Simplifying Utilization Management

Utilization review goes hand in hand with Medicare and Medicaid. This process was developed as a cost-containment strategy to combat against overuse of services. The aim of UM is to strive for a balance between helping patients and keeping insurance costs down for all parties. The terms utilization review and utilization management can be used interchangeably and vary depending on what state you’re in.

What is Utilization Management?

Utilization review, often referred to as UR, is a structured process used to assess the medical necessity, appropriateness, and quality of healthcare services provided to injured workers. It involves conducting case reviews, checking medical records, speaking with patients and physicians, and analyzing the care plan. UR nurses may make care recommendations based on established CMS guidelines for the diagnosed condition. They also help figure out whether or not the treatment is eligible for reimbursement from the insurance plan.

The Utilization Review includes:

1. Pre-certification Reviews, also known as Prospective Reviews: happen before the medical service is provided. An RN or physician collects all necessary information and the reasons for the request.
2. Concurrent Reviews: occurs when medical treatment is in progress the goal here is to monitor the patients’ recovery and resources being used during the treatment.
3. Retrospective Reviews: this review is performed after the medical services are provided. It’s focus is on the effectiveness of the treatment received.
4. Re-reviews: when a medical service is denied during any of the above steps the employee/claimant or physician can appeal the denial.

The primary goal is to ensure that the medical treatments are consistent with the established guidelines and standards, thereby promoting better outcomes and cost containment for the workers’ compensation system.

Pre-Authorization and Pre-Certification

Pre-Authorization:

Pre-authorization is a process used to gain approval from your patients’ healthcare payer before they receive certain medical services, undergo procedures, or get prescriptions. It’s essentially a way of ensuring that any proposed medical actions meet the criteria set by the insurer and are eligible for coverage. Think of it as a checkpoint you pass through to ensure the claimant’s treatment is medically necessary and will be covered by your insurance plan.

For example, if a physician suggests a spinal surgery, they may need to seek pre-authorization from the insurance company. This process helps prevent unexpected financial burdens and ensures that the procedure is necessary and will be covered, avoiding any surprise bills down the road.

Pre-Certification:

Pre-certification primarily focuses on planning and documenting medical services, procedures, or hospital stays. It’s not about seeking approval but rather notifying the insurance company in advance about any planned healthcare activities.

Picture it as booking reservations. The healthcare provider gets informed about what’s coming up. Pre-certification doesn’t seek permission but rather ensures that all the necessary arrangements are in place. It can help streamline the process, coordinate care, and make sure everyone involved is on the same page.

For instance, if you’re planning elective surgery, such as a nose surgery, your healthcare provider might pre-certify it with your insurance company. This allows them to make necessary preparations, check for coverage details, and facilitate a smooth experience for you.

Peer Review vs Utilization Review

Although they might sound similar these services are distinct but both aimed at ensuring appropriate, cost-contained care.

Peer Review: This is the evaluation of a patient’s medical records and treatment plans by a panel of independent, impartial medical professionals, referred to as peers.

For example, if a patient needs spinal surgery, a peer-reviewed panel of orthopedic surgeons may assess the medical records and treatment plan to determine whether surgery is the most appropriate course of action or if alternative treatments like physical therapy could be more effective.

Utilization Review: It is used to evaluate and manage the medical services, procedures, and treatments provided to a patient to ensure they are necessary and cost-effective.

For example, suppose the physician prescribes a series of tests, bloodwork and a lengthy hospital stay for a patient with an unexpected rash. This can definitely be cause to worry but a UR nurse would assess whether the tests and the duration of the hospital stay align with best practices.

Benefits

Don’t forget about the rules: Many states and countries have regulations that require insurance companies to implement utilization management practices. Insurance adjusters can benefit from these established procedures to ensure they remain compliant with these legal requirements.

Faster Claims: Utilization management can speed up the claims process. Insurance adjusters can work with utilization review experts to ensure that claims align with evidence-based medical practices. This reduces delays caused by disputes over medical necessity, helping injured parties receive their benefits more quickly.

Cost Control: Utilization management ensures that medical treatments and procedures are necessary and in line with established guidelines. By preventing unnecessary or inappropriate treatments, insurance companies can significantly reduce their claim payouts. For insurance adjusters, this means less strain on the company’s financial resources, allowing them to manage claims more effectively.

The Role of Case Management

How do Case managers play a role in the UR process? Simple.

Case management is a more hands-on process that is crucial in facilitating patient care. Case managers collaborate with at-risk patients who may need more special attention to get back to work or out of the hospital.

Let’s say a treating physician recommends an MRI for a soft tissue injury that doesn’t initially indicate severe damage, the case will need to be reviewed by a CM to ensure it aligns with evidence-based guidelines.

In these situations, guidelines might suggest that physical therapy or anti-inflammatory medication—is the first line of care unless specific red flags are present.

To validate this, Case Managers collaborate with a UR nurse who has access to clinical guidelines (like ODG or ACOEM) that outline when an MRI is considered necessary.

If the treatment aligns with the guidelines, the nurse approves it. If not, they might talk with the treating physician to discuss alternative approaches.

High Stakes Benefits

Utilization Management is most useful with high-cost cases. These are cases in which a small number of patients generate a large portion of healthcare expenses.

1. Coordination of Complex Care: High-stakes cases often involve multiple specialists and complex treatment plans. Utilization management aids in coordinating these complex care plans to ensure the patient’s insurance company covers their procedures. Alternatively, there might be approval or referrals that need to be made before UR takes care of that.
2. Prevents Unnecessary Procedures: In high-stakes cases, there may be pressure to pursue aggressive or experimental treatments. Utilization management ensures that procedures are backed by evidence and are truly necessary, preventing unnecessary interventions that may carry risks.
3. Fraud Prevention: High-stakes cases may attract fraudulent or exaggerated claims due to the high potential payouts. Utilization management scrutinizes claims for irregularities and fraudulent activities.

It is estimated that up to 7 percent of patients can account for 30-60 percent of costs.

Utilization Management Matters

UM is a multifaceted approach that balances cost control, quality improvement, and streamlined care coordination. It helps ensure that patients receive the right care at the right time, which not only improves their health outcomes but also contributes to the overall efficiency and sustainability of the healthcare system. Want to discuss if it’s the right choice for you and your claims? Look through our service page and compare your choices. We’ll be here to help you through your medical claims.