Utilization review savings at the micro level

Utilization review (UR) programs have become an integral part of efforts to contain health care costs for private health insurers, employers, and health care organizations. While some studies have measured the overall performance of these programs, important information in the prior level of the health care utilization has not been used in estimating the effectiveness of the program for micro units (e.g., employer groups). In this article, the authors present a model to determine how the impact of the hospital UR program on health care utilization for specific groups varies with historical use patterns. The estimation approach used in this article can be used to determine the effect of UR for specific employer groups without having to rely on the average effectiveness measures for all. Claims obtained from Aetna Health Plans provided data for more than 5,300 employer accounts covering approximately 580,000 employees, 44% of whom had the UR program sometime during the period 1987 to 1990. Because of regression to the mean, UR savings were greater for units with higher prior use and smaller for units with lower use. In addition to prior use, the size of the group also determined the extent of regression to the mean. Groups with smaller number of enrollees had greater potential to save from the UR because of UR's ability to reduce the outliers.