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What Is Utilization Management in Healthcare?

Utilization management (UM) is certainly not a new concept, but what is it? And how can this complex review process help your organization reduce healthcare costs? 

Continue reading to learn more about UM, why it’s important, and who benefits from it.


Efficiency in Healthcare


UM  is an important, systematic process that promotes efficiency in healthcare. 

When performing UM, care managers consider the following factors to determine the appropriateness of care for a member:


  • The severity of symptoms, acuity of symptoms, prior treatment efforts, clinical diagnosis, and level of impairment in functioning.
  • Clinical outcomes research and level of care guidelines.
  • Capabilities of local providers and facilities.


This ensures that members get appropriate and necessary care in the right setting without redundant or unnecessary procedures. 

This, in turn, helps payers control costs and prevent both under and over-utilization of services.

The most effective way to conduct UM is with software, like InfoMC’s Incedo™, which guides care managers through the UM process and provides advanced automation that further enhances the efficiency of a UM workflow. 

Utilization management software can be configured to evaluate a wide range of medical and behavioral health services, including: 


  • ER visits
  • Medical procedures
  • Inpatient admissions
  • Primary care physician visits
  • Outpatient visits
  • SNF admissions
  • Specialty referrals
  • Inpatient days
  • Medical treatments & testing
  • SNF inpatient days
  • High-cost imaging


The UM review process is run on a case-by-case basis for each member, with payers (not providers) primarily responsible for ensuring UM is carried out.


Components of UM


There are three components of utilization management, with each one addressing a different stage in the member treatment process. 


  1. Prospective Review. This is performed before treatment begins and is used to determine which services a member needs. Redundant, unnecessary, and inappropriate treatments are eliminated under this component of UM. Of course, treatments marked superfluous at this point may become appropriate at a later time.
  2. Concurrent Review. This occurs while the member is undergoing treatment. Analytics tracked include resource consumption and members’ health. Depending on how the member is progressing, treatments marked unnecessary during the prospective review may be deemed appropriate now, and vice versa.
  3. Retrospective Review. This UM process runs once treatment is completed and reviews the efficacy of the treatment so that successful methods can be prescribed to similar patients in the future. 


Why Is UM Important?


UM is important because it helps reduce healthcare costs, improves health outcomes, eliminates unnecessary treatments, and ultimately promotes population health. 

The two overarching goals of UM are to reduce costs and improve member health. Each goal facilitates the other since helping members receive the most effective treatments possible improves health and saves money by mitigating the need for further treatments. 

Consequently, UM benefits everyone involved in the healthcare process — members, payers, and providers alike. 

Here are a few more reasons why UM is crucial for the healthcare industry: 


  • UM tracks treatment performance, providing the insights necessary for discovering and stopping unnecessary treatments and procedures. 
  • By eliminating ineffective treatments, UM helps decrease denials — by curating healthcare treatments based on efficacy. This helps requested treatments get approved. 
  • UM’s strong emphasis on effectiveness helps sick employees get back to work sooner, lightening the healthcare cost burden for employers and enabling companies to offer employees better healthcare options. 
  • UM, organizations help reduce system overwhelm by getting members in and out of care as quickly as possible. 
  • On a national scale, UM is important because by tracking treatments and approving only effective and appropriate procedures, this review process helps increase the overall health of the entire population. 


What Are the Benefits of Utilization Management (UM)?


Having a strong UM program in place delivers benefits to everyone involved in the continuum of care. Some benefits offered by the UM process include:  


  • For Payers. Benefits include access to better clinical data and treatment analytics, lower healthcare costs, and the ability to track the performance of new treatments.
  • For Members. Lower insurance premiums, fewer denials, access to more effective treatments, and less time in the hospital. 
  • For Providers. Faster claim approvals, better resource allocation, support for better treatments, access to more comprehensive data. 


How UM Software Is Improving Efficiency


Software is one of the strongest UM tools, offering a wide range of automation capabilities. And for payers (who are constantly looking for better ways to automate their processes), programs like InfoMC’s Incedo™ represent the next great leap in UM evolution. 


1. UM Software Allows for Auto-Authorization During Prospective Review


For many organizations, executing their UM plan is a manual process that requires the provider to call the payer for treatment authorization and the payer to process the request and then call the provider back with authorization or denial. 

Incedo™ eliminates this wait time and drives efficiency by enabling auto-authorization for services that do not require a clinical decision or routine procedures that are regularly approved. We’ve added logic-oriented decision making that allows payers to select which services can be auto approved.

This allows timely response to providers and less human interaction, resulting in increased efficiency and streamlined workflows. 


2. Care Management Integration


Incedo™ enhances teamwork across UM and Care Management allowing the Medical Director and UM nurse to view the same member information while working together to make decisions. Care Managers are able to submit service requests for authorization directly from the care plan and view progress on the authorization status or respond to requests for additional information from the UM nurse through the system.


3. Automated Workflows During Concurrent Review


Another advantage of using Incedo™ as your utilization management software is that we’ve developed configurable automated workflows that support inpatient concurrent reviews, Medical Director reviews, and follow-ups after hospital discharge. . Our system automates the UM process, producing auto-generated tasks for the right people to complete the actions required with due dates to help manage compliance with decision and notification turn-around times.


4. Integration With Evidence-Based Criteria Software


To ensure an efficient clinical review process, Incedo™ seamlessly integrates with leading evidence-based criteria software, including InterQual® Connect by Change Healthcare and MCG software. 

Having evidence-based criteria integrated into our UM platform improves efficiency by allowing  reviewers to seamlessly access care guidelines from right within the UM workflow in Incedo. 


Learn More About How Incedo™ Enhances UM Processes 


InfoMC’s utilization management platform, Incedo™, provides a person-centered medical management system that augments operational efficiencies and supports member health outcomes by empowering providers and payers with sophisticated UM capabilities.

Contact us today to learn more about how InfoMC can help you take advantage of UM in your organization.


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