The Truth about Utilization Management
May 10th 2021

The Truth about Utilization Management: Lower Costs and Better Care

Some self-insured employers get a bit anxious when they hear the term utilization management, because they equate it to denying coverage and limiting spending however possible, even if it means upsetting employees and compromising care. However, these concerns are considered far from modern reality. Utilization management has become an important tool to improve quality of care while simultaneously controlling costs, thereby pleasing employers and employees alike.

“It's the right care, at the right time, at the right place," says Nate Kalkofen, Vice President, Client Relationship Executive at eviCore.

How does utilization management work in real life? Here's an example of how utilization management plays out in practice:

A physician requested a head CT scan for a patient with poor coordination who had been having difficulty walking for a few weeks without any history of trauma. The physician had suspected ataxia, a neurological sign and symptom that refers to loss of coordination of muscle movement due to disorders in one or more components of the nervous system, including the posterior fossa. This fossa is located at the base of the skull and is much better visualized with MRI compared to CT scans because of the artifact produced from the surrounding thick bone.

The eviCore medical director recommended that a brain MRI be performed instead, to avoid ambiguous CT scan results, which would have required a more definitive study with an MRI later. Without this recommendation, there would also have been potential delays in care, because the physician would have needed to request a follow-up brain MRI and the patient would have needed to return to the imaging facility before obtaining a more definitive diagnosis.  Through recognizing the superiority of MRI in this setting, both the expense of the unnecessary CT and the resulting delay in diagnosis were avoided.

Such scenarios are common because utilization management is focused on providing care based on evidence-based clinical guidelines based upon the latest clinical science, and is frequently delivered through a prior authorization process that ensures that a test, treatment, or procedure ordered by a healthcare provider is safe and appropriate.

In many cases, advice from another physician may be helpful in determining the appropriate test or procedure which should be performed," says Dr. Norm Scarborough, Chief of eviCore Radiology Services. “We have over 400 doctors working for eviCore with a wide variety of specialists who bring a high level of expertise to prior authorization decisions."

Delivering the Right Care With Utilization Management

Utilization management steers care toward clinically recommended next steps. It also helps patients and self-insured employers avoid the costly and potentially dangerous “cascade effect." When the most appropriate test or procedure is ordered from the beginning, it helps avoid unnecessary procedures following insufficient initial tests and incidental findings.

In one such case, a physician requested a CT scan for a young woman with right upper abdominal pain. However, this was not a “red flag" (emergency) situation, so eviCore recommended an abdominal ultrasound as an initial study instead. eviCore’s evidence-based clinical guidelines describe that ultrasounds are 96% accurate in detecting gallstones, which the woman's physician suspected the patient of having, perhaps along with an inflamed gallbladder.  The requesting physician agreed this is sound medical practice, and the highly accurate abdominal ultrasound confirmed the physician's suspicion: the woman suffered from gallstones.

A CT scan would have not only been more costly, but also carried a lower sensitivity for detecting gallstones, so additional expensive tests might have been required to confirm their presence.

Because of utilization management, this patient:

  1. 1. Was not unnecessarily exposed to the potentially harmful radiation and contrast material used in a CT scan
  2. 2. Was diagnosed in a timely manner
  3. 3. Avoided unnecessary costs, thanks to utilization management

That better care pathway also helped reduce overall costs for her self-insured employer, resulting in a win-win.

The savings and health benefits of utilization management accumulate every time a more effective diagnostic test is recommended instead of a less effective test that may have been initially requested. The impact can be particularly significant when an employer adopts utilization management programs to manage high-cost claims involving conditions such as musculoskeletal disorders, cancer, or cardiology conditions where the effectiveness of tests such as CT scans and MRIs can vary based on the clinical circumstances.

Depending on the circumstances, these tests could also produce incidental findings that are unrelated and unexpected, thereby leading to further testing and perhaps invasive procedures. For example, one medical test may lead to another (the cascade effect), e.g., if a physician starts by ordering a spinal MRI for new onset of pain in one area without neurologic symptoms or any conservative treatment, only to uncover findings such as degenerative or bulging discs in another area which do not correspond to the patient’s symptoms. This may result in the physician ordering additional tests or even invasive procedures that aren't necessary.

Patient-Centered Decision-Making Improves Outcomes

eviCore utilization management specialists ask three patient-centered questions when deciding whether to authorize a physician's order for diagnostic testing or treatment.

  • Is the test or treatment supported by evidence-based guidelines?
  • Is the test or treatment appropriate for this individual patient?
  • Is the test or treatment being performed at the most appropriate site for this patient?

Many self-insured employers may think that utilization management only saves money through the denial of services, but in fact its purposes are also to ensure appropriateness of care and patient safety, both of which drive cost savings over time.

For example, the utilization team may recommend that an MRI be performed at a high-quality freestanding facility rather than in a hospital, where it would cost more without any difference in clinical quality. Or, for a patient who injured their back, physical therapy may be approved before going ahead with  an expensive, and possibly unnecessary, MRI.

In some cases, the utilization management team may recommend a more expensive treatment than what was requested—for example, an oncology drug regimen that is shown to have better outcomes than a similar cheaper treatment.

The above real-life examples illustrate some of the ways that high-quality utilization management delivers a more effective way to manage healthcare costs for self-insured employers. Costs will still rise year-over-year, but those increases will be smaller with effective utilization management in place, Kalkofen says. “Utilization management may seem to cost more, but in working with my clients I’ve seen their return on investment of 3:1 at a minimum, so it more than pays for itself.”

Saving on expenses is wonderful, but what matters most is that utilization management also delivers better care. “Utilization management is looking at the entire care continuum and identifying the best avenue forward to get your employee healthy and back on track," Kalkofen says. Put more simply, utilization management comes down to this: controlling costs while improving your employees’ care.