|This article does not cite any references or sources. (December 2009)|
Utilization management (UM) is defined by the Institute of Medicine (IOM) Committee on Utilization Management by Third Parties (1989) as "a set of techniques used by or on behalf of purchasers of health care benefits to manage health care costs by influencing patient care decision-making through case-by-case assessments of the appropriateness of care prior to its provision"
UM is the evaluation of the appropriateness and medical need of health care services procedures and facilities according to evidence-based criteria or guidelines, and under the provisions of an applicable health benefits plan. Typically, UM addresses new clinical activities or inpatient admissions based on the analysis of a case, but may relate to ongoing provision of care, especially in an inpatient setting.
UM describes proactive procedures, including discharge planning, concurrent planning, pre-certification and clinical case appeals. It also covers proactive processes, such as concurrent clinical reviews and peer reviews, as well as appeals introduced by the provider, payer or patient. A UM program comprises roles, policies, processes, and criteria.
UM roles may include: UM Reviewers (often an RN with UM training), a UM program manager, and a Physician Advisor. UM policies may include: the frequency of reviews, priorities, and balance of internal and external responsibilities.
UM processes may include: escalation processes when a clinician and the UM reviewer are unable to resolve a case, dispute processes to allow patients, caregivers, or patient advocates to challenge a point of care decision, and processes for evaluating inter-rater reliability amongst UM reviewers.
UM criteria may be developed inhouse, acquired from a UM vendor, or acquired and adapted to suit local conditions. Two commonly used UM criteria frameworks are the McKesson InterQual criteria, and the Milliman Care Guidelines.
Prospective review is typically used as a method of reducing medically unnecessary admissions or procedures by denying cases that do not meet criteria, or allocating them to more appropriate care settings before the act.
Concurrent review is carried out during and as part of the clinical workflow, and supports point of care decisions. The focus of concurrent UM tends to be on reducing denials and placing the patient at a medically appropriate point of care 
Retrospective review considers whether an appropriate level of care applied after it was administered. Retrospective review will typically look at whether the procedure, location, and timing were appropriate according to the criteria. This form of review typically relates to payment or reimbursement according to a medical plan or medical insurance provision. Denial of the claim could relate to payment to the provider or reimbursement to the plan member. Alternatively, retrospective review may reflect a decision as to ongoing point of care. This may entail justification according to the UM criteria and plan to leave a patient at the previous (current) point of care, or to shift the patient to a higher or lower point of care that would match the UM criteria. For example, an inpatient case situated in a telemetry bed (high cost) may be evaluated on a subsequent day of stay as no longer meeting the criteria for a telemetry bed. This may be due to changes in acuity, patient response, or diagnosis, or may be due to different UM criteria set for each continued day of stay. At this time the reviewer may indicate alternatives such as a test to determine alternate criteria for continued stay at that level, transfer to a lower (or higher) point of care, or discharge to outpatient care.
There are four basic techniques in utilization management:
- Demand Management
- Utilization Review
- Case Management
- Disease Management
Criticism of UM
UM has been criticized for treating cost of care as an outcome metric, and that this confuses the objectives of healthcare and potentially reduces healthcare value by mixing up processes of care with results of care 
- Field, M. J. (1989). Controlling costs and changing patient care?: the role of utilization management. National Academies
- Mitus, A. J. (2008). The birth of InterQual: evidence-based decision support criteria that helped change healthcare. Prof Case Manag, 13(4), 228-233
- O. Olakunle, B. Iskla and K. Williams, "Concurrent Utilization Review: Getting It Right," The Physician Executive Journal, Vols. May-June, pp. 50-54, 2011
- Porter, M. E. (2010). What is value in health care? New England Journal of Medicine, 363(26), 2477-2481.