This article first reviews the Medicaid scheme and identifies the limitations on the discretionary power of the state to restrict coverage, the most important of which is the requirement that a state provide medically necessary care. Existing statutory, regulatory, and judicial mechanisms for determining medical necessity are presented and critiqued. Finally, a proposed federal statutory procedure is presented and explained.

I. Introduction

II. Background: The Medicaid Scheme

III. Federal Limitations on State Discretionary Power

IV. Medical Necessity: A Fundamental Requirement

V. Existing Procedural Mechanisms for Determining the Medical Necessity of Proposed Treatment ... A. The Fair Hearing ... B. Review Organizations ... C. Utilization Review Committees ... D. The Courts

VI. A Proposal for Statutory Reform ... A. The Proposal ... B. Explanation of the Model ... 1. Initial Decision by the Recipient and the Donor ... 2. The Concurring Opinion ... 3. The Presumption ... 4. Local and State Level Determinations—Due Process Fulfilled ... 5. Appeal to the Secretary and Judicial Review

VII. Conclusion