Utilization Reviews

The utilization review process is a long-standing one that determines whether medical services and expenses are both appropriate and necessary; this assists in minimizing costs for the organization in question. These reviews take a number of forms:

  • Pre-admission reviews for scheduled hospitalization—precertification review
  • Admission reviews for unscheduled hospitalization—precertification review
  • Second opinions for elective surgeries
  • Concurrent reviews
  • Individual case retrospective reviews
  • Aggregate plan retrospective reviews
    These reviews are performed by various doctors and healthcare professionals in conjunction with insurance companies, but can also be conducted by independent agencies. In utilization reviews, a balance must be struck between reducing the volume of services and increasing the quality of care.
    The first type of utilization review to consider is known as the precertification review, which is a pre-approval process for treatments designated by the insurance companies. Before medical care is provided, these procedures require precertification to determine whether they are necessary.
    For the most part, procedures requiring this process include the following:
  • Nonemergency hospitalization
  • Outpatient surgery
  • Skilled nursing and rehabilitation services
  • Home care services
  • Home medical equipment
    The review and approval process involves determining whether the requested service is medically necessary.
    Most insurance plans have pre-established clinical guidelines of care for a given condition. Once the precertification request is submitted to the insurance company, the committee goes through these cases against the provided guidelines and determines if the case in question meets the requirements of the guidelines. The committee can contact the healthcare provider and other individuals who can help them make the determination. The process usually starts with data collection which includes symptoms diagnosis results of lab tests in the list of required services. It also compared the medical information provided against the plan’s medical necessity benchmarks.
    A second type of review is known as a concurrent review. These are used during active management of a given medical condition, which may be inpatient or ongoing outpatient care. The prime objective of such a review is to ensure that the patient receives the correct care in a timely, cost-effective manner. Once the physician has begun a course of treatment, any new treatments found on the insurance companies’ preapproval list are submitted—along with all relevant information on the procedure, clinical status, and progress (or lack thereof) up to the date of submission—to the insurance company for approval. The physician and other providers are then informed of the insurer’s decision.
    A particularly important aspect of a concurrent review is assessing the need for continuous hospitalization, as the primary objective of such a review is to decrease the amount of time the employee remains in the hospital. Often, feedback includes a specific discharge plan, which can include transfers to rehabilitation, hospice, or nursing facilities. These plans often change due to complications or abnormal test results involved in treatment of a given condition, but it is still important to minimize hospitalization time, such that cost is contained as much as possible.
    The final type of utilization review is called a retrospective review, in which medical records are audited on a specific case after treatment has already been completed. This type of review takes two forms; one reviews a specific plan’s aggregate utilization statistics, the other deals with individual cases.
    The insurance company can use the results of these reviews to approve or deny coverage for treatment that has already been received. Specific elements of individual cases are compared to previous patients with the same condition, and, based on the retrospective review, treatment guidelines and criteria may be revised.
    The other function of an individual case retrospective review is to request the approval for treatments conducted without precertification approvals; such cases may occur under an extreme medical emergency, when time constraints prevent the parties involved from obtaining precertification. Emergency acute care surgeries are a common example for this type of review. This type of review usually takes place before any payments are made.
    The second type of retrospective utilization review is the aggregate group review, performed by the insurance company for the plan’s sponsor. Due to confidentiality laws, plan sponsors have no access to individual cases, and instead must use statistical data in aggregates. This means that average statistics on incident experience (compared to the appropriate benchmarks) is provided to the sponsor. The insurance company, an independent review organization, or the providing hospital can conduct these reviews.
    The term utilization management is often used interchangeably with utilization review. Because the plan’s sponsor is responsible for all medical costs in an employer-sponsored plan, that sponsor often demonstrates the most concern as to the management of those expenses. Due to advancements in the field of information technology, sponsors require intermediaries—such as brokers and insurance companies—to provide them with empirical data; this data is also analyzed to provide appropriate benchmark studies. These studies can help employers with cost-containment efforts because they can lead to utilization improvement, waste management, and adherence to evidence-based medical practices.

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