Effect of utilization review in a fee-for-service health insurance plan

Although utilization review is widely used to control health care costs, its effect on patterns of health care is uncertain.

In 1989, New York City and its unions temporarily replaced actual utilization review with sham review for half the participants in the city's fee-for-service health insurance plan. We compared the health services provided to 3702 enrollees whose requests were subjected to utilization review (the review group) with the services provided to 3743 enrollees whose requests received sham review and were automatically approved for insurance coverage (the nonreview group). The enrollees, physicians, and hospitals were all unaware of the group assignments.

During the study period (mean duration, eight months), the members of the review group underwent 1255 procedures in 20 categories of procedures for which second opinions were required (such as breast, cataract, foot, hernia, and hip-replacement surgery, as well as hysterectomy and coronary bypass surgery), and the members of the nonreview group underwent 1365 procedures (P = 0.02). The members of the review group had 124 fewer procedures in doctors' offices and hospital outpatient departments (P = 0.002). In the following year, the members of the review group underwent 248 procedures from the 20 categories, and the members of the nonreview group underwent 234 (P = 0.46). No other differences in patterns of care were found between the groups, including rates of hospital admission to medical-surgical, substances-abuse, or psychiatric units; average lengths of hospital stay; the percentage of enrollees who received preadmission testing; or rates of use of home care. During the study period, the mean age-adjusted insurance payments per person were $7,355 in the review group and $6,858 in the nonreview group (P = 0.06).

The utilization-review program reduced the performance of diagnostic and surgical procedures for which second opinions were required and did not merely delay them until the following year. Otherwise, the program had little effect. Alternatively, actual review and sham review may both have decreased the use of hospital services, with patients or their physicians choosing more efficient treatment when they believed that care would be reviewed.