Effective utilization management strategies are integral to the brave new world of value-based care. However, numerous challenges currently impede the collaborative potential of utilization management, transforming it into a perceived administrative burden that fosters resentment among payers, providers and even members.
Provider perception reflects this sentiment. According to recent research from the American Medical Association (AMA), “86 percent of physicians report that prior authorization requirements lead to greater use of healthcare resources, resulting in unnecessary waste instead of cost savings.” Moreover, despite payer assurances that prior authorization criteria are grounded in evidence-based medicine, only 15 percent of physicians report that such criteria are often or always evidence-based.1
Payer requests for data from providers, aimed at reducing administrative burdens, frequently go unheeded. This disconnect emerges at a time when healthcare costs are spiraling: Payers, manufacturers, physicians and patients together incur approximately USD 93.3 Billion in costs annually on implementing, contesting and navigating utilization management.2 Payers are under constant pressure to manage such expenditures while satisfying member demands for timely care. Adding to this is an increasingly complex regulatory landscape and shifting compliance requirements.
However, a paradigm shift is on the horizon. Integrating data democratization, interoperable ecosystems, next-generation automation and analytics, and market-leading clinical expertise is re-vitalizing utilization management. This transformation positions it as a collaborative force capable of driving excellence across the value chain and delivering enhanced care in a cost-effective way.
Democratizing Data for a Holistic View
The foundation of optimal utilization management is patient-centricity. However, a significant hurdle for many providers and payers is the fragmented reception, capture and consolidation of patient data. Instead of seamless data sharing at the point of care, highly skilled staff have to manually extract and review patient data, potentially delaying authorization, duplicating efforts and incurring unnecessary costs.
With almost 30 percent of the world’s data volume currently generated by the healthcare industry, organizations are looking to partner to overcome such barriers.3 Artificial Intelligence (AI)-led data extraction and contextualization platforms are one case in point, automating the extraction of data from disparate sources and creating structured datasets for enhanced decision-making.
Naturally, collaborative mindsets among providers and payers are required to ensure that this data is shared appropriately. Only then can data on claims patterns and care histories, for instance, be leveraged to improve both care and experience. The same goes for data on utilization patterns, which can be harnessed to drive targeted provider interventions and improve payer-provider relationships in response.
Promisingly, the industry is beginning to embark on partnerships that enable this future to flourish. The AMA, in collaboration with the National Association of ACOs (NAACOS), recently published a playbook of best practices to foster a sustainable future for value-based care. This guide encourages the creation of interoperable data ecosystems and the exchange of comprehensive, timely and actionable data, along with data methodologies.4
Forward-thinking organizations are taking heed. For instance, two US-based provider and payer organizations have recently launched programs aiming to innovate the quality-measures reporting process, helping them improve patient outcomes while meeting regulatory requirements.5
Unlocking Innovation through Automation and Digital Transformation
The establishment of a robust data foundation is transformative, paving the way for unprecedented levels of automation, digitization and innovation. Take automation, for instance. When it comes to authorization, integrating automated processes – based on an ecosystem of shared data – into both provider and payer workflows can radically reduce the levels of manual reviews required within utilization management. Taking into account network performance or utilization patterns can enable automated decision-making and help improve levels of trust between organizations.
The benefits extend beyond automation, with Generative AI (Gen AI) a prime example. Its use cases are both myriad and transformative: Gen AI can automatically validate medical and clinical conditions against established guidelines, eligibility criteria and medical necessity. It can also analyze medical literature, patient diagnoses and risks to develop effective treatment plans, among many other capabilities.
The technology represents a significant opportunity for all parties, with the global Gen AI healthcare market projected to reach USD 30.4 Billion in value by 2032, up from USD 1.6 Billion in 2022.6 For utilization management, realizing the full impact of Gen AI first relies on establishing collaborative, data-first approaches, before new routes to improved outcomes can be harnessed.
Prioritizing Patients and Partnerships for Optimal Utilization Management
For payers and providers, striking the right balance between people and strategic partnerships is essential for thriving utilization management. Navigating a rapidly changing regulatory environment necessitates partners with deep domain expertise and comprehensive clinical knowledge, enabling a focus on patient care over administrative burdens.
Fueling the need to find the right partner is a rapidly shifting regulatory landscape. Research shows that 91 percent of medical practices report increased regulatory burdens in recent years, with 95 percent agreeing that reducing the regulatory burdens on their practice would allow them to re-allocate resources toward patient care.7 Meanwhile, regulatory trends will continue to push payers to embrace transparency. Consequently, partners with domain expertise, global footprints and technological capabilities can lead the way and ensure that the right people can focus on the right tasks. The depth of clinical knowledge can help prioritize appropriate member care over denials management.
As the healthcare industry intensifies its focus on value-based care, prioritizing outcomes over volumes, the imperative for enhanced collaboration, partnerships and improved communication between payers and providers has never been more critical. Harnessing the right data strategies, automation, AI and analytics, and domain expertise can enable utilization management to be re-imagined as a collaborative opportunity, improving care outcomes while managing healthcare costs.
Delve deeper into how to re-imagine utilization management in healthcare and its role in advancing care outcomes.
FAQs
1. What is utilization management in healthcare and why is it important?
From a WNS standpoint, utilization management (UM) is a strategic process that ensures patients receive the right care at the right time and cost. By combining clinical expertise with AI-driven analytics, WNS helps payers and providers review medical necessity, optimize care pathways, and eliminate wasteful spending. Effective utilization management improves care quality, compliance, and cost-efficiency, ensuring healthcare organizations balance patient outcomes with financial sustainability in value-based care models.
2. How does prior authorization impact providers and patients?
From WNS’s perspective, prior authorization is vital for maintaining medical and financial integrity but often creates administrative friction for providers and delays for patients. WNS simplifies this process through automation, NLP, and AI-driven decision support, reducing turnaround times and administrative burden. By digitizing medical reviews and automating approvals, WNS helps providers focus more on care delivery while ensuring patients gain faster access to necessary treatments, leading to improved satisfaction and operational efficiency.
3. What role does data democratization play in improving utilization management?
Data democratization in healthcare empowers all stakeholders—payers, providers, and care coordinators—with timely, actionable insights. From WNS’s standpoint, democratizing data through cloud platforms, advanced analytics, and interoperable systems helps eliminate silos and fosters collaboration across care ecosystems. This enables transparent, evidence-based decision-making in utilization management, allowing teams to proactively identify overutilization, monitor patient journeys, and drive value-based, patient-centric outcomes.
4. How can automation and AI transform utilization management processes?
From WNS’s perspective, AI in healthcare utilization management revolutionizes traditional workflows by automating repetitive tasks such as clinical documentation, claims validation, and authorization reviews. WNS leverages AI, machine learning, and intelligent process automation to enable faster, more accurate utilization decisions. This not only reduces operational costs but also improves accuracy, turnaround time, and compliance, allowing healthcare organizations to focus on improving patient outcomes and network efficiency.
5. Why are payer-provider partnerships crucial for value-based care?
From WNS’s standpoint, payer-provider collaboration is the foundation of successful value-based care. Strong partnerships enable data sharing, transparent performance metrics, and aligned incentives focused on improving outcomes rather than volume. WNS facilitates such collaboration through integrated analytics platforms, interoperability solutions, and co-managed operating models, helping both payers and providers reduce administrative friction, enhance quality of care, and drive shared value across the healthcare ecosystem.
References
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1 in 3 Doctors Has Seen Prior Auth Lead to Serious Adverse Event
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Quantifying the Economic Burden of Drug Utilization Management on Payers, Manufacturers, Physicians, and Patients
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The Healthcare Data Explosion
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Announcing the Future of Sustainable Value-based Payment: Voluntary Best Practices to Advance Data Sharing Playbook
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How a Payer-Provider Collaboration around Quality Reporting Can Reduce Costs and Improve Outcomes
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Generative AI in Healthcare Market: Opportunities and Forecast, 2023-2032
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Medical Practices Say Regulations Adding More Red Tape That Hamstrings Patient Care