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The Utilization Review Process: Cost Cutter or Time Waster?

The sky-rocketing cost of healthcare and the advent of managed care over the past four decades has led to the creation of medical treatment scrutiny and rationing, a process known as utilization review (UR), at times used interchangeably with the term utilization management. The idea is simple and usually involves a third party payer such as a health insurance plan authorizing medical services based on the patient’s particular policy and on the “medical necessity” of a proposed treatment or service. In other words, two questions must be answered: is the patient covered for the service and is the service really necessary? In the pre-managed care era the treating physician was the sole “decider” as to which patient needed a particular treatment or service and for how long. Such is not the case today. Doctors are often spending a good portion of their time asking for permission to treat, justifying a patient’s treatment retrospectively, or continuing a treatment through the concurrent review process.

In many ways it does make sense, especially with the sometimes ridiculous treatment costs, to scrutinize and contain unnecessary, inappropriate, or excessive use of healthcare services. The following is an example of how the process might take place. After a thorough evaluation, a physician determines a particular procedure is in the patient’s best interest, basing this decision on years of education and practice experience. If a prior authorization is required, he/she will submit the request to the patient’s insurance company for approval. The reviewer, employed by the insurance company, first determines whether the patient’s policy covers the proposed treatment. If covered, then there is a determination based on “clinicals” along with strict predetermined guidelines as to whether or not such treatment is medically necessary. Next, questions are asked such as “will the patient benefit from this treatment?” or “is there an equally effective yet less costly, and perhaps less invasive alternative?” The decision can then range from approval, to approval with stipulations or limitations (e.g. number or frequency of treatment), to denial.

A denial for authorization can then be countered by the physician by way of “peer to peer” review where the physician speaks directly with the insurance company’s physician preferably of equal specialized training. Whereas up to this point, the treating physician could use ancillary staff to conduct the review, the doctor himself has to carve out time to conduct any required peer review. If the peer review upholds the denial, then there are further levels of appeals which of course delays the patient getting started with needed treatment. In the case of having to defend a given treatment retrospectively, there are appeal letters to be written, patient records to submit, and more phone calls to make, etc.

One might then ask, is the cost-cutting worth the time required to engage in the UR process? The answer would depend on who is being asked. The insurance company most likely sees the reduction of cost, undeniably their number one goal, as worth any time it might take. The physician, whose agenda has more to do with quality of patient care and outcome over cost, might think otherwise. After all, time spent on the phone reviewing is time NOT spent treating the patients in the waiting room. There has been surprisingly little in the way of studies to help determine how much UR actually contains the cost of healthcare. One particular study in the late 1980s, a time when UR was in its infancy, found that this process does in fact reduce utilization of services, thus reducing the cost of medical care [1]. Various healthcare use indicators were studied, such as number of hospital admissions, and the percent reduction in utilization of services was generally found to be in the teens. This of course, translates into undeniable and significant savings. This post has considered only time and cost, yet one might wonder how might the UR process adversely affect patient outcomes, e.g. a particular treatment is denied and thus withheld due to lacking medical necessity. That would certainly be an interesting topic for another discussion.

In summary, UR involves two seemingly opposing forces both claiming to have the patient’s best interest at heart. The physician’s agenda is to treat effectively no matter the cost, versus the “gate keeper’s” agenda to treat but only in the least expensive way possible for positive outcome. The patient just wants to get well and go home, and isn’t that what really matters at the end of the day?

[1] Wickizer TM, Wheeler JR, Feldstein PJ. Does utilization review reduce unnecessary hospital care and contain costs? Med Care. 1989 Jun;27(6):632–647.

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