Utilization Review for Medicaid Diagnosis-Related Group Systems: Practice, Innovation and Lessons of Experience

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Abstract
Utilization review practices, innovations and trends for the 21 states using diagnosis-related groups for Medicaid during 1992 are described. Ac cording 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 characteris tics, and provider practice norms. More than half of the states with Medicaid diagnosis-related group sys tems contract with a Medicare Peer Review Organi zation. State programs are developing complemen tary 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 pat terns change. Utlization review strategies also sup port 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 sug gestions for refining utlization review programs for diagnosis-related group systems are presented.

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