Issues of medical necessity: a medical director's guide to good faith adjudication.

The term medical necessity is difficult to define, a problem for insurers who need to clearly describe what is and is not covered in their contracts with subscribers. An unclear, vague definition of medical necessity leaves insurers vulnerable to litigation by subscribers denied care deemed medically unnecessary. To avoid lawsuits, insurers must make every effort to educate their subscribers about their medical coverage, going beyond merely providing a lengthy subscriber handbook. In decisions on medical necessity, medical directors at insurance companies play a key role. They can bolster the insurer's position in denial-of-care cases in numerous ways, including keeping meticulous records, eliminating unreasonable financial incentives, maintaining a claims denial database, and consulting with other insurers to achieve a consensus on medical necessity.