The Journal of Things We Like (Lots)
Select Page
Amy B. Monahan and Daniel Schwarcz, Rules of Medical Necessity, 107 Iowa L. Rev. ­­___ (forthcoming, 2022), available at SSRN.

In a must-read article, Amy Monahan and Daniel Schwarcz have teamed up to undertake, in their own words, an “exhaustive review of caselaw and publicly filed health insurance policies,” and report back on what health insurers have been doing with their contract terms to try to control their claims spend-out. The results are riveting. Monahan & Schwarcz document a shift twenty years in the making. The nature of what they see is a switch from insurers defining the scope of coverage using the broad standard-like term of “medically necessity” within each benefit category, to the use of highly particularized rules embodied in clinical policies or guidelines that are directly or indirectly fixed by reference in the insurance policy terms.

Their piece is a reply of sorts in a conversation across the decades with another colossus of an article, Mark A. Hall & Gerard F. Anderson, Health Insurers’ Assessment of Medical Necessity, 140 U. Pa. L. Rev. 1637 (1992). Each article, Monahan & Schwarcz’s and Hall & Anderson’s, stands and grapples with the fundamental and enduring crosswinds of the health coverage conundrum and renders them into a coherent historical narrative of sweeping momentum.

If you wanted to understand private health insurance coverage and its discontents over the last half century, you could do a lot worse than simply reading these two articles. A more conventional history would survey the political epiphenomena of the underlying forces that Monahan and Schwarcz document—phenomena such as the impact of ERISA and the fraying employer-based system of coverage, the managed care revolution and its expression as the prevailing ethos of the Jackson Hole Group and Clinton Health reform era, the subsequent managed care backlash and Patients’ Bill of Rights campaigns followed by the evidence-based medicine movement, and then the passage of the ACA. But Monahan and Schwarcz follow a rarer model of scholarship that peels back the surface events to reveal the corresponding hydraulics beneath, and we as readers are all the wiser for it.

I found the rules versus standards framework to be a handy organizing tool in their endeavor, one that clicks satisfyingly into place. It lends a conceptual handle and plausibility to the story they tell of change over time, specifically of ever greater “rulification” in the way coverage decisions get made. The framework goes on to deliver a pay-off in the form of a prediction that bears out: that courts will be ever more disempowered in health insurance decisions. But the rules versus standards frame stops short of answering the question of who should be empowered instead. The inherent limitation of this theoretical frame shows a bit toward the end of the article, which fractures into an array of different proposals about which I will say more in a moment.

Meanwhile, Monahan & Schwarcz add an interesting twist in the application of the frame. They argue that the rulification not only diminishes judges’ role; it also disrupts a delicate balance of other forces keeping insurers in check, such as administratively-required internal and external review as well as legislatively mandated benefits, all of whose mechanisms assume a standard-based regime.

While Monahan & Schwarcz and Hall & Anderson may disagree on whether the U.S. health system at the time of their respective articles suffered from a state of excessive rulification (the former’s view) or excessively discretionary standards (the latter’s), I think that their posture of disagreement is otherwise overstated. It is notable that neither pair thinks that the answer lies in judges deciding what gets covered. Nor does it lie with doctors or insurers deciding, never mind legislators. True, Monahan & Schwarcz chafe more at the notion of judges being pinned down by rulification, even if they wouldn’t vest judges with the substantive decisions either. And Hall & Anderson trust a utilization review entity more than Monahan & Schwarcz do. Indeed, I wonder if that is the main axis of distinction between the positions that these articles stake out. Monahan & Schwarcz’s account is suffused with doubt over whether the evidence will ever be sufficient for the technocrats to definitively and legitimately decide what life-saving care is warranted. The decision of what care is appropriate will always push the ever-elusive frontier of knowledge, will always harbor residual unknowns, particular to the individual. To me, their hard-earned caution may represent as great a sea-change over the decades as the rulification they document; it speaks to an epochal chastening of our (or at least my) optimism about evidence-based medicine and its close corollary, value-based payment. To imprison the judgments about appropriate care too tightly in a matrix of decision rules now feels procrustean. Monahan & Schwarcz insist upon an institutionalized release valve—and here is where they offer a smorgasbord of answers.

Some I feel are no-goes, like their third option, proposing to mandate that plans use a particular set of medical necessity determinations such as Medicare’s. The authors themselves also voice doubts about the political viability of the second proposal, which would involve legislating strong substantive standards for utilization review into ERISA with a private cause of action. But I particularly liked the first proposal, whereby state and federal insurance regulation, following Minnesota’s lead, would prohibit plan reliance on rules of medical necessity after internal appeals, ensuring that external appeals and any ensuing litigation remain open fora for challenging an insurer’s rules of medical necessity for substantive error as applied to a specific patients’ circumstances. And their final proposal of greater transparency is a no-brainer. Every one of us should call our Congressional delegations to press for this as soon as possible, pausing only to read what I whole-heartedly recommend as a most thought-provoking contribution on the core problems defining our field.

Download PDF
Cite as: Christina S. Ho, Medical Necessity, Then and Now, JOTWELL (December 8, 2021) (reviewing Amy B. Monahan and Daniel Schwarcz, Rules of Medical Necessity, 107 Iowa L. Rev. ­­___ (forthcoming, 2022), available at SSRN),