CONTROLLING OUTPATIENT MEDICAL EQUIPMENT COSTS THROUGH UTILIZATION MANAGEMENT

Utilization management programs have been widely used to control hospi tal inpatient costs, but little is known about their potential to cont rol outpatient costs. Claims data covering a 21-month period beginning in January, 1990 were analyzed to evaluate the effects of a utilizati on management program established by an insurance carrier to contain c osts for durable medical equipment. Four items were targeted for revie w: seat lifts, transcutaneous electrical nerve stimulator (TENS) 2 and TENS 4 units, and power-operated vehicles. The program was associated with significant reductions (P < 0.05) in order requests, supplier ch arges, and claims payments for three of the four targeted items. Under the program, the rate of denials increased significantly (P < 0.05) f or two of the targeted items. Most of the program's cost savings accru ed from a ''sentinel'' or volume effect, not from an increase in denia ls. These findings provide further evidence of the cost containment po tential of utilization management. Focused utilization management prog rams that target provider groups, patient populations, or service sect ors experiencing high volume have the greatest chance of achieving cos t savings.