Utilization Review Services Explained

Healthcare costs in the U.S. aren’t slowing down. National health expenditures reached roughly $5.3 trillion in 2024, growing about 7% year-over-year. At that level of spending, it’s important to make sure care is appropriate, necessary, and actually delivering value. That’s where utilization review (UR) comes in.

Those working in healthcare, insurance, or workers’ compensation are familiar with utilization review. But what does it entail, and how do each of the services function in practice?

What Is Utilization Review?

Utilization review is the process of evaluating whether healthcare services are medically necessary, appropriate, and delivered at the right level of care.

In other words, UR answers the core question: Is this the right care for the patient, at the right time and in the right setting?

Utilization review shows up across the entire healthcare ecosystem, including health plans, hospitals, third-party administrators, and workers’ compensation programs. It functions as a clinical safeguard that helps align care with evidence-based standards.

Why Does Utilization Review Matter?

Unnecessary care is a massive problem in U.S. healthcare. Estimates suggest that $760 billion to $935 billion in annual healthcare spending is waste, including overtreatment, low-value care, and administrative inefficiencies (JAMA). Utilization review helps address and contain these costs by ensuring services are clinically appropriate before they are delivered or reimbursed.

But cost is only part of the picture. Utilization review also plays a key role in patient safety and quality of care. By evaluating whether services are medically necessary and supported by clinical evidence, UR helps reduce exposure to unnecessary procedures, avoidable complications, and treatment that may not improve outcomes.

It also supports consistency in care decisions. In a system where treatment approaches can vary widely between providers and settings, utilization review helps align decisions with established clinical guidelines and evidence-based standards. This creates a more standardized approach to care delivery across patients and payers.

The Core Utilization Review Services Explained

Pre-Certification

Pre-certification is the starting point. Before certain procedures, medications, or admissions, providers notify the payer or UR partner to confirm the service is a covered benefit under the patient’s plan.

It’s important to be clear: this isn’t a full clinical review. It’s more of a coverage checkpoint, making sure the request is routed correctly and meets basic plan requirements.

Skipping this step can lead to claim denials, delays, and unnecessary friction on both sides.

Pre-Authorization (Prior Authorization)

Pre-authorization is where the clinical review begins. Before care is delivered, a licensed clinician evaluates whether the requested service meets medical necessity criteria, typically based on established guidelines.

Medicare Advantage plans process tens of millions of prior authorization requests each year, with the majority of requests ultimately approved and a smaller portion resulting in denial. Only about 10–12% of denials are appealed, meaning the vast majority are never formally challenged or re-reviewed.

However, when appeals are submitted, over 80% are partially or fully overturned in many reported analyses.

Put simply, when providers appeal a denial, they often submit additional clinical documentation or clarification that wasn’t fully considered in the initial review. In many of those cases, the decision is changed and the service is approved.

This doesn’t necessarily mean the original decision was incorrect. It often means the initial review was based on limited or incomplete clinical information, and the appeal provides a more complete picture of the patient’s condition and treatment need.

Prior authorization decisions can shift when more information is available, and the appeals process functions as an important second layer of clinical review, not just an administrative step.

Prospective Review

Prospective review is the broader category that includes pre-authorization. It refers to any evaluation of a treatment plan before services are performed, ensuring the proposed care aligns with clinical guidelines and is appropriate for the patient’s condition.

This is where proactive decision-making happens. before costs are incurred and before care paths are locked in.

It’s especially important for:

• Scheduled procedures
• High-cost imaging or diagnostics
• Inpatient admissions

Concurrent Review

Once treatment is underway, concurrent review takes over.

This is real-time monitoring of a patient’s care, typically during a hospital stay or ongoing treatment plan.

Reviewers (often nurses or physicians) assess:

• Whether the patient still meets criteria for the current level of care
• Whether treatment is progressing as expected
• When it’s appropriate to transition or discharge

Concurrent review helps prevent two costly problems:

• Unnecessarily extended stays
• Premature discharges

When it works well, it keeps patients in the right setting for the right amount of time.

Expedited Review

Not every case can wait. When a patient’s condition is urgent and delays could seriously jeopardize their health, an expedited review is triggered.

Regulatory guidelines generally require decisions within 72 hours or less, with faster turnaround required when clinically necessary.

This process exists for a reason: patients in critical situations shouldn’t be stuck waiting in a queue.

Retrospective Review

Retrospective review happens after care has already been delivered.

At this stage, reviewers evaluate whether services were:

• Medically necessary
• Supported by appropriate clinical documentation
• Consistent with established clinical guidelines

This type of review evaluates whether care delivered aligns with medical necessity standards, based on documentation in the medical record.

Physician / Peer Review

When a denial, especially for medical necessity, is under consideration, it should be reviewed by a physician rather than determined solely at an administrative level.

A licensed physician, ideally in the same specialty, reviews the case and evaluates the clinical rationale behind the request.

This step is critical for credibility. It ensures:

• Clinical decisions are made by clinicians
• Providers have a meaningful opportunity to discuss and defend care decisions
• Denials are grounded in medical reasoning, not just policy

Utilization Review in a Changing Healthcare System

Utilization review sits at the intersection of clinical decision-making, cost containment, and healthcare operations. As pressure on the system continues to grow, the real question isn’t whether utilization review is necessary; it’s how well it’s working in practice across the organizations that rely on it every day.

Need a stronger, more consistent utilization review process? Connect with our team today.

Check out our sources:

American Medical Association. 2024 AMA Prior Authorization Physician Survey. American Medical Association, Dec. 2024, www.ama-assn.org/system/files/prior-authorization-survey.pdf.

American Medical Association. “Prior Authorization and Claims Data Insights.” AMA Advocacy and Policy Resources, www.ama-assn.org/practice-management/prior-authorization.

Berwick, Donald M., and Andrew D. Hackbarth. “Eliminating Waste in US Health Care.” JAMA, vol. 307, no. 14, 2012, pp. 1513–1516. doi:10.1001/jama.2012.362.

Centers for Medicare & Medicaid Services. National Health Expenditure Data: Historical and Projected Spending. U.S. Department of Health and Human Services, www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data.

Health Affairs. “U.S. Health Care Spending Growth and Drivers.” Health Affairs, www.healthaffairs.org.

URAC. Health Utilization Management Accreditation Standards. URAC, www.urac.org/accreditation-cert/health-utilization-management-accreditation/.