before – that service is sought.112 At that point, of course, the policyholder
and insurer may have quite different expectations about what should be
To be sure, many insurers include provisions stating that they will cover
only medically accepted therapies that are recommended by a recognized
medical specialty organization or Medicare guidelines, which gives a
modicum of substance to the categories.114 However, the therapies
themselves are not listed.115 More generally, insurers typically limit
coverage to “medically necessary” or “appropriate” services and items.116
While these terms add some limits to the general categories, the services
that will be covered remain unspecified. Typically, the insurer reserves the
contractual right to determine what is medically necessary in any individual
case.117 Thus, coverage remains unpredictable ex ante by the policyholder
and often also by the insurer.
It would be the rare policyholder who is familiar enough with health
insurance practices to be able to anticipate the range of healthcare services
that will be covered. The ordinary consumer would have to possess a strong
imagination to dream up the “losses” for which she seeks coverage ex ante.
For the vast majority, no expectation of specific coverage arises until a
physician or other health professional recommends a particular course of
therapy. In today’s health plans, insurers “satisfy” claims by paying the
provider, not the policyholder. The policyholder gets the services the
insurer decides are covered ex post.
112. See generally Wendy K. Mariner, Patients’ Rights after Health Care Reform: Who
Decides What Is Medically Necessary?, 84 Am. J. Pub. Health 1515 (1994). Some services
may seem obvious, such as hospitalization for a stroke, but whether to give the patient tissue
plasminogen activator (tPA), for example, depends upon the patient’s circumstances. See id.
113. See id.
114. See id.
115. See id.
116. Alan M. Garber, Cost-Effectiveness and Evidence Evaluation as Criteria for
Coverage Policy, 23 Health Aff. 284, 285 (2004); Harriette B. Fox & Margaret A.
McManus, A National Study of Commercial Health Insurance and Medicaid Definitions of
Medical Necessity: What Do They Mean for Children?, 1 Ambulatory Pediatrics 16 (2001);
Sara Rosenbaum et al., Who Should Determine When Health Care Is Medically Necessary?,
340 New Eng. J. Med. 229, 230 (1999); Mariner, supra note 112, at 1516–17.
117. See Rosenbaum et al., supra note 116, at 229–30. Similarly, health plans often
require prior authorization of coverage for particular services for the purpose of determining
whether particular services are medically necessary for an individual patient. For example,
while a plan may indeed cover the category of behavioral health services, specific services,
such as inpatient therapy, may not be covered and paid for without a plan determination that
it is actually medically necessary. And ongoing utilization management practices may
require periodic determinations that continued therapy is medically necessary. MAHP Letter
to Massachusetts Division of Insurance re Special Session on Treatment for Opioid
Addiction (Sept. 26, 2014) (on file with author).