Utilization Management in Health Care


The cost of health care in the U.S. has skyrocketed over the last two decades. This expense has markedly increased the burden on health care payers and providers. Consequently, health care stakeholders have devised various means of limiting health care cost. Concurrent utilization review (UR) is one such strategy. Concurrent utilization review (UR) is a management strategy employed by managed care sector to control the utilization of benefits by hospitalized patients through restricting their length of stay (LOS), and use of auxiliary services (Murray, 2001, p. 17). This essay discusses the strengths, weakness, and policy implication of concurrent utilization review strategy.


Cost saving

Because policy makers developed this utilization management strategy to address the problem of surging health care cost, it is directed towards achieving this objective. Wickizer, Wheeler, and Feldstein (1991, p. 443) affirmed that, concurrent review programs have various positive impacts on significant hospital variables. Some of the positive impacts include lowering hospital admissions by 13%, decreasing the cost of auxiliary services by 9%, decreasing the cost of daily inpatient services by 7%, reducing inpatient days by 11%, and decreasing the cumulative medical costs by 7%. Utilization review strategy cuts down the cost of health significantly in areas where resource utilization was previously high.

Superior care delivery

This program endorses provision of quality care. Murray observes that adverse outcomes arising from inappropriate denial of care may bring serious legal consequences to physicians, registered nurse, or payer (2001, p.19). Therefore, providers and payer tend to take extremely serious caution to avoid legal consequences, thereby allowing patients to access best quality care. Insurance providers are responsible for investigating all the medical data regarding a claim prior to refusal of reimbursement.

Competent personnel

These experts guarantee that payers provide benefits to those who deserve it by merit. They also ensure that unscrupulous health care institutions do not swindle money from payers by allowing inappropriate hospitalization. After the payer’s professional reviewers rule out a case as inappropriate hospitalization to the benefit of the payer, the provider will settle the expense of care.

Insurance policy of the care receiver is relevant in UR program. Majority of the patients are not familiar with the limitations of their insurance policies. Thus, these competent personnel scrutinize insurance policies of patients and qualify or disqualify them for reimbursement. This can make patient opt for insurance premiums that will meet their entire medical requirement.


Limited access to health care

A policy usually does not over 100% solution to the problem of interest. Similarly, Wickizer and Lessler (1998, p. 844) found that treatment restriction associated with UR increased the probability of readmission within 60 days following denial of access to psychiatric care. In fact, the adjusted odds of readmission rose by 3.1% for every day the demanded LOS was reduced (Murray, 2001, p. 18).

Problem in the determination of appropriateness of care

Because reimbursement depended on the report by health care providers, establishing whether patient hospitalization was appropriate is difficult. A study by Bickman, Karver, and Schut (1997), revealed that the clinician ratings revealed an almost zero inter-rater reliability (p. 515).

The tools used for review criteria are inadequate to detect the truthfulness of a claim. Murray argues that low rates in UR undertaking can be accounted for by the improved used of terms by provider personnel in reporting to external reviewers regarding the credibility of their judgment on cases (2001, p. 22). Specific phrases may have a high chance of generating approval from payer’s reviewers and a learning graph for the UR program may exist. This does not indicate a provider ploy, but the unconscious mastering of new vocabulary to rationalize acute care.

Absence of evidence-based standards

Utilization review critics may question safety issues arising from implementation of UR. Although this program reduces utilization levels, there is no proof of safety because of lack of evidence-based standards. Moreover, it is hard to identify impaired care quality associated with UR programs. The existing review criteria are insufficient to identify inappropriate hospitalization, at a varied degree of accuracy. Mark you, quite a substantial number of non-physicians determine the credibility of utilization. Although many denied cases might qualify for hospitalization, they are not appealed due to a flawed and cumbersome appeal process.


An exceptional finding from this subject is the realization that the law protect patient from unreasonable UR conclusions. When a patient’s health deteriorates because of unjustified denial of coverage, he/she is entitled to compensation of harm from the practitioner or even sometimes payer. This legal concern emanating from UR is outstanding because a program that intends to restrict cost of health care is itself limited by law.

This viewpoint of utilization review program brings together all the components including the provider, payer, and patient. The legal process of the utilization review program has complex policy implications. Policy makers should develop well-defined criteria for assessing patient harm and recovery to ensure full compensation.


Although UR is a shrewd utilization management strategy to contain the surging cost of health care, researchers should clear some uncertainty impairing its effectiveness. Therefore, further research is necessary to set evidence-based standards to guide UR process.

Reference list

Bickman, L., Karver, M. S., & Schut, J. (1997). Clinician relaibility: Accuracy in judging appropriate level of care. Journal of Consulting and Clinical Psychiatry , 65(3), 515-520.

Murray, M. E. (2001). Outcomes of concurrent utilization review. Nursing Economics, 19(1), 17-23.

Wickizer, T. M., & Lessler, D. (1998). Do treatment restriction imposed by utilization management increase the likelihood of readmission for psychiatric patient? Medical Care , 36(6), 844-850.

Wickizer, T., Wheeler, J., & Feldstein, P. (1991). Utilization review savings at the micro level. Have hospital inpatient cost containment programs contributed to the growth in outpatient expedniture? Medical Care , 29(5), 442-451.

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