There is a small change in the NSW workers compensation reforms that sounds technical but will shape thousands of everyday decisions: whether your insurer funds your physiotherapy, your scan, your surgery, or your psychologist. The law has shifted the test for medical treatment from “reasonably necessary” to “reasonable and necessary.” Two words, one extra conjunction — and a noticeably tighter threshold for approval. This article explains the change, why it matters, and what to do if your treatment request is knocked back.
What the test actually says now
Under the Workers Compensation Act 1987 (NSW), an injured worker has always been entitled to have the insurer pay for medical and related treatment “reasonably necessary as a result of” the injury. That phrase has been tested through many decisions of the Personal Injury Commission, and it has generally been interpreted flexibly. If a qualified treating practitioner recommended a treatment, if it was likely to help, and if it was not plainly excessive, it would usually be approved.
The NSW workers compensation reforms change the wording from “reasonably necessary” to “reasonable and necessary.” Insurers and reviewing bodies will be asked to look at two things, not one:
- Whether the treatment is reasonable (proportionate, evidence-supported, proposed by an appropriate provider); and
- Whether it is necessary (needed to treat the injury, rather than merely helpful or desirable).
The commencement date for the new test is yet to be proclaimed, and the operational detail will be fleshed out in regulations and SIRA guidelines still under development. Most practitioners expect that, once in force, the new test will be applied more strictly in borderline cases. Treatment that was previously approved without much scrutiny may now attract more insurer questions and more requests for supporting evidence.
Why the wording was changed
The reforms were driven in part by the rising cost of the scheme. iCare and SIRA reported that medical treatment costs have been growing faster than wages or claim numbers. Psychological injury claims have been associated with long courses of treatment with variable evidence of effectiveness. The tighter test is intended to give insurers a clearer basis to decline treatment that is not well supported by medical evidence, while still funding treatment that genuinely helps a worker recover.
Whether the reform achieves that balance is a matter for the scheme and the Parliament to assess over time. For injured workers, the practical reality is that the threshold to get treatment approved has moved — and moved in favour of insurers.
What kinds of treatment are affected
The test applies across the full range of medical and related treatment, including:
- General practitioner consultations and specialist referrals
- Physiotherapy, chiropractic care, osteopathy, and remedial massage
- Psychology, counselling, and psychiatry
- Diagnostic imaging and pathology
- Surgery and post-surgical rehabilitation
- Medication
- Home and workplace modifications
- Attendant care
- Travel expenses for treatment
It also applies to treatment for both physical and psychological injuries. If you are navigating a claim for hearing loss at work, carpal tunnel syndrome, or a workplace psychological injury, the new test will colour how the insurer assesses every treatment request on your file.
A worked example
Consider a warehouse worker who injured her back lifting stock. Twelve months into her claim, her physiotherapist recommends a further ten sessions of treatment focused on core strengthening and manual therapy. Her treating GP supports the request.
Under the old “reasonably necessary” test, that request would often be approved with little friction. Under the new test, the insurer may ask: has the previous course produced measurable functional gains? Is there objective evidence — range of motion, return-to-work capacity, validated pain scales — to show progress? Are there other options (a home exercise program, a supervised gym program) that could be equally effective at lower cost?
Those are reasonable questions for the scheme to ask. They also change the nature of the conversation between injured workers, their treaters, and their insurer. The quality of the documentation matters at each step.
What insurers are expected to do differently
Under the old test, it was common for routine treatment to be approved with limited scrutiny once a treating GP had signed off. Under the new test, we expect to see:
- More requests for additional medical evidence. Insurers are likely to ask treating doctors for fuller justification of why the requested treatment is both reasonable and necessary. Vague recommendations are more likely to be declined.
- More use of independent medical examinations (IMEs). Insurers already use IMEs, but the new test gives them a sharper reason to seek one if they want to question treatment requests.
- Tighter scrutiny of long courses of treatment. Open-ended or repeat treatment approvals are likely to attract closer review at renewal points.
- More disputes referred to medical assessment. Where an insurer and a treating practitioner disagree, expect more matters to be sent to the Personal Injury Commission’s medical assessment process.
None of this means you will lose access to treatment. It does mean that how treatment requests are framed — and who frames them — matters more than it did.
What to do before you ask for treatment
- Work with a treating doctor who documents thoroughly. Under the new test, a short note on a WorkCover Certificate of Capacity is unlikely to carry a borderline request. A detailed rationale that addresses why the treatment is needed, why it is proportionate to the injury, and what recovery goal it supports is far more likely to succeed.
- Keep a clean record of your symptoms and functional limitations. If you are claiming for stress leave or a psychological workplace injury, keep a diary of symptoms, triggers, and the impact on your work and home life.
- Understand the treatment pathway. The Clinical Framework for the Delivery of Health Services sets out principles for evidence-based, goal-driven treatment. Treatment requests that fit squarely inside that framework are harder for insurers to decline.
- Don’t let a knock-back sit. If a treatment request is declined, you usually have rights of review. Each process has time limits. If you miss them, you may lose the ability to challenge the decision.
What to do if treatment has been declined
A decision to decline treatment should come to you in writing, with reasons. Typical grounds for decline include: the treatment is not consistent with the injury accepted on the claim; the provider is not appropriately qualified; insufficient medical evidence; or that previous similar treatment has not produced functional gains.
Each of these grounds can be challenged. The process you will most commonly use is:
- Request internal review within the insurer’s time frame, supplying any additional evidence you can gather.
- If internal review does not resolve the dispute, lodge a dispute with the Personal Injury Commission.
- In parallel, you can engage the Independent Review Office (IRO) for guidance and complaint handling. The IRO administers the Independent Legal Assistance and Review Service (ILARS), which funds legal representation for eligible injured workers at no cost to them.
A decline is not automatically permanent. Insurers make decisions on the material in front of them at that time. New medical evidence, a fuller rationale from a treating specialist, or a change in your clinical picture can support a fresh request.
Practical takeaways
- The test has changed. Treatment now needs to be both reasonable and
- Evidence matters more than ever. Ask your treating practitioner to document why the treatment is needed, not just helpful.
- Track your symptoms and functional impact. This evidence travels with every treatment request.
- Act on declines quickly. Internal and external review processes have time limits.
- Use the IRO and ILARS. ILARS exists to help eligible injured workers navigate disputes, including by funding legal representation.
How Gajic Lawyers can help
The new medical treatment test is only one strand of a much larger package of NSW workers compensation reforms 2026. Our team has spent 30-plus years handling workers compensation disputes across NSW. We work on a No Win No Fee basis. Our technology-driven, fully paperless process means you can run your entire dispute from wherever you live, including regional NSW.
If your medical treatment has been declined, or you expect it might be, don’t wait for the next review. Call us for a free, obligation-free consultation on (02) 9890 5885, or visit our workers compensation page to start your claim.
