Utilization review is a standard process within managed healthcare designed to evaluate the medical necessity and appropriateness of services a patient receives. Health insurance companies and other payers employ this mechanism to ensure provided care aligns with established clinical guidelines and is delivered efficiently. The goal is to balance providing high-quality treatment with managing the increasing costs of the healthcare system. This oversight applies to various medical services, from hospital admissions to high-cost prescription medications.
Defining Utilization Review
Utilization review (UR) is the formal process of assessing a patient’s treatment plan against evidence-based medical criteria. Healthcare professionals, such as doctors, nurses, and case managers, working for or contracted by the insurer, carry out this evaluation. Their work differs from simple claims processing, as it involves making clinical judgments rather than just checking billing codes.
The core of the review determines if a service is medically necessary for the patient’s specific condition. This means the proposed treatment must be accepted as effective, non-experimental, and appropriate for the patient’s symptoms and diagnosis. Reviewers also assess the appropriateness of the care setting, deciding if a procedure requires an inpatient hospital stay or could be safely performed on an outpatient basis.
By enforcing these standards, UR aims to prevent the overutilization of resources, such as redundant tests or unnecessarily long hospital stays. This practice serves to control costs for the plan and ensures patients receive services that benefit their health. The decisions made during this process directly impact whether the insurer will cover the cost of a provider’s service.
The Three Types of Review
Utilization review is categorized into three types based on the timing of the assessment relative to when the medical service is provided. These stages ensure continuous oversight across the patient’s care journey. Each type has a distinct purpose and affects the patient’s access to treatment at a specific point in time.
The first category is Prospective Review, which occurs before a service is delivered. This is commonly known as prior authorization or precertification, requiring the provider to request approval for a procedure, hospital admission, or expensive medication before it is administered. This review eliminates unneeded or inappropriate services, giving the patient and provider certainty of coverage ahead of time.
The second type is Concurrent Review, which takes place while the patient is actively receiving care, often during a hospital stay. Reviewers monitor the patient’s progress against clinical criteria to determine the continuing need for services. This review determines if the patient’s continued admission or current level of care remains medically justified, helping manage the length of stay and coordinate discharge planning.
Finally, the Retrospective Review is conducted after the service has been completed and the bill has been submitted to the insurer. This examination reviews the patient’s medical record to confirm the appropriateness of the care provided. While it does not affect the patient’s immediate treatment, a negative finding can result in a denial of payment to the hospital or provider, even if the service was pre-approved.
Navigating Coverage Decisions and Appeals
The utilization review process culminates in a coverage decision, which is either an approval or a denial of the requested service. An approval signifies that the insurer deems the service medically necessary and will proceed with payment according to the policy terms. A denial, formally called an Adverse Benefit Determination, means the payer has determined the service does not meet their medical necessity criteria or is not covered under the patient’s specific plan.
When a service is denied, the patient or the healthcare provider has the right to appeal the decision. The appeals process typically begins with an Internal Review, where the patient challenges the denial directly with the insurance company. This stage requires submitting additional medical documentation or a statement from the treating physician to justify the necessity of the service.
If the internal appeal is unsuccessful, the patient can pursue an External Review, which involves an independent third party reviewing the case. This independent review organization is not affiliated with the insurer and makes an unbiased medical judgment regarding the necessity of the care. Navigating these appeals requires close attention to the deadlines and documentation requirements outlined in the patient’s health plan documents.