What does "utilization management" involve in health insurance?

Utilization management in health insurance is fundamentally about evaluating the necessity and efficiency of healthcare services provided to policyholders. This process involves assessing various healthcare procedures, interventions, and treatments to ensure they are appropriate for the patient's condition and that they are being used in a cost-effective manner.

By focusing on the necessity of care, utilization management aims to prevent overuse or misuse of medical services, which can lead to unnecessary costs for both the insurer and the insured. This not only helps in ensuring that patients receive the right care at the right time but also plays a significant role in managing healthcare resources effectively.

The importance of this management technique cannot be overstated, as it helps insurers maintain quality of care while controlling costs, thereby supporting the overall sustainability of the healthcare system.