Utilization review for Medicaid diagnosis-related group systems: practice, innovation, and lessons of experience.

Abstract

Utilization review practices, innovations and trends for the 21 states using diagnosis-related groups for Medicaid during 1992 are described. According to this descriptive survey, Medicaid inpatient utilization review programs vary widely in authority, approach and focus, reflecting state payment system incentives, health and hospital system characteristics, and provider practice norms. More than half of the states with Medicaid diagnosis-related group systems contract with a Medicare Peer Review Organization. State programs are developing complementary clinical and data analytic approaches, advised by multidisciplinary utilization review committees, and are moving from random review to strategies that focus on specific types of admissions/procedures, and shift as provider practices and utilization patterns change. Utilization review strategies also support payment incentives and system features, e.g., by targeting outliers, readmissions and transfers, and short stays. Overall, programs are becoming more flexible, targeted, and interactive. Trends and suggestions for refining utilization review programs for diagnosis-related group systems are presented.