What Is Utilization Review?

Utilization review, also called utilization management, is the process payers and healthcare organizations use to evaluate and approve services against clinical need, cost, and established care guidelines.

It supports the right level of care from admission through discharge, helping patients get appropriate treatment while limiting unnecessary services.

The goal is straightforward: make sure patients get care that’s clinically justified, avoid unnecessary tests or treatments, and keep costs under control without compromising quality.

Why Does it Matter in RCM?

UR is essential for:

• Medical necessity verification: Confirms that the care provided is clinically justified, which helps prevent denials.
• Cost control and efficiency: Catches redundant or excessive services by reviewing what’s truly needed.
• Quality and compliance: Keeps treatment aligned with clinical guidelines and regulatory requirements.
• Revenue optimization: Supports reimbursement by ensuring claims are backed by clear UR-approved documentation.

What Are The Types of Utilization Review?

Utilization Review typically occurs at three stages:

How Does Utilization Review Work?

• Leveraging clinical protocols: Reviewers look at the patient’s condition, test results, and treatment plan, then check them against evidence-based guidelines such as MCG or InterQual to confirm the right level of care and whether the services make sense. Those guidelines also help decide inpatient versus observation status, spell out what documentation needs to be in the chart, and indicate when step therapy or other treatment options should be considered. 
• Involvement of clinical reviewers: Registered nurses and other clinicians handle the reviews by pulling the chart, including H&Ps, progress notes, orders, imaging, and labs. They check for medical necessity, the patient’s response to treatment, and whether continued-stay criteria are met, then document their findings so care and billing teams have a clear, traceable record. 
• Provider collaboration: UR teams partner with attending physicians and case management when criteria are not fully met or when continued care needs to be justified. They may clarify diagnoses, update the chart, discuss alternate care settings such as a SNF or home health, and request prior authorization extensions when the clinical picture supports it. 
• Prior authorization checkpoints: For scheduled services, the UR team makes sure the authorization is in place, uses the correct CPT or HCPCS codes, and matches the clinical reason for the service. If coverage terms change or the care plan shifts, they update the authorization so the claim does not get denied for no authorization or a code mismatch. 
• Continued-stay reviews: For inpatient stays, the UR team checks the chart at intervals to make sure the admission still meets medical-necessity criteria. When a patient stabilizes, they work with case management to plan the next step, whether that is a lower level of care or discharge, and they do it in time to avoid days the payer will not cover. 
• Documentation alignment: UR specialists call out chart gaps that can put payment at risk, like missing severity details, no record of conservative treatment, or incomplete test results. They then work with clinicians to update the documentation. Strong, complete notes support good clinical decisions and help claims go through cleanly. 
• Payer communication: When a case sits on the edge of the criteria, UR staff set up peer-to-peer calls with the payer’s medical director or review nurse to walk through the clinical details and context. Coming prepared with concise notes, key labs, imaging, and guideline references often secures approval and heads off denials that could have been avoided. 
• Appeal and adjustment process: If a service or stay is denied, the UR team works with coding, billing, and clinical leaders to build a strong appeal using chart notes, imaging, lab results, and the relevant guideline citations. If the payer upholds the denial, they adjust internal workflows and training to fix the root cause and keep it from happening again. 
• Integration with RCM: UR outcomes drive status (inpatient versus observation), length-of-stay expectations, and required documentation, all of which affect coding, DRG/APC assignment, and reimbursement. Clear handoffs to coding and billing reduce rework, shorten A/R days, and improve first-pass payment. 
• Metrics and feedback loops: Top-performing programs keep an eye on a few core signals: observation-to-inpatient conversion rates, avoidable days, how often denials are overturned, and how fast authorizations come through. They do not just report the numbers. They review them regularly, then turn the findings into targeted training, simple EMR prompts, and pre-service checks that catch problems before they reach the claim.

What Are The Benefits of Utilization Review?

Here are some important benefits of Utilization Review: 

• Ensures patients receive the right care at the right time while keeping costs in check. 
• Aligns treatment plans with clinical guidelines to support medical necessity and cut unnecessary tests and procedures. 
• Reduces avoidable hospital days by confirming the appropriate level of care. 
• Strengthens documentation, leading to cleaner claims, fewer denials, and faster payments. 
• Resolves borderline cases early through collaboration between reviewers and physicians, preventing delays. 
• Feeds insights back into care pathways, improving consistency and aligning care settings with patient needs. 
• Gives revenue cycle teams clearer footing to protect reimbursement and accelerate cash flow.

What Are The Challenges of Utilization Review?

• Administrative burden: UR takes significant documentation and dedicated staff time, which can strain busy teams. 
• Denials and delays: Gaps in UR work can trigger claim denials or slow down care when approvals aren’t in place. 
• Policy churn: Payer rules change often, so processes and checklists need regular updates to stay current. 
• Provider pushback: Some clinicians view UR as second‑guessing their judgment, which can create friction. 
• Resource heavy: Ongoing reviews require trained reviewers, careful chart work, and consistent follow‑through.

What Are The Best Practices in Utilization Review? 

• Implement clear protocols: Give reviewers structured, evidence-based guidelines they can follow the same way every time. 
• Integrate UR tools: Use technology to flag missing criteria and speed up approvals, reducing manual back-and-forth. 
• Train interdisciplinary teams: Bring clinicians, case managers, coders, and billing together so everyone understands the process and their role. 
• Monitor trends: Look at UR outcomes, denials, and appeals to spot patterns and fix workflow issues at the source.
• Stay current on policies: Review payer rules and clinical guidelines regularly to keep practices compliant and up to date.

In Summary 

Utilization Review is a pivotal step in healthcare delivery and revenue cycle management that ensures services are medically necessary, quality-driven, and cost-effective. Conducted through prospective, concurrent, and retrospective reviews, UR aligns patient care with payer requirements while protecting provider reimbursement and supporting clinical compliance.