If you are a board member, physician leader, administrator, director of case management or a utilization review committee member and personally have not reviewed, revised or voted to approve a UM plan during the last year, this is a potentially devastating problem.


The Centers for Medicare & Medicaid Services (CMS) Conditions of Participation establish the medical staff and hospital’s responsibility with respect to utilization management, stating clearly that “the hospital must have in effect a utilization review (UR) plan that provides for review of services furnished by the institution and by members of the medical staff to patients entitled to benefits under the Medicare and Medicaid programs.”  (§ 482.30 Condition of participation: Utilization review.)


The UM plan establishes an organization-wide process for utilization review. It should be integrated with quality, risk and case management activities, and it should have a mechanism of shared information between the medical staff, hospital admitting department, emergency department, hospital business office, health information management and other alliance facilities. Hospital leadership support of the UM plan and allocation of sufficient resources are crucial to its success.


The Utilization Management Plan


The elements of comprehensive utilization management plans are listed below.



I.  Purpose (scope)

II.  Goals and objectives

III.  Authority and responsibility for implementation

A. Governing board of directors

B. Senior leadership

C. Medical staff and hospital departments

D. Professional review committee

1. Committee structure

2. Meetings

3. Records and reports

E. Physician advisors

F. Professional and technical personnel

G. External review organizations

IV. Essential requirements for effective utilization review (plan description and process)

A. Criteria

B. Pre-admission review

C. Admission review

D. Continued stay review

E. Outlier review

F. Annual focused medical review

G. Discharge planning

V. Denials management

A. Medicare

1. Hospital-issued notice of noncoverage (HINN)

a. Pre-admission

b. Admission

c. Continued stay

B. Medicaid

C. Commercial payers

VI. Information management

VII.   Conflict of interest

VIII. Confidentiality

IX. Plan evaluation, amendment and revisions




Your Best Defense


A solid, defensible UM plan, applied consistently, is a hospital’s best defense when appealing RAC denials related to medical necessity. Use the UM plan to establish a process, then follow the process every time, all the time.  Up-to-date policies and procedures regarding hospital admission requirements need to be in place and shared with practitioners for alternative levels of care (i.e. outpatient with observation services, inpatient, swing bed). Case management staff need to be available and knowledgeable regarding alternative care settings, and fully able to facilitate the decision-making process when an acute hospital admission is not required. A widely accepted, current and uniform set of admission and discharge criteria also needs to be available as a resource, and a strong physician advisor second-level review process needs to be in place to establish patient status as close to bed placement as possible.


Conditions of Participation


A hospital UM plan establishes a foundation for complying with the CMS Conditions of Participation. That foundation should provide clarity of purpose and application of process as it relates to managing Medicare and Medicaid patients through each acute episode of care, from admission to discharge.


At the end of the day, a great UM plan will demonstrate to CMS and audit contractors that your hospital knows the rules, understands the rules and follows the rules. Remember, in the world of CMS and audit contractors, there is no right way to do the wrong thing. Establish a process via your UM plan, then follow that process.


A solid plan, reviewed and revised annually, is critical to the success of your RAC readiness and appeals program.


About the Author


Donna McLean, RN, MBA, CMAC, is president and co-founder of DSE Associates – Healthcare Case Management Solutions. Donna’s 25 years of firsthand experience in providing healthcare services qualifies her to understand the needs and requirements of clients in the healthcare arena.


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