What Is Utilization Management In Healthcare?
Utilization management is an integral part of how insurance companies, or health plans, assess clinical treatment decisions and coordinate patient care. Clinicians at provider organizations submit treatment requests to the health plan for review and approval. These submissions can occur before, during, or after treatment. Health plans review these requests using evidence-based guidelines. These guidelines are created by a panel of clinicians who extensively researched patient encounters and conducted retroactive utilization management reviews to determine which treatments resulted in the best patient outcomes.
Utilization management reviews can be required for a variety of medical services, including:
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- Emergency room visits
- Home health services
- Imaging
- Inpatient stays
- Medications
- Outpatient visits
- Surgical procedures
In addition to using evidenced-based guidelines, decisions are determined on various types of patient information, such as:
- History & Physicals
- Consultations
- Discharge summaries
- Health management plans
- Lab results
- Medications
- Vitals
Ultimately, utilization management is about reducing costs while maintaining a high standard of care.
Overview of the Utilization Management Process
Utilization management programs typically consist of three separate processes:
- Prospective reviews, sometimes known as prior authorizations, occur prior to the administration of treatment. These reviews ensure the requested care is medically appropriate.
- Concurrent reviews occur while treatment is being administered, such as while a patient is receiving care at an inpatient facility. Concurrent reviews are used to provide care oversight throughout the care continuum. Concurrent reviews can address various types of care, including care coordination across multidisciplinary teams, disease management, patient discharge planning, or patient transitions to other care facilities.
- Retrospective reviews occur after treatment has been administered to evaluate the success of the provided care and determine if the billed codes are correct. Additionally, through retrospective reviews, utilization management guidelines are regularly updated based on treatment efficacy. Future requests of these treatments are then more likely to be approved based on previous successes. This review process is especially important as new treatments and medications enter the market.
The utilization review process ensures the collection of information at the initial point of entry and during treatment in a patient’s care to evaluate medical necessity and the appropriateness of care related to desired outcomes. Patients can enter a hospital at various entry points – for example, ED, outpatient infusion center, cardiac catheterization lab, outpatient dialysis unit, hospital operating room, or at an ambulatory surgery center. Because of this, there are some variations in processes due to each facility’s staff. But, generally speaking, concurrent review allows the reviewer to collaborate in real time with the ED physician, referring physician, and/or admitting hospitalist to confirm that the care is medically necessary and provided at the proper level and the correct status is ordered.
Initial treatment requests are either reviewed manually by utilization management nurse or through an automated system. Both processes use evidence-based guidelines to determine if treatment requests align with the most appropriate care options based on the provided clinical information. There are times when a nurse may ask for additional supporting clinical information to help with the determination. If the nurse is unable to make a determination, he/she may involve a physician advisor to provide determination. The request is either approved or denied at this stage. If treatment is denied, clinicians can submit a peer to peer if available per contract or submit for appeal.
Denial appeals are escalated to a utilization management physician for review, who can also schedule a peer-to-peer meeting, which provides the patient’s doctor an opportunity to further discuss the case directly with the utilization management physician to justify their proposed course of treatment.
The utilization management process can also include additional personnel, such as:
- Case managers, who work with patients and clinicians to create and implement care plans that ensure patients receive the care they need without unnecessary treatments or procedures.
- Utilization managers, who are responsible for supporting the overall utilization management program and reviewing decisions to confirm that they align with the established review requirements.
Benefits of Utilization Management
One primary benefit of utilization management programs is that they reduce overall healthcare costs. By reviewing patient care decisions, utilization management can decrease the use of inefficient or unnecessary treatments while promoting effective care options. In addition to reducing ineffective treatment, utilization management can also provide additional cost savings by decreasing the number of hospitalizations or readmissions that may occur when appropriate care is not provided.
Utilization management programs also allow hospitals and health systems to better manage their resources by determining the amount of care a patient will need. Through evidence-based guidelines and clinical guidance, utilization management promotes better patient outcomes by ensuring patients receive the right services at the right time, delivered by the right provider in the right setting for the right cost. This is often referred to as meeting the patients’ five rights.
An additional benefit of utilization management is that by following evidence-based guidelines, clinicians can be confident that they are administering care based on compliance requirements. Healthcare regulations are incorporated into the guidelines to ensure care is administered while adhering to the latest policies.
Finally, utilization management reduces the number of denials hospitals and health systems receive. Denials require significant amounts of time and resources to address, resulting in higher administrative costs. This reduction in denials results in a reduction of hospital and health system expenditures related to expensive and time-consuming denial management processes.
Challenges in Healthcare Utilization Management
Utilization management is not without its challenges. While guidelines are extensively reviewed and are regularly updated to reflect advances in healthcare treatment, denial decisions can occasionally be incorrect, which could negatively impact patient care through the denial of treatment or through care delays while a decision is being rendered. These types of care obstacles can create animosity between the health plan, clinicians, and patients.
Another challenge with utilization management is clinicians may feel their ability to administer care based on their education and experience is being hindered by utilization management criteria overriding their care decisions.
Utilization management also can create a burden on clinicians and office staff. Clinical team members are often required to spend significant time dealing with utilization management administrative processes, which results in clinicians having less time to dedicate to patients. Administrative burdens increase if a denial is received, because staff members will have to gather additional clinical information to appeal the denial. In some instances, the reason for the denial might not be clear, so providing the correct information to support the appeal could be difficult.
Not only can administrative processes create care delays, but they can also occur because utilization management staff are not available when care requests are submitted, such as nights, weekends, and holidays. This issue can be frustrating for clinicians if urgent care is needed during these time periods. If care delivery is delayed, patient health could be affected; however, if urgent care is administered but ultimately denied, the patient will be responsible for the cost. This situation can be especially challenging for the patient because they may not have an understanding of why a treatment they were told was necessary was ultimately denied by the health plan.
The Future of Utilization Management
While utilization management has been used in the healthcare system for decades, these processes are expected to drastically evolve with the widespread adoption of artificial intelligence (AI). Through AI, utilization management will significantly improve, becoming faster, more efficient, and more accurate. In essence, it has the power to transform historically subjective and time-consuming processes into more streamlined and efficient processes with more consistent outcomes. These innovations will result in improved patient care, decreased administrative burdens on clinicians, and lower healthcare costs due to a reduction in unnecessary or ineffective treatments.
Additionally, AI will be able to more quickly evaluate significant amounts of outcomes data when compared to manual reviews. This acceleration in data analysis will allow AI to identify treatment patterns and apply that information to more effectively predict patient outcomes more quickly. This data will be vital to the healthcare industry as it continues to embrace the value-based care model.
Xsolis: Revolutionizing Utilization Management
At Xsolis, the future of utilization management is now through our Dragonfly platform. Dragonfly streamlines the utilization management process and ensures patients receive the care they need by automating the review of simple requests, where there is already an agreed upon threshold between health systems and payers on clear-cut inpatient versus observation statuses, freeing providers to focus on more complex cases.
Incorporating AI and advanced technologies, Dragonfly accelerates medical necessity decision-making through its shared data views and predictive analytics, updated in real time, and reduces the time required to complete a utilization management review. This utilization management review automation also reduces the administrative time required to complete a request, which decreases administration time, allowing clinicians to spend more time with their patients.
Dragonfly’s AI-driven system also helps clinicians prioritize patients needing their attention the most by assigning them a Care Level ScoreTM (CLSTM). A clinician’s patient queue, including CLS and clinical data, is accessible through an online dashboard that updates in real time as clinical information changes. With over 2.7 billion predications and a 94% CLS accuracy rating, clinicians can rely on Dragonfly to help them focus on patients with the highest level of care needs, ensuring clinicians provide consistent care and every decision is truly objective.
No other AI-driven technology uniquely serves both health systems and health plans to reduce payer-provider friction and create a more collaborative, frictionless healthcare system. Learn how Xsolis can reduce the administrative burden of your utilization management process and improve medical necessity decision-making for health systems with Dragonfly Utilize, and for health plans with Dragonfly Align.