What is the purpose of 'utilization review'?

Utilization review is a process employed by health insurance companies and managed care organizations to evaluate the necessity, appropriateness, and efficiency of healthcare services. The primary purpose of this process is to determine whether a proposed treatment or service is medically necessary before it is authorized for payment. This helps ensure that patients receive appropriate care while simultaneously controlling healthcare costs by preventing unnecessary services.

By assessing factors such as the clinical guidelines, patient health history, and treatment plans, utilization review plays a critical role in the healthcare system. It helps manage resources effectively, ensuring that the treatments provided are supported by evidence-based practices and that only necessary care is funded by the insurance provider.

While monitoring physician performance, reviewing patient eligibility, and assessing the quality of care are important elements within healthcare and insurance, they are not the main functions of utilization review. The distinct focus on evaluating necessity and appropriateness of services for payment authorization sets utilization review apart as a specific and vital process within the broader healthcare management framework.