Insurance companies use utilization reviews to figure out if a treatment is medically necessary for you.

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Utilization review is a health insurance company's opportunity to review a request for medical treatment. The purpose of the review is to confirm that the plan provides coverage for your medical services. It also helps the company minimize costs and determine if the recommended treatment is appropriate. A utilization review also gives you the opportunity to confirm that your health plan provides adequate coverage for your particular condition. If the company denies coverage as a result of a utilization review, you can always appeal the decision.

The term "utilization management" is often used interchangeably with utilization review. Although they both involve the review of care based on medical necessity, utilization management usually refers to requests for approval of future medical needs, while utilization review refers to reviews of past medical treatment. So, utilization management is the process of preauthorization for medical service. You can also use it for approval for additional treatments while you're undergoing medical care (a concurrent review). Reviews of appeals also fall under utilization management.

The term "utilization review" refers to a retrospective review -- the review of treatments or services that have already been administered, and review of medical files in comparison with treatment guidelines. In the latter case, information retrieved during a utilization review can be used as part of a system that creates the insurance company's guidelines for a given condition. When creating these documents, insurance companies not only use patient experiences but also review how physicians, labs and hospitals handle the care of their patients.

In this article, we'll dig deeper into the types of utilization reviews and management and find out what to do if your review is denied. Let's start with precertification reviews.

Precertification Review

Precertification is the preapproval process for treatments found on your insurance policy's precertification list. The length of the list varies by plan type, but most lists include nonemergency hospitalizations, outpatient surgery, skilled nursing and rehabilitation services, home care services and some home medical equipment. The review and approval involves determining whether the requested service is medically necessary.

Most insurance plans have predetermined criteria or clinical guidelines of care for a given condition. So, once you submit a precertification request to an insurance company, a committee reviews these guidelines and determines if you have met the criteria for precertification coverage. If necessary, the committee may contact your health care provider. The general process for precertification is similar in most health care plans.

The process begins with the collection of information, including the symptoms, diagnosis, results of any lab tests and list of required services. The committee then reviews the criteria for your condition. It may compare your medical information to the health plan's medical necessity criteria. If the committee denies your request, you can start the appeals process.

­Next we'll go over concurrent and retroactive reviews.