Healthcare Utilization Management Explained

Healthcare Utilization Management

Utilization management is an integral part of the private and public health plan. As the majority of the Americans are enrolled in publicly or privately funded health plans; they use utilization management programs as the primary cost containment strategy. The utilization management services are designed for determining whether the clinical guidelines or the medical necessity criteria are met. It includes all the guidelines related to the level of care, location, length of stay for the treatment course, and the appropriateness of the treatment.

Utilization management has become a primary approach that private and public payers can use for determining if the patients are receiving the required care, and the money spent on health care is providing the right value.

There are different types of utilization management:

  • Retrospective review

    It is a form of medical records review which is conducted after the discharge of the patient. It tracks the consumption of resources and appropriateness of the care.

  • Prospective review

    It includes the review of the medical necessity to check the performance of the scheduled procedures before admission.

  • Concurrent review

    It includes the review of the medical necessity decisions which are made while the patient is at the post-acute setting or at present in an acute condition.

  • Preadmission certification

    It is the authorization granted to a patient for the hospital admission after the review of the patient’s need for the inpatient services.

The utilization management process includes:

  • Collecting the complete information about the condition of the member from the provider. The collected information depends on what type of information has been requested. The collected information could include the progress notes, laboratory test results, radiology, and the treatments which the member went for.
  • Reviewing the information for determining the medical necessity of the services.
  • Notifying all the parties who are involved, which is the provider, member, and the facility, which renders the service of the review.
  • Reviewing the member’s case for care management needs and possible discharge planning.

UM is made up of different programs:

  • Step therapy

    It helps to lower the costs through the less expensive and safe drugs. The program uses the step approach for using the drugs for specific medical conditions. It means one has to first try the safe and cheaper drug or the one which is clinically proven before going to the different drugs.

  • Prior authorization

    It helps to improve safety conditions. There are some drugs that are misused or overused or may not be the best medicine as per the health condition of the individual. The authorization process in this scenario makes it mandatory for the approval of medicines by the health plan.

  • Quantity limits

    It helps in lowering the waste. The program controls the frequency or the amount to be used. These limits promote the cost-effective and safe usage of the drug. It also reduces the overuse and waste.

The first category through which utilization management is carried out is:

  • Organizations that do not have contracts or other relationships with the providers.
  • It should not be at the risk of the medical services cost.

The second category includes:

  • Utilization management is done by the parties at the risk of additional medical services cost and does not have any relationship with the physicians or the hospitals. This category comes under the insurer based service without the provider contracts. Many insurers acting in the insurance capacity engage in utilization management as controlling the claim costs.

The third category is where:

Utilization management covers the organizations that establish and manage the explicit networks or the panel of providers. The organizations include some of the PPOs, HMOs, and Blue Shield and Blue Cross plans.