While supplies last! Free 2022 Coding Essentials for Infusion & Injection Therapy Services book with every RACmonitor webcast order. No code required. Order now >

The utilization management (UM) plan explicitly should detail the reporting structure and the roles and responsibilities of the board of directors, medical staff, hospital administration and line staff as they pertain to utilization review duties. Forming a strong UM plan with clear lines of authority and responsibility, coupled with a strong communication loop featuring peer review and quality improvement, is an important step to establishing commitment to a valid, consistent and compliant utilization review process.


Establishing Authority


Ultimately, the hospital board of directors has final authority over the utilization of hospital services. It is important that the UM plan detail how reports, annual evaluations, studies and minutes of the URC flow to the board. Below are two examples of how hospitals establish that flow of information:



Outlining Responsibilities


Governing Board – The governing board establishes and annually approves the utilization management plan. The board is also responsible for providing the human, informational and physical resources necessary to enable the case management team to perform its functions. Governing boards also delegate responsibility for implementation of the plan to the medical staff and chief executive officer, and require the hospital and medical staff to implement and report on utilization review activities throughout the organization.


Senior Leadership/Hospital Administration – The chief of staff, chief executive officer or “designee” delegates oversight of the URC, acting as a subcommittee of the medical executive committee or the performance improvement oversight committee. This person also ensures that admissions and continued stays are medically necessary and that medical and hospital resources are used appropriately. Such personnel should evaluate the effectiveness of utilization review activities and report the evaluation results to the governing board. Hospital administration is responsible for delegating a UR coordinator and a director to aid the UR Committee in carrying out its review functions by providing adequate personnel, time, data collection tools and systems. Administration also should provide meeting space and access to medical records, serving as a liaison and considering (and acting upon) recommendations made by the committee. These recommendations should be ratified by the medical executive committee to enhance to hospital policies and procedures, which ultimately promotes effective UR.


Medical Staff/Medical Executive Committee – The medical staff or medical executive committee is responsible for the following utilization review activities:


Criteria – Either developing or establishing the medical necessity criteria used by non-physician staff performing first-level review for all levels of care and services provided by the hospital.



Resource Utilization – Ensuring provision of healthcare that meets professionally recognized quality standards, provides consistently appropriate and medically necessary treatment for patients, and features the most efficient use of hospital services and facilities. This also includes ensuring the maintenance of a consistent, valid, accurate and complete medical record to justify diagnoses, admission, treatment and continued care.  The committee also should receive, analyze and act on utilization review findings.


Peer Review Issues – Creating a mechanism for referring utilization peer review issues (i.e. over- or underutilization of resources, denials, etc.) to the appropriate peer review body.



Utilization Review Committee – The chief medical officer or chief of staff as specified in the medical staff bylaws is responsible for appointing at least two physicians, one of whom acts as chair, to handle utilization review functions.    However, for practical purposes at least three physicians should be engaged because “the committee’s or groups’ reviews may not be conducted by an individual who was professionally involved in the care of the patient whose case is being reviewed.”


Non-medical staff advisors of the UR committee should include personnel from case management/utilization review, performance improvement, data management, health information management, nursing, patient financial services and administration. The committee should meet regularly, no less than six times per year. Minutes should be maintained in accordance with hospital policy and should include recommendations and actions. Patients and physicians should not be identified in the minutes. The board, medical staff and other committees, in accordance with your plan’s statement of authority and responsibility, also should review the minutes.


Physician Advisors – Employing an active and engaged physician advisor (PA) is crucial for a strong, compliant UM plan. This is a role that requires daily interaction with the hospital team members responsible for the utilization review function. The PA’s role is to act as a clinical resource to the UR team, providing education to the medical staff regarding UR and review cases referred by the UR team. The PA also may assist in writing letters of appeal for denials, serve as a member or chair of the UR Committee and help out with complex case reviews and documented UR case decisions.


Professional and Technical Personnel – Typically, the professional and technical personnel responsible for the day-to-day provisions of the UM plan reside in case management or the UR department. These personnel are required to perform the following functions:



  • Review the medical record thoroughly to obtain information necessary to make UR decisions;
  • Apply criteria objectively for admissions, continued stay, level of care and discharge readiness;
  • Provide services 24 hours a day, seven days a week to all relevant hospital departments, acting as a resource;
  • Within 24 hours, review all patients placed in a bed;
  • Screen and coordinate elective and emergency admissions and transfers, outpatient observations, and conversions of status as appropriate and in a compliant manner;
  • Provide UR to all admissions, regardless of payer status;
  • Review all continued stays at a scheduled frequency, but not less than every  three days or sooner;
  • Screen for timeliness, safety and appropriateness of the rendering or use of hospital services or resources;
  • Meet weekly for complex case (high-dollar/long length of stay) problem solving; and
  • Complete retrospective or focused reviews as directed by the UR committee.


External Review Organizations –
Governmental and commercial payers actively are engaged in monitoring hospitals’ adherence to UR requirements and the medical necessity of medical and surgical care.



  • The Centers for Medicare & Medicaid Services (CMS) contracts with peer review organizations called Quality Improvement Organizations (QIOs) as defined in Title XI, Part B of the Social Security Act. Each state’s QIO monitors and evaluates inpatient hospital utilization control activities.
  • Audit contractors are charged with auditing hospital services and making financial recoupments when medical necessity, coding or billing practices are deemed inappropriate.
  • Commercial payers typically are involved in the review and care of their members.


With all external review organizations, the UR staff should:



o Establish working relationships with third-party reviewers;

o Provide clinical information as required;

o Facilitate medical record access and supervision for onsite insurance reviewers; and

o Ensure communication to patients and/or family members from external review organizations.

As you can see, a strong, compliant UM plan requires much more attention than what’s given during the day-to-day activities of the UR staff. Medical staff, administrative and departmental support is imperative in this age of increased scrutiny and financial accountability. Part 3 of this series will focus on the essential elements for effective utilization review.


About the Author


Donna McLean, RN, MBA, CMAC, is president and co-founder of DSE Associates — Healthcare Case Management Solutions. Donna’s 25 years of firsthand experience in providing healthcare services qualifies her to understand the needs and requirements of clients in the healthcare arena.

Contact the Author




To comment on this article please go to editor@racmonitor.com


Fraud Report: Two Cases Underscore Fed’s Focused Efforts to Reduce, Prevent Medicare and Medicaid Fraud



You May Also Like

Leave a Reply

Your Name(Required)
Your Email(Required)