Unnecessary care that’s not evidence-based—usually associated with excess testing, surgical procedures or over-prescribing—accounts for up to 30% of what is spent in healthcare. In recent months, enforcement actions against physicians and hospitals have gained increased attention. But unnecessary care and over-utilization is not a new story or one that’s easy to understand.
Medical necessity means something slightly different in every part of the healthcare industry. Varied definitions and interpretations are used by providers, physicians, courts, pharmacy benefits managers, government insurers, private insurers, and consumers. Perhaps the two most important are from the largest and most influential payer, Medicare, and the industry’s most important clinical authority, the American Medical Association (AMA).