Which managed care technique controls health care costs by evaluating the medical necessity of planned services before they are provided?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Managed care plans use utilization review (UR) to determine whether proposed treatment is medically necessary, appropriate, and cost-effective before, during, or after care is delivered. In its prospective form, UR requires preauthorization or precertification before a non-emergency admission or procedure; concurrent and retrospective reviews take place while treatment is ongoing or after it has concluded. By denying or limiting care that fails medical-necessity standards, UR controls utilization and holds premium levels down. This tool is a defining cost-containment mechanism of HMOs, PPOs, and EPOs, and it is a standard exam point under managed care delivery systems.
Why the other options are wrong
- B) A copayment is a fixed cost-sharing amount a member pays at the point of service for each visit or prescription. It is a fee-sharing device that shifts some cost to the member, not a mechanism that evaluates whether a proposed service is medically necessary before it is delivered.
- C) Coordination of benefits is a claims-payment rule used when a person is covered under more than one health plan. It determines which plan pays first and prevents duplicate or overpayment, but it does not review the medical necessity of the services that were rendered.
- D) Guaranteed issue is an enrollment requirement that obligates insurers to accept every eligible applicant regardless of health status. It expands access to coverage and has nothing to do with controlling the cost of individual services or managing utilization.
Memory hook
Think pre-approval: utilization review asks 'is this care needed?' before the care happens.