A. Utilization management (UM) as a program or process has existed for more than 30 years. UM functions began in the early 1970s with the creation of professional standards review organizations (now called quality improvement organizations or QIOs), which evaluated health care services provided to Medicare and Medicaid beneficiaries. The initial focus of UM was on reviewing hospital care, but gradually included outpatient services as well. By the 1980s, health maintenance organizations (HMOs) used the UM process to control referrals to specialists and gradually to health care services across the continuum of the delivery system. UM programs may be all-inclusive or focused on one or more areas of precertification, admission and concurrent review, outpatient and ancillary services, imaging and x-ray, pharmacy management, or ambulatory surgery centers.

B. In the commercial sector, UM traditionally was conducted by insurance companies, HMOs, or third-party utilization review vendors. The industry is now seeing physician organizations and hospital facilities developing UM programs and information systems to conduct UM reviews and coordination within a risk contract and/or pay-for-performance (Managed Care Resources, 2006).

C. The validated clinical and outcome impact of UM is still unclear. Supporters cite a positive shift from inpatient to outpatient care, reduction of inpatient days, and an enhanced referral process for identifying patients for discharge planning and disease and case management programs. Critics of the program identify significant administrative costs with unclear cost benefit, access barriers and delays for patients to care, and increasing patient and physician dissatisfaction with an unfriendly system (Managed Care Resources, 2006).

A. Admission certification—A form of utilization review in which an assessment is made of the medical necessity of a patient’s admission to a hospital or other inpatient facility. Admission certification ensures that patients requiring a hospital-based level of care and length of stay appropriate for the admission diagnosis are usually assigned and certified as medically necessary according to care guidelines; but this is not necessarily a guarantee of payment for such services (payment is a benefit and/or claims determination).

B. Alternative level of care—A level of care that can safely be used in place of the current level and is determined based on the acuity and complexity of the patient’s condition and the type of needed services and resources.

C. Appeal—The formal process or request to reconsider a decision made not to approve an admission or health care services, reimbursement for services rendered, or a patient’s request for postponing the discharge date and extending the length of stay.

D. Case rate—Rate of reimbursement that packages pricing for a certain category of services. Typically combines facility and professional practitioner fees for care and services.

E. Continued stay review (also known as concurrent review)—A type of review used to determine whether each day of the hospital stay is necessary and that care is being rendered at the appropriate level. It takes place during a patient’s hospitalization for care.

F. Continuum of care—The continuum of care matches ongoing needs of individuals being served by the case management process with the appropriate level and type of health, medical, financial, legal, and psychosocial care for services within a setting or across multiple settings.

G. Denials (also called noncertifications)—Issuance of a notice of noncertification decision within the utilization management process for health care services.

H. Diagnostic related groups (DRGs)—A patient classification scheme that provides a means of relating the type of patient a hospital treats to the costs incurred by the hospital. DRGs include groups of patients using similar resource consumption and length of stay. Use of DRGs also is known as a statistical system of classifying any inpatient stay into groups for the purposes of payment. DRGs may be primary or secondary; an outlier classification also exists. This is the form of reimbursement that the Centers for Medicare and Medicaid Services (CMS) uses to pay hospitals for Medicare and Medicaid recipients. Also used by a few states for all payers and by many private health plans (usually non-HMO) for contracting purposes.

I. Discharge outcomes (criteria)—Clinical criteria to be met before or at the time of the patient’s discharge. They are the expected or projected outcomes of care that indicate a safe discharge.

J. Discharge planning—The process of assessing the patient’s needs of care after discharge from a health care facility and ensuring that the necessary services are in place before discharge. This process ensures a patient’s timely, appropriate, and safe discharge to the next level of care or setting including appropriate use of resources necessary for ongoing care.

K. Evidence-based medicine—Involves the practice of medicine by use of nationally accepted clinical practice guidelines for a disease/disorder, including screening, diagnosis, and treatment of patients, based on what is referred to as the current “best evidence.” Best evidence comes from medical studies or clinical trials (Hayes OnHealth, 2006).

L. InterQual clinical decision support tools—Evidence-based criteria sets that support care planning and level-of-care decisions across the continuum of care.

M. Length of stay (LOS)—The number of days that a health plan member/patient stays in an inpatient facility, home health, or hospice.

N. Level of care (LOC)—The intensity of effort required to diagnose, treat, preserve, or maintain an individual’s physical or emotional status.

O. Milliman Care Guidelines—Span the continuum of care providing access to evidence-based clinical practice guidelines, clinical/medical knowledge, and best medical practice relevant to patients in a broad range of care settings.

P. National Committee for Quality Assurance (NCQA)—An independent nonprofit organization dedicated to improving health care quality through review and accreditation to the managed care industry.

Q. Overutilization review—Using established criteria as a guide, determination is made as to whether the patient is receiving services that are redundant, unnecessary, or in excess.

R. Preadmission certification (also known as prospective review)—An element of utilization review that examines the need for proposed services before admission to an institution to determine the appropriateness of the setting, procedures, treatments, and length of stay.

S. Precertification/prospective review—The process of obtaining and documenting advanced approval from the health plan by the provider before delivering the medical services needed. This is required when services are of a nonemergent nature.

T. Prospective payment system (PPS)—A health care payment system used by the federal government since 1983 for reimbursing health care providers/agencies for medical care provided to Medicare and Medicaid participants. The payment is fixed and based on the operating costs of the patient’s diagnosis.

U. Quality Improvement Organization (QIO)—A federal program established by the Tax Equity and Fiscal Responsibility Act of 1982 that monitors the medical necessity and quality of services provided to Medicare and Medicaid beneficiaries under the prospective payment system.

V. Resource management (RM)—A quality improvement activity that analyzes resources used in patient care processes to improve quality, efficiency, and value (Brown, 2005).

W. Retrospective review—A form of medical records review that is conducted after the patient’s discharge to track appropriateness of care and consumption of resources.

X. Utilization management (UM)—Review of services to ensure that they are medically necessary, provided in the most appropriate care setting, and at or above quality standards.

Y. Utilization review (UR)—A mechanism used by some insurers and employers to evaluate health care on the basis of appropriateness, necessity, and quality.

Z. Utilization Review Accreditation Commission (URAC)—A not-for-profit organization that provides reviews and accreditation for UR services/programs provided by freestanding agencies.

A. A UM program is a comprehensive, systematic, and ongoing effort. UM review activities are conducted through telephonic, fax, and web services, and onsite interfaces with members and their contracted provider or designee. Review activities encompass the utilization of clinical care and services, including inpatient and outpatient services.

B. UM program goals

C. UM review process