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Following completion of this chapter, the reader will be able to:

  • Explain what utilization review is.

  • Describe the difference between utilization review and utilization management.

  • Compare and contrast retrospective, concurrent, and prospective review processes.

  • Define a technical error and how they can be avoided.

  • Compare and contrast first- and second-level denials and their appropriate appeals.

  • Compare and contrast internal and external utilization review.

  • Explain the benefits of expressing examination findings in numeric terms.

Documentation is the means of communicating information from the professional to all users of the medical record whether electronic or manual. It is the “what” physical therapists and physical therapist assistants do, “how” it is performed, and the outcomes. It is imperative to clearly and concisely communicate only the information that is relevant and necessary about care provided and the resulting condition of the patient or client. Although there are multiple definitions for utilization management (UM), of which utilization review is a component, according to the American Physical Therapy Association (APTA),1 UM “is based on the information derived from the review process both internal and external to the organization providing services, to ensure quality of service and effective and efficient delivery. Provision of care when looked at through utilization review (UR) should include verification of benefits and applicable co-payments prior to the start of care.”1

According to Institute of Medicine (now National Academy of Medicine) Committee on Utilization Management, employers or governmental programs that purchase medical care can use UM in one of three ways.2 The purchaser can:

  • engage in utilization management directly

  • contract with another organization for utilization management services, as Medicare and many employers do; or

  • shift some of the financial risk to another party, such as an insurer (HMO, PPO) that is then faced with the same three choices of doing utilization management directly, contracting for the services, or shifting risk to still another party (for example, physicians or hospitals).

Regardless of who or what entity is performing the UM, it is critical to the process that the treating physical therapist is aware of the third-party payer coverage and benefits a patient or client has to ensure that the length of stay (LOS), interventions, and services provided are included in the benefits available and that the organization or primary treating physical therapist is an approved provider if required by a patient's third-party payer.

APTA1 defines utilization review as “a system for reviewing the medical necessity, appropriateness and reasonableness of services proposed or provided to a patient or group of patients. This review is conducted on a prospective, concurrent and or retrospective basis to reduce the incidence of unnecessary and or inappropriate provision of services. UR is a process that has two primary purposes: to improve the quality of service (patient outcomes) and to ensure the efficient expenditure of money.”1 To further break this down, the goals are:


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