the services of chiropractors; fourteen for marriage counselors; and four for massage therapists. Arizona mandated the cost of athletic training. The issue isn't whether any or all of these treatments are good or useful: the question is whether we should all be required to pay for some who want them.

Deepak Chopra has said that insurers should cover meditation classes: "If insurance companies paid for lifestyle-management classes, they would save huge sums of money." Almost every request for a new mandate claims it will save money, yet the amount we spend on care keeps rising. But Chopra's comment illustrates the fundamental principle we now apply to judging whether something should be reimbursed: Not, Is it worth the money? But, Is it good for us?

The traditional understanding of healthcare is that people get sick and medicine provides a cure. Today, that order is often reversed. With society's willingness to pay for ever more care—a willingness demonstrated by the 45-year increase of our spending from $42 billion to more than $2.5 trillion—much of the innovation in healthcare is now about the simultaneous search for new treatments and new conditions that require these treatments. It's not that these new conditions are somehow fake illnesses. Rather, illness is increasingly recognized and often only named when a treatment becomes available.

Erectile-dysfunction (E.D.) medications have all the trappings of healthcare. They require prescriptions written by licensed physicians. They look like any other type of medicine, packaged in the iconic plastic prescription bottles. Medicare (and sometimes Medicaid) and many private insurers will cover E.D. drugs; Viagra and its competitors can legitimately be expensed against tax-advantaged flexible spending and health savings accounts.

Viagra is a classic example of why we seem to need more healthcare even as we get healthier. Before the treatment was available, most male impotence was seen as a consequence of age. Don’t get me wrong: Improving the sex lives of older males is a clear social good. But when we first decided to subsidize all healthcare expenses, would we have considered this problem a health issue?

As we've expanded our willingness to pay for care—through private actions and government support—healthcare as an industry has met the challenge. It's proved able to absorb our trillions in additional dollars by charging higher prices, convincing us that more expensive options provide better results, and expanding our definitions of "need." In other words, healthcare has done what any industry does to increase its market and revenue base in the face of rising consumer demand.

But healthcare as an industry isn't quite like consumer products or automobiles or food. Sure, Procter & Gamble, Ford, and General Mills try to grow by raising prices, introducing new and improved versions of existing products, and extending their product lines. But they must do so in a constant give-and-take with the consumer, overcoming natural consumer resistance to spending more money; what makes healthcare unique is the absence of this consumer in the equation. So healthcare companies can raise prices, introduce "better" products, and expand the definition of what your health requires without the typical consumer resistance—without needing to prove that a new product is worth a high price.

Presented by

David Goldhill is the president and chief executive officer of the cable-television network GSN, and the author of Catastrophic Care: Why Everything We Think We Know About Health Care Is Wrong.

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