The Lords Insurance Blog

Making Insurance

Term of the Day

From our insurance terms section, this is the definition:

Utilization – How much a covered group uses a particular health plan or program.”

In depth explanation from eHow:

Healthcare insurance companies are responsible for providing healthcare coverage guaranteed to the insured. The utilization review is a method by which these companies can manage their costs when requests for medical coverage are submitted. It also gives the insured the extra guarantee that their healthcare needs will be covered.


Utilization review is a process used to determine the level of medical necessity of a given request for healthcare. It is generally applied after treatments, where the medical data is analyzed in totality to determine its efficacy and efficiency in both services and costs. Utilization reviews are also conducted to compare existing patient files against the guideline standards. This part of the review–which includes patient, physician, hospital and lab data–aids healthcare insurance companies in updating their standards for treatment so that they can provide more efficient and cost-effective services in the future.


Prior to the treatment and subsequent utilization review, healthcare insurance companies generally institute a precertification process of approving or denying treatments before they are administered. Insurance companies usually have guidelines about the limitations of their coverage that apply to the necessity of medical treatment.
So, the precertification process is used to prevent additional out-of-pocket expenses to the patient. Information is collected about the medical treatment request, which includes patient information, health history, symptoms, the diagnosis, laboratory results, and the required treatment for the current condition.

Concurrent Reviews

There are two types of utilization reviews, concurrent reviews and retrospective reviews. Concurrent reviews occur during the healthcare treatment process and are for the purposes of monitoring the necessity of the treatment modality and its cost effectiveness. Concurrent reviews can occur during the patient’s inpatient or outpatient care. Concurrent reviews are used to assess the treatment plan for a given health condition and to seek approval for other complimentary treatments that exist on the insurance company’s preapproval list. Information is collected about the current treatment and progress of the patient, and it is submitted for approval. They are also used to determine the level of outpatient care that is needed after hospitalization.

Retrospective Reviews

The retrospective review is the second type of utilization review. These are used when medical treatment has already occurred, prior to notifying the healthcare insurance company. This type of review is then subject to the insurance company’s approval or denial of the healthcare services. Retrospective reviews afford insurance companies the opportunity to compare the services and cost to low-cost healthcare examples for the same treatment. The information is then cross-referenced to the treatment received by the patient, and providers and hospitals actively provide documentation for this process. Retrospective reviews are used when required precertifications were not acquired, such as in emergency, life-threatening healthcare procedures that are time-sensitive.


Sometimes utilization reviews result in healthcare insurance denial of coverage for the given treatment. Though this may seem as the final decision, there is an appeal process in place for those who want their claim to be reconsidered. Submitting an appeal is a time-sensitive procedure. The appeal must include why the original claim was denied and the supporting paperwork and health records on the need for the claim to be approved. Contact your insurance company immediately if deciding to file an appeal for a denied claim.



Written by lordsinsurancelog

December 21, 2010 at 5:53 am

Posted in Daily Quip