Controlling Medical Benefits Costs

Provider failures in effectively implementing utilization management(UM) techniques result largely from dependence on costly and outmoded processes and failure to effectively concentrate resources on high volume, high cost services.

For example, the usual method for prior authorization involves the repeated exchange of information via fax or phone, independent screening of requests by utilization management personnel, and frequent physician review. This convoluted, costly process results in massive accumulation of forms, miscommunications, filing and data entry errors, etc. It leads to last minute cancellations, frustrated, angry providers and patients, appeals, bad press, and ultimately punitive legislation.

Other reasons for failure to successfully implement utilization management techniques by health plans include unwillingness to commit necessary economic resources to administrative redesign. "Computerization," i.e. database, accounting, demographic, and other software running on in-house networks plus information technology maintenance, accounts for 60%- 70% of initial investment and continuing expenses of managed care plans.