Utilization management (UM) is the work of checking that each admission, and each day of a stay, is medically necessary and properly authorized. Most hospitals do some of it themselves. Outsourced utilization management means bringing in an outside team of clinical reviewers, physician advisors and technology to do some or all of it. For the basics, see What Is Hospital Utilization Management?.
Why Hospitals Outsource Utilization Management
The reasons tend to fall into four groups:
- Coverage. Admissions and status decisions don't wait for business hours. An outside team can staff nights, weekends and holidays without the hospital recruiting for every shift.
- Expertise. Reviewers who apply InterQual and MCG every day across many payors, backed by physician advisors for disputed cases, see patterns a small in-house team may not.
- Starting from nothing. A hospital with no UM program can stand one up faster than it can hire and train a team.
- Cost structure. In bServed's published figures, hospitals have seen 60% lower in-house UM costs.
The starting-from-nothing case is real. Hospital 3, a rural hospital, began an Emergency Department utilization program from a standing start and saw its admission rate rise 30% and payor denials fall 40%.
What Federal Rules Still Require
Outsourcing the work doesn't change what Medicare's hospital rules expect. A hospital's utilization review plan must be carried out by a committee of two or more practitioners, at least two of them doctors of medicine or osteopathy. That committee can be a staff committee of the hospital, or a group outside the institution established by the local medical society and some or all of the hospitals in the locality, or in a manner approved by CMS[1].
Reviews can't be conducted by anyone with a direct financial interest in the hospital, or anyone who was professionally involved in the care of the patient being reviewed[1]. Those requirements stay the hospital's to meet, so ask any vendor how its reviewers and physician advisors fit into your utilization review plan, and involve your compliance team early.
What to Expect From an Outsourced Program
A good program works as an extension of your hospital team rather than a separate silo. In bServed's model, that means specialized software integrated with your existing EMR to surface utilization signals and track authorization status, clinical and revenue cycle experts who work alongside your staff without disrupting physician workflows, and real-time reporting for finance and operational leadership covering authorizations, level-of-care decisions, denial rates and financial performance. Implementation is typically complete within 30 days, with no new systems for your staff to learn.
Questions to Ask Before You Outsource
- Does the team cover nights, weekends and holidays, including the Emergency Department?
- Which criteria do reviewers apply, and how are payor-specific criteria handled?
- How does the service connect to your EMR, and what does it ask of your staff?
- Who are the physician advisors, and when are they brought in?
- What will leadership see in reports, and how often?
For a fuller checklist, see How to Choose a Utilization Management Company.
How bServed Approaches It
bServed provides 24/7 utilization management from the Emergency Department through discharge. The work spans emergency department utilization review, inpatient concurrent review, denial prevention, and clinical revenue cycle optimization. At Hospital 1, a combined ED and behavioral health deployment recovered $3M+ in cash with a 10X verified ROI.