Utilization Management Takes On New Meaning, Requires Additional TLC Under Value-Based Care Models

posted by Medecision

on December 6, 2019


In 1989, the Institute of Medicine defined utilization management as a “set of techniques used by or on behalf of purchasers of healthcare benefits to manage healthcare costs by influencing patient care decision-making through case-by-case assessment of the appropriateness of care prior to its provision.” The definition still holds true today but as time marches on, the meaning of utilization management (UM) has certainly taken on new connotations for healthcare organizations.

For many years, as the industry operated under fee-for-service models, UM was primarily viewed as a cost-cutting tool. However, as healthcare moves toward the full embrace of value-based care models — which reimburse care providers based on clinical outcomes achieved not just the quantity of services delivered — UM is being seen in a different light. Indeed, UM is increasingly leveraged as a means to not only manage costs but to ensure quality and manage risk as well.

“Utilization management ensures that medical necessity is evaluated against nationally recognized, evidence-based standards and decision support. So, health plans look at a request for service and then ensure that for a person’s unique situation, diagnosis, and comorbid conditions, a particular service is medically necessary and appropriate. From a quality perspective, health plans can not only ensure they are containing costs by reigning in some of those extraneous services that were pervasive in a fee-for-service world but also, ensure that care providers are delivering high-quality care and that members are experiencing more positive outcomes and fewer complications,” said Debbie Hill, MSN, RN, Sr. Director UM Product Applications at Medecision.

In addition, healthcare provider organizations, themselves, not only “receive” UM from health insurers, they are actually embracing UM as they take on risk under value-based care models. These organizations are leveraging UM as a key strategy of various population health initiatives, which focus on managing and improving care effectiveness across a defined group of patients. With these programs, UM is used to maintain the highest quality of care while reducing or eliminating care that is inefficient, wasteful or unnecessary.

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