Controlling workers' compensation medical care use and costs through utilization management

Little is known about the performance of utilization management (UM) programs, which are now widely used within the workers' compensation system to contain medical costs and improve quality. UM programs focus largely on hospital care and rely on preadmission and concurrent reviews to authorize hospital admissions and continued stays. We obtained data from a large UM program representing a national sample of 9319 workers' compensation patients whose medical care was reviewed between 1991 and 1993. We analyzed these data to determine the denial rate for hospital admission and outpatient surgery and the frequency of length-of-stay restrictions among hospitalized patients. The denial rate was approximately 2% to 3% overall, but many of the denials were later reversed. On average, the UM program reduced the length of stay by 1.9 days relative to the number of days of care requested. The estimated gross cost savings resulting from reduced hospitalization time and decreased outpatient care was approximately $5 million. UM programs may offer a viable approach to cost containment within the workers' compensation system. Their value as a tool to improve the quality of care for workers' compensation patients remains to be demonstrated.