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The criteria of a well-written health insurance policy should include the requirement that all treatment is ‘medically necessary’. This requirement is needed to enable insurers to combat over-utilization – the industry term used to describe over-investigation and/or treatment of patients.

Historically, if a doctor ordered a test, prescribed a drug, or performed a surgical procedure, patients and insurers generally accepted that the item was clinically appropriate and in the best interest of the patient. Now it is commonly accepted that there are often alternative treatment options available and that some doctors are financially motivated in their treatment patterns.

The definition of what is medically necessary varies considerably, with the weakest wordings only requiring that treatment be ordered by the patient’s treating physician. A good definition should require that all treatment is:

• Undertaken in accordance with accepted standards of medical practice
• Clinically appropriate in terms of type, frequency, extent, site and duration, and effectiveness for the patient's injury, illness, or disease
• Not performed for the convenience of the patient or healthcare provider
• Not more costly than an alternative service that is at least as likely to produce equivalent therapeutic or diagnostic results

This is a complex definition that gives an insurer the potential ability to decline a claim or question a doctor about any element of treatment that does not appear to meet the medical necessity criteria. In practice, questioning a doctor who has seen and treated the patient if one is a non-medically qualified claims technician relying on information provided by the patient and doctor is difficult, and therefore avoided by some insurers.

Many insurers rely instead on the experience and judgment of their claims staff to assess if the claims submitted are valid (meaning that decisions are judgment-based rather than evidenced-based). To decline a claim or question a doctor effectively, it is necessary to ensure that such actions be done on the basis of fact and that insurers have information and tools available on which to base such actions.

The U.S. has the most advanced tools available for assessing and questioning medical necessity. Commercially available evidence-based clinical guidelines can be used to identify unusual treatment and to question a doctor. These guidelines, which are continuously researched and updated, set out best practices for treating each medical condition and account for variables such as age, sex, and co-morbidities. Providers (hospitals and doctors) use the guidelines as clinical pathways, and insurers use them to question treatment that deviates from them. Many markets outside of the U.S. do not have clinical guidelines, and differences in the quality and availability of medical facilities and treatments in other regions mean that U.S. guidelines are not easily transposable.

Insurers without access to appropriate guidelines need to make use of the most appropriate information and data available to them. Some countries collate and publish wide sets of clinical data and, in some cases, clinical guidance, which provides good evidence sets against which a doctor’s treatment can be compared. If national statistics are not available, a useful starting point may be an industry or insurer’s own historic claims database.

Insurers should not control a patient’s treatment but should be able to confirm that the treatment being provided meets policy terms and conditions, including if it is medically necessary. Often an appropriate question to be asked of a doctor is ‘What is medically different about your patient that necessitates the deviation from best clinical practice (if clinical guidelines are available) or from national/industry or company historical norms’?

Questioning an attending physician’s treatment of a patient is not easy, but the medical necessity of treatment is at the core of good health insurance terms and conditions. Insurers enhance their capability to ask these questions when doing so against an evidence-based set of guidelines rather than relying on experience and judgment.