OPM Should Promote Medical Necessity Programs for Federal Employees' Health Insurance

HRD-80-79: Published: Jul 29, 1980. Publicly Released: Aug 8, 1980.

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Medical necessity programs were developed to help contain health care costs and promote good health care. They can reduce the incidence of, and payment for, health care procedures not found to be medically necessary or consistent with generally acceptable medical practice. Federal Employees' Health Benefits Program plans have varied greatly in their use of medical necessity programs, but data from plans using the programs show that benefits have been achieved and should increase. Savings are also being achieved because of education and publicity. The Office of Personnel Management (OPM) program manager for employee organization plans has asked the plans to review claims to determine that they represented medically necessary services. Representatives have agreed to include a list of unnecessary surgical procedures in their claim processing systems.

Improved care and cost reduction benefits of medical necessity programs can be realized more fully if OPM keeps abreast of program developments and makes sure they are adopted promptly. Medical necessity programs are relatively new; benefits realized so far have been limited. However, these programs enjoy widespread physician acceptance, and benefits appear likely to increase as the programs are expanded and more widely used.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Director of OPM, should systematically monitor developments in these programs, in both the private and public sectors; evaluate these programs to determine how Federal Employees Health Benefits Program plans might use them to foster better health care and lower health insurance costs; and require the Federal Employees Health Benefits Program plans to use aspects of these programs that are proven beneficial.

    Agency Affected:


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