Controlling Health Care Costs: Utilization Management

Consider two people standing outside of a grocery store.

Person one is told: “Here is $200.00 for groceries for one month. You may buy any food you wish—but you may not spend more than this $200.00. So, make your purchases wisely. We are going to watch carefully to make sure that you do not exceed $200.00.”

The second person is told: “There is no limit on how much you spend on groceries in the next month. You may spend as much as you wish! And you may come back as often as you like. There are no limits. In fact, no one is even going to pay attention to what you buy!”

Which person do you think is more likely to walk out of the store with the most expensive cut of steak?
Which person is more likely to pay attention to prices and sales?
Which one do you think is more likely to buy food that they will never eat?

This scenario is very like the difference in health care spending within your average state prison system and the medical community at large. Physicians in the medical community at large are like the shopper with no budget and no oversight. They can order the most expensive drug advertised on TV even though there is a much cheaper, bio-identical medication available (think of Nexium and omeprazole, for example). They can order a $2,000.00 MRI of the knee to “verify” what they already know from physical exam. They can order expensive but meaningless tests, such as Whole Body Scanning. US practitioners can do this because the US health care system is set up in such a way that there is little pressure or scrutiny on what medical practitioners order, prescribe or spend. Also, since there is no overriding medical budget, there is no pressure to conserve resources. If a medical practitioner orders an unnecessary medication for a certain patient, this prescription does not at all impact her next patient.

Correctional physicians, on the other hand, are like the shopper who has only a limited amount of money to spend. The reason for this is that prison systems have a specified medical budget, and DOCs watch that budget closely. Practitioners within the prison system are charged with spending this limited resource wisely. If correctional practitioners spend, say, $200,000.00 on meaningless tests, well, that is money that now cannot be spent on more important uses—such diabetic check ups or hiring more nurses to increase inmate access to medical care.

As a result of practicing within a budget, correctional practitioners tend to have a lot of scrutiny as to the medical choices they want to make. Those of us who practice in a prison system know all about this scrutiny–by having to fill out forms: Forms required to prescribe medications not found on the DOC formulary, forms requesting approval for referrals to medical specialists, and forms to justify why you want an MRI.

This process is broadly called “Utilization Management” or simply “UM.” Your typical Primary Care Physician in suburbia has to do very little UM in comparison. In fact, the degree of UM scrutiny of one’s practice is one of the big differences between “outside”medicine and Correctional Medicine. UM is sometimes hard for newcomers to Correctional Medicine to get used to. Outside physicians are usually not in the habit of paying attention to how much medical procedures cost, much less whether the medical benefit of the procedure is worth the expenditure, or if a less expensive alternative can get the same result.

There have been many attempts to broadly educate the medical community about medical economics. Perhaps the most noteworthy is the Choosing Wisely Program, in which each medical specialty lists medical procedures that have little medical utility and yet are commonly ordered by American medical practitioners.

I have spent many years practicing in both environments: my initial career was as an Emergency Physician with no scrutiny (at all!) of the costs of my practice. Since then, I have practiced Correctional Medicine, where I was introduced to the heretofore foreign concept of Utilization Management. In my opinion, Utilization Management, when properly done, is a good thing, not a bad thing. And I say this having myself experienced the sense of irritation and frustration when my own UM requests have been turned down!

It is important to be cost conscious and, more importantly, cost-effective, when practicing medicine. The key to effective UM is Evidence Based Medicine. And, of course, like everything else, UM can be done well or done poorly. More on this subject in a future post of JailMedicine!

What is your experience with Utilization Management in your facility? Please comment!

5 thoughts on “Controlling Health Care Costs: Utilization Management

  1. Utilization management is definitely a good thing. If used properly and consistently it will drive the pharmaceutical industry away from the current practice of making small insignificant changes to effective drugs simply to raise the price and profit margin. Currently I’m practicing correctional medicine but previously worked at the VA – another system that has a restrictive formulary. In many cases, my Veteran patient was able to achieve excellent control of medical conditions using formulary “old fashioned” drugs, whereas their family members – who saw private docs prescribing much more expensive drugs – were not able to afford their prescriptions at all.

    • Great point, Jeanine! I read a study once that only about 50% of all prescriptions are ever filled–and one big reason for that is that patients cannot afford them.

    • I agree, Jeanine. I remember a study sometime back that showed that only 60% of all prescriptions are ever filled. One reason for that is that the prescription is too expensive for the patient . . .

  2. One of the keys to getting good UM results is to give them so much information that they can’t say no. I work in corrections and we have a good UM program, but I’ve seen submissions from some of our newer docs that are just scribbled out without much, or any, supportive information. This leads to the reviewer questioning what’s going on and then advising alternate actions or not approving at all. Do as much as you can do first and gather as much information as you can first and then submit it.

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