The "Medical Necessity Requirement" in Medicaid
Tim Sindelar, Disability Law Center, Boston, MA
Copyright © 2002 Disabilty Law Center,  All rights reserved.

The Medicaid Act does not define "medically necessary." ¹ The Supreme Court in Doe v. Bolton, 410 U.S. 179, 35 L. Ed. 2d 201, 93 S. Ct. 739 (1973) provided some indication of the meaning of this term when it struck down portions of a Georgia law as unduly burdening the constitutional right of privacy outlined in Roe v. Wade, but upheld a portion of the statute banning abortions that an attending physician determined to be unnecessary. The Court held "whether . . . an 'abortion is necessary' is a professional judgment that . . . may be exercised in the light of all 'factors -- physical, emotional, psychological, familial, and the women's age -- relevant to the well being of the patient.' All these factors may relate to health. This allows the attending physician the room he needs to make his best medical judgment." Doe v. Bolton, 410 U.S. at 192.

Although each state is allowed to develop its own definition of medical necessity for operation of the Medicaid program in the state, there is a striking similarity in the definitions that have been adopted across the county. See Lew Golinker’s Study of Medicaid Medical Necessity Regulations.

A. Amount , Duration, Scope Requirement

42 USC 1396a(a)(10)(B) states that the medical assistance made available to categorically needy individuals "shall not be less in amount, duration, or scope than the medical assistance made available to any other such individual." This section is implemented by 42 C.F.R. § 440.230:

"[e]ach [medical] service must be sufficient in amount, duration, and scope to reasonably achieve its purpose (c) The Medicaid agency may not arbitrarily deny or reduce the amount, duration, or scope of a required service ... to an otherwise eligible recipient solely because of the diagnosis, type of illness or condition. (d) The agency may place appropriate limits on a service based on such criteria as medical necessity or on utilization control procedures."

Many courts have found this requirement to create an enforceable right under §1983, see, e.g.: Rolland v. Cellucci , 52 F. Supp. 2d 231 (D. Mass. 1999); Parry v. Crawford, 990 F. Supp. 1250 (D. Nev. 1998); Greenstein v. Bane, 833 F. Supp. 1054 (S.D.N.Y. 1993).

However, the exact scope of this provision is not clearly established. In Beal v. Doe, 432 U.S. 438, 97 S. Ct. 2366, 53 L. Ed. 2d 464 (1977), the Supreme Court stated that "[n]othing in the [Medicaid] statute suggests that participating States are required to fund every medical procedure that falls within the delineated categories of medical care." Rather, the statute "confers broad discretion on the States to adopt standards for determining the extent of medical assistance, requiring only that such standards be 'reasonable' and 'consistent with the objectives' of the Act." Id. The Court suggested without elaboration that "serious statutory questions might be presented if a state Medicaid plan excluded necessary medical treatment from its coverage." Id.

In Alexander v. Choate, 469 U.S. 287, 105 S. Ct. 712, 83 L. Ed. 2d 661 (1985), the Supreme Court further clarified the boundaries of state discretion in Medicaid coverage. There, a group of disabled Medicaid recipients challenged Tennessee's new 14-day limit on inpatient hospital stays on the ground that the limit violated the Rehabilitation Act because it disproportionately affected disabled persons and denied them meaningful access to Medicaid benefits. The Court, in its Rehabilitation Act analysis, found that Tennessee's decision to limit the number of hospital days did not deny disabled persons meaningful access to state Medicaid services because they could take advantage of the covered 14 days just as easily as non-disabled individuals. The Court noted that the Medicaid statute gave "the States substantial discretion to choose the proper mix of amount, scope, and duration limitations on coverage, as long as care and services are provided in 'the best interests of the recipients,'" id. at 303, 105 S. Ct. at 721 (quoting 42 U.S.C. § 1396a(a)(19)), and that the 14-day limitation was in the best interests of the recipients because, as the district court found, 95% even of the disabled individuals eligible for Medicaid were fully served even with this limitation.

The First Circuit has determined that the provision "reflects the Congressional preference accorded the categorically needy;" and that "they are to receive assistance first and in no less a comprehensive form because they are ‘persons whom Congress considered especially deserving of public assistance.’" Massachusetts Association of Older Americans et al v. Sharp, 700 F.2d 749 (1^st Cir. 1983) citing Schweiker v. Gray Panthers, 453 U.S. 34 at 37 (1981.) The court in King v. Sullivan, 776 F. Supp. 645, 653 (D.R.I. 1991) stated that 42 U.S.C. § 1396a(a)(10)(B) does not, on its face, require states to provide the same level of services to everyone receiving Medicaid. Instead, the statute "sets forth a requirement that the 'categorically needy' receive at least the same level of protection as the 'medically needy,' and that 'categorically needy' individuals receive equal treatment vis-a-vis each other."

In Rolland v. Cellucci, 52 F. Supp. 2d 231 (D. Mass. 1999) Magistrate Neiman found that the plaintiffs had pled a cognizable claim of a violation of the comparability provision in asserting that individuals with similar disabilities in ICF-MRs were receiving more services under Medicaid than were individuals in nursing homes. In a broad reading of this provision, the Court stated:

The comparability provision requires that all Medicaid services, except those services provided under the HCBW program be furnished equitably. Accordingly, similarly situated individuals, whether they be categorically needy--that is, receiving Supplemental Security Income as claimed with regard to the entire plaintiff class--or medically needy, must receive comparable services. 42 U.S.C. § 1396a(a)(10)(B); Schweiker v. Hogan, 457 U.S. 569, 573-74, 102 S.Ct. 2597, 73 L.Ed.2d 227 (1982). Some courts have also held that the comparability provision is violated if there is a disparity of treatment among the categorically needy even when those individuals have differing disabilities. See White v. Beal, 555 F.2d 1146, 1151-52 (3d Cir.1977); Parry By and Through Parry v. Crawford, 990 F.Supp. 1250, 1257 (D.Nev.1998). See generally Sobky v. Smoley, 855 F.Supp. 1123, 1140-41 (E.D.Cal.1994) (citing cases).

Id at 238. The Court also found the plaintiffs’ situation to be essentially the same as that of the plaintiffs in Sobky v. Smoley, 855 F. Supp. 1123 (E.D. Cal. 1994):

"[a]t the very core of both Sobky and Plaintiff’s claims here are allegations that the respective states failed to provide certain necessary services. In particular, Plaintiffs claim that individuals residing in ICF/MRs receive active treatment to prevent them from losing certain important skills, while those individuals residing in nursing facilities are not receiving ample services. (Am.Compl.¶ 52, 72-78.) Similarly, Plaintiffs contend that the state excludes eligible individuals with cognitive as opposed to physical disabilities from its Personal Care Attendant ("PCA") services. (Am.Compl.¶¶ 62-66.) At bottom, Plaintiffs' complaint supports a cognizable claim of a violation of the comparability provision of Medicaid.

Id at 239.

B. Best Interests - 1396a(a)(19)

A state medicaid plan must "provide such safeguards as may be necessary to assure that eligibility for care and services under the plan will be determined, and such care and services will be provided, in a manner consistent with simplicity of administration and the best interests of the recipients." 42 U.S.C. § 1396a(a)(19). This provision has generally not been helpful to Medicaid recipients seeking to overturn state limitations on medically necessary care.

See, Alexander v. Choate, 469 U.S. 287, 303, 105 S. Ct. 712, 721, 83 L. Ed. 2d 661 (1985)

In general, this requirement has not been found to create a federal right enforceable under §1983. See : Harris v. James 127 F. 3d 993 (11^th Cir. 1997); Cook v. Hairston, 948 F.2d 1288 (6^th Cir. 1991); Stewart v. Bernstein, 769 F2d 1088 (5^th Cir. 1985); Graus v. Kaladjian, 2 F. Supp. 2d 540 (S.D.N.Y. 1998);and Wood v. Wallace, 825 F. Supp 177 (S.D. Ohio 1993) .

C. Early and Periodic Screening, Diagnosis, and Treatment (EPSDT)
     Services

Medicaid mandates a separate program to provide for the "Early and Periodic Screening, Diagnosis and Treatment" (EPSDT) of children and young adults under the age of 21. 42 USC §1396a(a)(43); 42 USC §1396d(r). A state’s EPSDT program must provide for an array of services, including a comprehensive screening program, to include medical history, physical examination, immunizations, laboratory services, health education and vision, dental and hearing screening.

In addition, the state agency must provide for "[s]uch other necessary health care, diagnostic services, treatment, and other measures . . . to correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services, whether or not such services are covered under the state plan. " 42 USC § 1396d(a)(4)(B). 42 USC §1396a(a)(43)(C) requires "arranging for (directly or through referral to appropriate agencies, organizations, or individuals ) corrective treatment the need for which is disclosed by [EPSDT] child health screening services."

The EPSDT provisions of the Medicaid act have been found to be enforceable in decisions by the 7th Circuit Court of Appeals, and in several district courts. See, Miller v. Whitburn, 10 F.3d 1315 (7th Cir. 1993); Benjamin H. v. Ohl, No 3:99 -0388 (S.D. W. Va. July 15, 1999); Wellington v. District of Columbia, 851 F. Supp. 1 (D.D.C. 1994). But see, contra: Charlie and Nadine H. v. Whitman, 83 F. 3d 476 (D.N.J. 2000) and Westside Mothers v. Haveman, 133 F. Supp.2d 549, 561-562 (E.D. Mich. 2001), appeal pending.

In Bond v. Stanton, 655 F 2d 766 (7th Cir. 1981) the Seventh Circuit found not only that EPSDT gives rise to a cause of action under § 1983, but that EPSDT imposes requirements additional to those of the regular Medicaid program and that it is "intended to produce results." The Court stated that "a failure to implement the treatment aspect of EPSDT unquestionably results in a failure of the entire program. Detection alone is meaningless without the appropriate follow-up." With respect to screening services, the Court found that theoretical availability of providers to perform the screenings was insufficient. Giving at most a list of providers who may or may not perform the screens was held to be inadequate. In Miller v. Whitburn, 10 F. 3d 1315 (7th Cir. 1993) the Court found it "clear" that the plaintiff was entitled to provision of medically necessary services under EPSDT

Similarly, Doe v. Pickett, 480 F. Supp 1218 (S.D. W. Va. 1979) found that EPSDT imposes on states an "affirmative obligation to see that minors actually receive the necessary services." See, also: Bach-Tuyet Tran v. Concannon, No. 99-CV-227-B-H (D. Me. Nov. 5, 1999)(settlement agreement) (Settlement agreement that when EPSDT preventive and diagnostic services are provided, the Department will pay the full amount allowed for the claim and seek reimbursement from any liable third party to the limit of legal liability, that the Department shall clarify "extenuating circumstances" when Medicaid recipients need not utilize third-party HMO coverage, and that the Department would develop easily understood written information on the rights and responsibilities of Medicaid recipients regarding third-party insurance.)

A. Durable Medical Equipment / Assistive Technology

Hunter v. Chiles, 944 F. Supp. 914 (S.D. Fla. 1996) ( Florida may not deny coverage of augmentative communication devices and services (ACDS) as durable medical equipment under its home health service program for its adult Medicaid recipients and whether Florida may deny coverage of ACDS for those under twenty-one (21) because of speculation that other payors may exist.

Ledet v. Fischer, 638 F. Supp. 1288 (M.D.La. 1986) (state cannot limit eyeglasses services only to postcataract surgery patients).

B. Experimental

Miller v. Whitburn, 10 F.3d 1315, 1321 (7th Cir. 1993) (stating that a participating state may deny coverage for experimental treatments so long as its definition of "experimental" and its application of the restriction are reasonable).

Smith v. Office of Civilian Health and Medical Program of the Uniformed Services, 97 F.3d 950 (7^th Cir. 1996) (decision of Office of Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) to treat high dose chemotherapy with peripheral stem cell rescue (HDC/PSCR) as still experimental at time it denied coverage was not arbitrary where there was significant, ongoing dispute in medical community over efficacy of HDC/PSCR as applied to treatment of breast cancer)

Wilson v. Office of Civilian Health And Medical Programs of The Uniformed Services (Champus), 65 F.3d 361 (4^th Cir. 1995) (CHAMPUS' determination that HDC/PSCR was experimental and investigational procedure excluded under CHAMPUS policy was arbitrary and capricious)

But see: Gripkey v. Mail Handlers Benefit Plan, No. 3:94-378-0, 1994 WL 276265 (D.S.C. Feb.14, 1994) (unpublished), Hawkins v. Mail Handlers Benefit Plan, No. 1:94CV6, 1994 WL 214262 (W.D.N.C. Jan.28, 1994) (unpublished), and Wheeler v. Dynamic Engineering, Inc., 850 F.Supp. 459 (E.D.Va.1994), aff'd, 62 F.3d 634 (4th Cir.1995). (all enjoining CHAMPUS from denying coverage for HDC/PSCR treatment)

For CHAMPUS, the term "experimental" is defined as:

Medical care that essentially is investigatory or an unproven procedure or treatment regimen (usually performed under controlled medicolegal conditions) that does not meet the generally accepted standards of the usual professional medical practice in the general medical community. 32 C.F.R. § 199.2(b).

C. Transplants

Miller v. Whitburn, 10 F.3d 1315 (7th Cir. 1993) ( Request for liver-bowel transplant for five year old suffering from a condition known as "short-bowel syndrome. "The Department has significant discretion to decide which treatments to cover." Remanded to the district court to decide only whether the Department's determination that the liver-bowel transplant procedure is experimental is reasonable.)

Allen v. Mansour, 681 F. Supp. 1232 (E.D.Mich. 1986) ( State can not deny funding for a liver transplant for a Medicaid recipient suffering from alcoholic cirrhosis who had not documented a two-year period of abstinence because liver transplant surgery was medically necessary and the only available procedure to resolve recipient's liver disease)

Weaver v. Reagen, 886 F.2d 194 (8^th Cir. 1989) (Missouri violated statutory right to Medicaid benefits by denying coverage of the drug Retrovir (formerly known as azidothymidine or AZT) for treatment of AIDS)

Visser v. Taylor, 756 F. Supp. 501 (D.Kan. 1990) (State denial of coverage for an FDA-approved drug Clozaril, used to treat schizophrenia was arbitrary, capricious, and in contravention of the Social Security Act in denying coverage on the basis of the recipient's diagnosis, type of illness, and mental condition.)

E. Abortion

Preterm, Inc. v. Dukakis, 591 F.2d 121 (1st Cir. 1979) In Preterm, the First Circuit struck down a Massachusetts abortion funding restriction that prohibited the state Medicaid program from funding abortions except in cases where the mother's life was in danger and where the pregnancy resulted from rape or incest. 591 F.2d at 126-127. The plaintiffs in Preterm argued that the state's funding restriction violated Title XIX because it did not permit funding for abortions in cases where the health of the mother was at risk. Although the First Circuit acknowledged that the state's abortion funding restriction was arguably a limitation based on medical necessity, the court concluded that restrictions which limit medical services "to life and death situations" and cases of rape and incest contravene the objectives of the Act. Id. According to the court, the state funding restriction contravened the objectives of Title XIX in two respects. First, the court reasoned that Title XIX's objective of providing needed medical care is broader than the stark "life and death" restriction embodied in the Massachusetts provision. The court concluded that the state's restriction thus "crossed the line between permissible discrimination based on degree of need and entered into forbidden discrimination based on medical condition." Id. at 126. The court further held that the restriction contravened Title XIX by failing to incorporate physician input into whether or not a given abortion procedure is medically necessary. According to the court, Title XIX "provides for a central role for the physician in determining proper treatment." Id. at 127.

Hern v. Beye, 57 F.3d 906 (10th Cir. 1995)(state cannot deny Medicaid funding for qualified women who are victims of rape or incest)

Hope Medical Group for Women v. Edwards, 63 F.3d 418 (5th Cir. 1995), cert. denied, 134 L. Ed. 2d 471, 116 S. Ct. 1319 (1996) (state cannot limit abortion funding to those cases where mother's life is at stake)

Hodgson v. Board of County Comm'rs, County of Hennepin, 614 F.2d 601, 608 (8th Cir.1980)

Zbaraz v. Quern, 596 F.2d 196, 199 (7th Cir.), cert. denied, 448 U.S. 907, 100 S. Ct. 3048, 65 L. Ed. 2d 1136 (1980)

Little Rock Family Planning Services v. Dalton, 60 F.3d 497 (8th Cir.1995)

Planned Parenthood v. Engler, 860 F. Supp. 406 (W.D.Mich.1994)

Planned Parenthood v. Blouke, 858 F. Supp. 137 (D.Mont.1994).

F. Other

Viveros v. State of Idaho Department of Health and Welfare, Idaho, No. 21187, Feb. 16, 1995 (reported in CCH Medicare and Medicaid Guide, New Developments 43,066) (Medicaid coverage denied for surgery to correct congenital ear malformation in child despite potential psychological damage due to deformity)

Have commercial and other government insurers covered the service ?

B. Experience with the procedure/ equipment (quantitative and qualitative).

C. Evidence of the demonstrated effectiveness of the procedure / equipment.

1. compared to data associated with no treatment or with alternative treatments;

2. comparison over time. "It is the nature of medical research that what may one day be experimental may the next be state of the art treatment.";

3. be alert to differences in the quality of the evidence regarding a procedure's effectiveness;

4. are completed double-blind studies necessary ?

5. peer-reviewed medical journal articles.

6. expert testimony.

D. Comparative analysis of the "attractiveness" of the various treatment alternatives for this client

E. The Treating Physician’s Opinion

See, eg: Weaver v. Reagen, 886 F.2d 194, 200 (8th Cir. 1989); Pinneke v. Preisser, 623 F.2d 546, 550 (8th Cir. 1980) ("The decision of whether or not certain treatment or a particular type of surgery is 'medically necessary' rests with the individual recipient's physician and not with clerical personnel or government officials."); Preterm, Inc. v. Dukakis, 591 F.2d 121 (1st Cir. 1979); Hunter v. Chiles, 944 F.Supp. 914 (S.D. Fl. 1996); Coe v. Hooker, 406 F. Supp. 1072, 1081-82 (D.N.H. 1976). See also: Gatto v. Bullen, Suffolk Superior Court No. 9702787-G (1998).

F. Courts Review of Decisions of Medical Necessity

Smith v. Office of Civilian Health and Medical Program of the Uniformed Services, 97 F.3d 950 (7th Cir. 1996) CHAMPUS's denial of coverage can be characterized either as an interpretation of its regulations governing experimental treatments, in which case it is reviewed for a "plainly erroneous or inconsistent" interpretation or as a decision to adopt the view of one side of an ongoing debate in the medical community, in which case review is under the arbitrary and capricious standard of 5 U.S.C. § 706(2)(A).

V. EXAMPLES OF COVERAGE DECISIONS RELATED TO MEDICAL NECESSITY

A. No Exclusion if Medically Necessary

Several court opinions have held that a state may not exclude from coverage services that are determined to be medically necessary. See: Hern v. Beye, 57 F.3d 906, 911 (10th Cir.), cert. denied, 116 S. Ct. 569 (1995)(state cannot deny Medicaid funding for qualified women who are victims of rape or incest); Dexter v. Kirschner, 984 F.2d 979, 983 (9th Cir. 1993) (participating states "must provide assistance to pay for medically necessary impatient hospital and physician's services for eligible persons") (as amended on denial of rehearing and rehearing en banc); Weaver v. Reagen, 886 F.2d 194 (8th Cir.1989); Pinneke v. Preisser, 623 F.2d 546, 548 n. 2 (8th Cir.1980); Doe v. Rose, 499 F.2d 1112, 1114 (10th Cir. 1974) ("The import . . . of [Medicaid's] statutory scheme is that indigents who qualify for Medicaid benefits are to receive all necessary medical and hospital care."); Little Rock Family Planning Servs. v. Dalton, 860 F. Supp. 609, 616 (E.D. Ark. 1994) ("What Title XIX does is to specify the categories of care . . . that every state Medicaid program must cover when 'medically necessary.'"); Visser v. Taylor, 756 F. Supp. 501, 507 (D. Kan. 1990) (holding that the "touchstone" of cases interpreting Title XIX's requirements for coverage "is medical necessity"); Allen v. Mansour, 681 F. Supp. 1232, 1237 (E.D. Mich. 1986) ("The medical necessity of the procedure is the touchstone for evaluating the reasonableness of standards in state medicaid plans."); Montoya v. Johnston, 654 F. Supp. 511, 513 (W.D. Tex. 1987) (holding that "it would be inconsistent with the objectives of the [Medicaid] Act" for a state to deny funding for "medically necessary treatment"); Simpson v. Wilson, 480 F. Supp. 97, 101 (D. Vt. 1979) ("The federal regulations do not permit [a state] to decline to provide medically necessary services.")..

B. Exclusions from Coverage Allowed

Many other decisions have adopted the position that Title XIX states may limit Medicaid coverage in select areas. For example, in Preterm, Inc. v. Dukakis, 591 F.2d 121 (1st Cir. 1979) the First Circuit held that Title XIX grants states some discretion to limit medical services based on their judgment as to whether a particular medical service is medically necessary. The court rejected the argument that a state Medicaid program must cover any medical procedure certified by a doctor as medically necessary. Rather, the court reasoned that state legislatures may make "the macro-decision ... that only certain kinds of medical assistance are deemed sufficiently necessary to come under the coverage of its plan." Id. at 125.

Other cases upholding state imposed limitations on coverage include:

Charleston Memorial Hosp. v. Conrad, 693 F.2d 324, 330 (4th Cir. 1982) (holding that a state's annual limits on Medicaid coverage to twelve inpatient hospital days -- which met the needs of 88 percent of Medicaid recipients -- and eighteen outpatient hospital visits -- which met the needs of 99 percent of Medicaid recipients -- was consistent with Title XIX and applicable regulations)

Curtis v. Taylor, 625 F.2d 645, 651-53 (5th Cir. 1980) (upholding a state's limit on Medicaid coverage to three physicians' visits per month where only 3.9 percent of the state's Medicaid population had required more than three physicians' visits in any one month in the year before the regulation was adopted)

Virginia Hosp. Ass'n v. Kenley, 427 F. Supp. 781, 785-86 (E.D. Va. 1977) (holding that Virginia's 21-day limitation on inpatient hospital coverage complied with Title XIX and deferring to Department of Health, Education and Welfare's interpretation of the statute that "services provided reasonably achieve their purpose if the amount, scope and duration would be sufficient for most persons needing that type of care")

Dougherty v. Department of Human Servs., 91 N.J. 1, 449 A.2d 1235, 1237 (N.J. 1982) ("We have never held that our statutory program requires state reimbursement for all medically necessary services for every patient.")

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