Defining and determining medical necessity in Medicaid managed care

In 2013, the American Academy of Pediatrics published a policy statement calling for pediatricians to be informed about the need for specific pediatric medical necessity language because children deserve "the intent embedded in Medicaid." This study aims to explore the definitions and determinations of medical necessity in Medicaid Managed Care (MMC), document the relevant language used throughout Medicaid, and investigate whether the federal standard of medical necessity for children is replicated in related state documents.

We conducted a desk review of state statutes, model MMC contracts, and 2 provider manuals per state, for 33 states with a full-risk MMC model.

The federal "to correct and ameliorate" standard was replicated in 100% of state regulations, 72% of MMC model contracts (n = 13 of 18 MMC model contracts available online), and 54% of provider manuals (n = 30 of 56 available and sampled online). Only 9 states had an explicit "preventive" pediatric medical necessity standard in their state regulations that exemplified "the intent imbedded in Medicaid."

The federal medical necessity standard for children is not replicated consistently within MMC programs from the state, to health plans, to network providers. Although the majority of the documents reviewed included the standard, the presence of the standard decreased by almost half between state-level and network-provider-level regulations. Having a single, explicitly defined pediatric medical necessity definition replicated at all levels of the health system would reduce confusion and increase the ability of pediatricians to apply the standard more uniformly.