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Understanding Utilization Management, Part II: Best Practices

In the first part of this series on Utilization Management (UM), we discussed the basics and some of the newer rules and regulations on entities conducting (UM) required by CMS beginning January 2024.  In this section, we will dive deeper into the process of UM and start to examine some of the best practices used by organizations to perform the function better.


Essential activities in Utilization Management

First, define areas for which UM will be conducted: Having an understanding of the key areas for which you will be reviewing information to assess the appropriateness of services and use of healthcare resources to provide timely, effective, efficient, high-quality care is an important part of the process to set up a UM program.

Services typically included in the UM process include:

  • Inpatient admissions (versus Observation or ED visit only)
  • Concurrent review on inpatients
  • Continued stay review on skilled nursing facility, ES or acute inpatient rehabilitation
  • Retrospective review (on inpatients, ED visits, etc.)
  • Prior authorization for procedures
  • Prior authorization for out of network care
  • Referral review
  • Home care visits
  • Post-acute services
  • Durable medical equipment (usually above a cost threshold)
  • Pharmacy reviews (outside of step therapy, quantity limits, high tier, or specialty drugs)
  • Benefits assessment for covered services

To ensure UM for the selected areas are handled appropriately, key processes must be operationalized in order to avoid missing key opportunities in healthcare resources savings, as well as avoiding unnecessary burden on practices participating in the program.

These processes include:

  • UM intake call in center and fax as well as portal capabilities to allow for multiple and easy ways to enter a member, a provider and key clinical information into the process
  • Benefits assessment process to ensure members/patients have benefits with the plan and the procedure is covered
  • UM system with capabilities to take in the information on the patient/member and coordinate all the care that is ongoing as a single source. The system should be able to work with and perform the following functions:
    • Third party sourced clinical guidelines should be incorporated into the system (e.g. MCG, InterQual)
    • Caseloads should be monitored down to the individual nurse level
    • Nurses, physicians, social workers and others assigned to each case should be easily identifiable
    • Patients’ progress should be visible in a single view
    • Easy movement within the system across the continuum of care, from admission, to discharge, through post-acute services and ongoing care management
    • Reporting capabilities based on needs of the health plan or the provider group should be easily configured within the system
  • Third-party sourced clinical guidelines, such as Milliman Care Guidelines (MCG, Hearst Company) or InterQual Guidelines (OPTUM) must be employed in assisting in the determining the appropriateness of the care, especially for inpatient admission and transfer criteria
  • UM registered nurses, who are well trained and experienced in the area they are reviewing, and able to exercise sound clinical judgement
  • Physicians to act as medical directors to provide assistance to nurses in cases that do not meet criteria and should be denied, or in cases that fall into the “gray zone”, to review the information provided by the physician(s) caring for the patient and assist in making a determination or even call the treating physician to do a “Peer to Peer” for more information in order to make the correct determination on the care being provided
  • Determinations should be sent to the appropriate facility, the treating physician and the patient
    • All determinations that are denied must include a clear, plainly written rationale for the denial and cite a guideline that must be included
    • The opportunity to appeal the denial must be included in the letter as well, including the appropriate address where to send the information


Best practices in UM

There have been many iterations over the years in how to conduct Utilization Management, what needs to be reviewed actually and how often.  There are some best practices to think about when starting or revamping a program.

What is critical to success is to obtain the appropriate clinical information to make a determination while avoiding burdening practices trying to care for patients:

  • When thinking about what to review, it is important to think about what you want to accomplish and what the impact would be. For that reason, think about putting things into THREE BUCKETS:
    • BUCKET ONE: No Prior Authorization or review because you are not going to act on them
      • Cases done in the physician or other provider’s office or a preferred site (independently owned, freestanding surgical center that is in network)
      • Routine office visits for in-network services
      • Minor surgical procedures, such as incision and drainage of a small abscess done in the office
    • BUCKET TWO: Notification needed so that plan or providers are aware of the case, benefits can be confirmed, and ongoing reviews can be done once patient is admitted, but no determination is needed
      • Inpatient procedures, such as valve surgery, surgical removal of a malignant tumor at network facilities by network providers, for example
    • BUCKET THREE: Prior authorization needed on cases to ensure appropriate conservative management has been tried before surgical intervention is considered, as well as where a procedure might not be a covered benefit (cosmetic) or a non-network facility or provider is being utilized during the procedure
      • Joint replacement or back surgery, to ensure conservative management tried
      • Breast reduction procedures, to ensure there is a functional issue
      • Nasal surgery where there is a functional issue identified
      • Out of network anesthesia at a network hospital
      • Out of network assistant surge

Other opportunities look to reduce the burden of handling denied cases. These create both physician as well as patient abrasion with the health plan and increase everyone’s work.

It is best practice to create a system that uses direct communications, or “Peer-to-Peer” calls to reduce denials and share clinical information in real time to avoid and reduce denials:

  • Developing a close working relationship between the facility Discharge Planning staff and the health plan, goes a long way to expediting the approval of post-acute care efficiently
  • When UM is done at the hospital or other facility, appoint a “Physician Advisor” who will be the clinical resource and go between attending physicians providing direct care for patients and the UM team reviewing the cases, both for the facility and the payer.
    • Physician Advisor should be experienced and knowledgeable in the UM process, and the guidelines being used as well as a good communicator


When determining the next review date, the following should be considered:

  • MCG or InterQual Goal Length of Stay (GLOS)
  • Status of the patient
  • Expected discharge date or
  • Expected point in time where a change in status might be seen
    • When a patient in the ICU might be moved to the next level of care would warrant a check-in at the mutually agreed time between the plan and the care team at the facility
  • If the patient has reached a plateau in post-acute care and no progress is seen


Utilization Management Committee

As discussed in the previous article, CMS will require a UM Committee made up of members of the health plan and community physicians who should be compensated for their time. Members of this committee should include:

  • Health plan CMO
  • One or two UM Medical Directors
  • Director (or Manager) of UM nurses
  • Director (or Manager) of UM social workers
  • Staff behavioral health professional
  • Three to five community physicians who are thought leaders in the physician community

The UM Committee meeting cadence will be determined by the size of the plan membership and should meet a minimum of quarterly but can meet more often if needed.

The agenda should include:

  • Minutes from the prior meeting
  • Old Business that is pending further review or discussion
  • New UM policies, programs, or procedures
  • Pertinent data regarding existing programs or how the plan is performing relative to UM targets
  • Issues identified within the medical community regarding the UM program
    • All topics should include open discussion and minutes should be documented regarding progress on existing issues and any follow-up that will be needed at the next meeting


We trust this primer on Utilization Management has helped outline the important topics that need to be addressed when starting a program or redesigning a UM program.

Please feel free to reach out at with any questions you might have so that we can assist you in making your program a successful one.

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