Medical Necessity, Benefit and Resource Allocation in Health Care

Abstract

Many health care systems espouse medical necessity, or need, as a guiding principle for the allocation of resources. Yet, logic and experience suggest that it is likely impossible to develop a concise, explicit, operational definition of medical necessity that would allow it to be used as an administrative or management tool. Even if such a definition could be developed, it would likely do little to solve the fundamental challenges facing policy-makers attempting to reform health care systems. This implies that we should refrain from further efforts to define medical necessity operationally. But does it follow that medical necessity is an empty concept? No. Even if it cannot be defined precisely, it can still serve as a guiding principle for health policy. Given that ability-to-benefit is a core concept underlying necessity, we develop a conceptual framework that encompasses alternative notions of benefit and then illustrate some selected implications of alternative benefit notions for processes required to use medical necessity as a guiding principle and for the types of services that would be deemed to produce a benefit.