Debunking Utilization Management Misconceptions

Utilization management touches nearly every corner of healthcare, yet most people only see it when something goes wrong.

For adjusters, it’s part of the daily workflow. For providers, it often feels like paperwork and phone calls. For patients, it shows up as waiting, uncertainty, and unanswered questions.

Behind the scenes, utilization management quietly shapes how care is reviewed, approved, and paid for. It’s one of the most influential processes in healthcare, yet one of the most misunderstood.

At its core, utilization management exists to bring structure and consistency to complex medical decisions. But when care feels delayed or confusing, UM often takes the blame.

So, what is utilization management really doing? And why does it cause so much debate?

What Is Utilization Management?

Utilization management (UM) is a clinical review process used by insurers, healthcare organizations, and third-party partners to determine whether medical services are appropriate, medically necessary, and aligned with accepted clinical standards.

Unlike a single checkpoint, UM spans the entire care journey. Reviews can happen:

• Before treatment begins
• While care is ongoing
• After services have already been delivered

The goal is to apply objective, evidence-based criteria to ensure care is delivered:

• At the right level
• In the right setting
• At the right time

For adjusters, utilization management adds critical clinical context. It supports consistent decision-making, manages risk, and creates defensible documentation when questions arise around medical necessity, timing, or scope of care.

In other words, it turns gray areas into structured decisions.

Core Services

Utilization management isn’t one action; rather, it’s a framework made up of different review types depending on when the evaluation happens and who conducts it.

Here are the most common UM services:

• Pre-Certification / Pre-Authorization: A review conducted before a specific service or procedure to confirm medical necessity and coverage requirements.
• Prospective Review: A broader look at a proposed treatment plan before care begins, often covering multiple services instead of a single request.
• Concurrent Review: A review that happens during active treatment to assess ongoing necessity, length of stay, or level of care.
• Retrospective Review: An evaluation conducted after care is delivered, typically for compliance, quality assurance, or payment determination.
• Physician / Peer Review: A clinical review performed by a physician, often in the same specialty, to evaluate complex cases or support appeal decisions.
• Expedited Review: A fast-tracked process used when medical decisions are urgent or time-sensitive.

None of these services are inherently restrictive or permissive. Their effectiveness depends on execution: clear criteria, strong documentation, and reviewers who understand the clinical context.

Misconceptions About Utilization Management

Utilization management is designed to support evidence-based care, but in real-world practice, it doesn’t always feel that way.

For providers, the administrative burden is very real. A survey conducted by the American Medical Association found that prior authorization creates meaningful barriers to care:

• 93% of physicians say it negatively affects patient outcomes
• 94% report that it delays access to necessary care
• 87% say it increases overall resource use, driving unnecessary waste

These impacts aren’t abstract. Time that should be spent treating patients is instead consumed by tracking down approvals, submitting documentation, and managing administrative follow-up. The same survey also links utilization management requirements to increased clinician frustration and burnout.

But here’s the key distinction: most complaints aren’t about utilization management itself; they’re about how it’s executed.

Delays happen when:

• Criteria aren’t clearly communicated
• Turnaround times don’t match clinical urgency
• Documentation bounces between multiple parties

Over time, these experiences fuel the narrative that utilization management “gets in the way” of care.

In reality, frustration is usually a symptom of process breakdowns, not a flaw in the concept of structured review. When communication is clear and reviewers understand the case, many of these pain points fade.

UM doesn’t fail because it exists; it fails when it’s applied poorly.

Why Utilization Management Is Beneficial

Despite the friction, utilization management plays a crucial role in:

• Containing cost
• Reducing unnecessary care
• Standardizing decisions across cases

Analyses of utilization review programs show they can:

• Reduce hospital admissions by 13%
• Cut inpatient days by 11%
• Lower inpatient costs by nearly 17%
• Deliver a positive return on investment

That’s not about delaying care; it’s about delivering the right care in the right setting.

UM helps:

• Prevent unnecessary admissions
• Limit redundant services
• Confirm medical necessity before payment

It brings consistency to decisions that would otherwise rely heavily on individual judgment.

Final Thoughts

In practice, utilization management isn’t meant to slow care; it’s meant to bring clarity and consistency to complex decisions. When applied thoughtfully, it supports evidence-based treatment, responsible resource use, and defensible outcomes. As healthcare continues shifting toward value-based care, effective utilization management becomes less about restriction and more about alignment, connecting clinical intent, patient outcomes, and sustainable cost control.

See how effective utilization management supports smarter, value-based care.

Check out our sources:

American Medical Association. “AMA Survey Indicates Prior Authorization Wreaks Havoc on Patient Care.” American Medical Association, 23 Jan. 2026, https://www.ama-assn.org/press-center/ama-press-releases/ama-survey-indicates-prior-authorization-wreaks-havoc-patient-care.

Bailit, Howard L., and Cary Sennett. “Utilization Management as a Cost‑Containment Strategy.” Health Care Financing Review, U.S. Centers for Medicare & Medicaid Services, 1991 Supp., pp. 87–93, https://www.cms.gov/research-statistics-data-and-systems/research/healthcarefinancingreview/downloads/cms1191182dl.pdf.