Utilization Management

What Does Utilization Management Mean?

Utilization management is the process of evaluating the efficiency and appropriateness of healthcare usage. It involves reviewing healthcare services to ensure that only necessary, appropriate, and efficient services are being utilized. This process helps health insurance companies prevent wasted expenditures on unnecessary treatments, services, or medications. Different plan types apply utilization management with different levels of strictness, which is one of the things to look at when you’re figuring out how to choose health insurance.

Insuranceopedia Explains Utilization Management

Utilization management involves reviewing both inpatient and outpatient services to ensure that all benefits provided by an insurer are used properly and optimally. EPO and HMO plans tend to require prior authorization for more services than PPO plans do, so anyone shopping for an EPO health plan should expect more of these reviews before treatment. One goal is to ensure that the benefits offered by a health insurance company effectively meet policyholders’ needs while remaining cost-effective for the insurer. If the utilization management process finds that this is not the case, the benefits may need to be redesigned. Tighter utilization management is also one way insurers keep premiums down, so it shows up in advice on how to lower your health insurance rates.