In our recent report, Outsourcing Utilization Management Reviews, we identified scalability and operational efficiency as a central reason why payers choose outsourcing.
This deep dive expands on that theme by examining three pressure points that regularly challenge internal UM teams: auto approvals, volume spikes, and specialty gaps. Each factor carries implications for cost, compliance, and the integrity of patient care. Let’s talk about how the right outsourcing partner eases the burden of those challenges.
Key Takeaways
Auto approvals in complex cases create both financial and clinical risk. Without physician oversight, unnecessary treatments may be authorized, raising costs and undermining patient care integrity. Outsourcing to a clinically driven UM partner ensures every case receives physician review, reducing inappropriate approvals and protecting both margins and quality of care.
Operational volatility exposes hidden financial risk.
Prior-authorization volumes can surge 30–50% overnight. Without flexible capacity, delays, overtime costs, and provider dissatisfaction escalate—directly affecting plan performance. Outsourcing provides on-demand scalability, allowing payers to absorb surges without added overhead or disruption to turnaround times.Specialty shortages now threaten review quality and compliance.
With projected physician shortfalls of up to 86,000 by 2036, maintaining subspecialist reviewers internally is increasingly impractical. Outsourced networks close that gap quickly and cost-effectively.The financial upside is measurable and achievable.
Modeled benchmarks show that outsourcing UM can reduce per-case costs by up to 35%, improve turnaround by 20% or more, and generate annual savings while maintaining regulatory control and quality oversight.
Auto Approvals
Minimizing Exposure in Complex Cases
While automation can help streamline routine claims, auto adjudication in complex or high-cost cases carries significant risk. When reviews bypass physician oversight, plans face exposure to inappropriate approvals, costly downstream appeals, and compliance findings.
Regulatory environment: CMS and state regulators are paying closer attention to how automated approvals are applied in utilization management, particularly when determinations involve high-cost services such as oncology, transplant, or behavioral health.
Financial impact: A single inappropriate approval can result in tens of thousands in unrecoverable medical costs. Multiplied across hundreds of cases, the effect is measurable margin erosion.
Operational risk: Delegated entities without credible oversight increase the likelihood of inconsistent determinations and audit flags.
Impact on patient care integrity: Beyond financial and compliance considerations, auto approvals can compromise the quality of care. High-cost or invasive procedures may be authorized unnecessarily, exposing patients to treatments that are not clinically warranted or that carry avoidable risk. This erodes one of the core purposes of utilization management: ensuring that every intervention aligns with evidence-based standards.
Outsourcing advantage
Trusted UM partners provide physician-led review teams that supply credible delegated support, ensuring determinations are clinically defensible and aligned with regulatory expectations. This oversight protects margins, reduces inappropriate approvals, and helps safeguard patients from unnecessary procedures.
Auto Approval FAQs
Q1: Why are auto approvals in utilization management risky for payer organizations?
Auto approvals in utilization management can undermine both financial performance and patient care. Without physician oversight, expensive or complex procedures may be authorized unnecessarily, leading to avoidable costs, audit exposure, and potential harm to members. For payer executives, this creates risk to both margins and compliance standing.Q2: How does BHM Healthcare Solutions protect payers from the risks of auto approvals?
Unlike organizations that rely on automation, BHM provides 100% clinical oversight with board-certified physician reviewers for every utilization management case. This approach ensures determinations are evidence-based, defensible under regulatory scrutiny, and aligned with quality standards. Partnering with BHM minimizes exposure to inappropriate approvals while safeguarding both financial outcomes and the integrity of patient care.
Volume Spikes
Creating a Shock Absorber for Demand
UM and prior-authorization volumes rarely remain steady. Plans face unexpected surges driven by flu and RSV seasons, new benefit rollouts, or public health events.
Industry reality: Research shows that payer review queues can increase 30 to 50 percent overnight during seasonal or market shifts (CAQH Index, 2023).
In-house limits: Teams staffed for baseline volumes struggle under sudden demand. Overtime and temporary contracts inflate cost per case by 25 to 35 percent, while turnaround times slip.
Strategic risk: Delays frustrate providers, trigger member complaints, and increase appeal rates, all of which raise compliance concerns and erode payer–provider relationships.
Outsourcing advantage
External UM partners act as a capacity buffer, scaling resources rapidly without the overhead of internal recruitment or overtime. This variable-cost model allows payers to absorb volatility while protecting service levels, compliance, and member satisfaction.
Volume Spikes FAQs
Q1: How do unexpected utilization management volume spikes affect payer operations?
Sudden increases in prior authorization and utilization review volumes can overwhelm in-house UM teams. These spikes often result in backlogs, overtime costs, slower turnaround times, and strained provider relationships. For payer organizations, the impact extends beyond operations, creating financial inefficiency and higher compliance risk.
Q2: How does BHM Healthcare Solutions help payers manage utilization review surges without increasing overhead?
BHM delivers scalable utilization management support that expands capacity when volume spikes occur, without the burden of adding staff or paying overtime. Our national network of licensed, board-certified reviewers allows payers to maintain service levels and compliance standards even during periods of rapid demand. Partnering with BHM ensures organizations can absorb utilization review surges while keeping costs predictable and meeting turnaround times.
Specialty Gaps
Closing the Subspecialist Shortage
Many determinations require the insight of board-certified subspecialists in areas such as oncology, behavioral health, and transplant medicine. These experts are scarce, expensive to recruit, and often underutilized when kept solely in-house.
Workforce challenge: The AAMC projects U.S. physician shortages of 13,500 to 86,000 by 2036, with subspecialty access being particularly constrained (AAMC Workforce Report).
Financial strain: Recruiting subspecialists internally drives up payroll and credentialing costs while leaving plans vulnerable to turnover.
Compliance angle: Limited access to subspecialist reviewers increases the risk of delayed determinations, higher overturn rates, and adverse audit findings.
Outsourcing advantage
Experienced Utilization Review vendors, like BHM Healthcare Solutions, maintain broad, multi-state physician reviewer networks with subspecialty coverage, supplying credentialed experts instantly. This provides for timely, high-quality determinations and strengthens compliance posture without the ongoing burden of internal staffing.
Specialty Gaps FAQs
Q1: Why are specialty reviewer shortages a growing concern in utilization management for payers?
Specialty and subspecialty physician reviewers are increasingly difficult to recruit and retain, particularly in fields such as behavioral health, oncology, and transplant medicine. The AAMC projects U.S. physician shortages of 13,500 to 86,000 by 2036, creating operational and compliance risks for payer organizations. Without access to subspecialists, utilization review determinations may be delayed, overturned on appeal, or flagged during audits.
Q2: How does BHM Healthcare Solutions close specialty and subspecialty gaps for utilization management reviews?
BHM maintains a broad, national network of board-certified subspecialists across behavioral health, oncology, transplant, and other complex service lines. This ensures that every review is supported by the appropriate clinical expertise, protecting payer organizations from delays, compliance risk, and quality concerns. By providing immediate access to credentialed specialists, BHM strengthens the reliability and defensibility of utilization review decisions.
Implementation Blueprint: A Practical Path Forward
Outsourcing does not need to be disruptive. The following framework helps payers simplify the process and a high quality vendor like BHM will help you navigate it.
Baseline & Pilot — Start with one or two review categories and track KPIs such as cost per case, turnaround time, and appeals.
Vendor Due Diligence — Confirm credentials, licensure, scalability, and data security.
Governance & Oversight — Define SLAs, reporting cadence, and escalation paths.
Shadow Mode & Migration — Run parallel reviews, then phase in based on performance.
Scale & Integrate — Expand across more lines and feed data into predictive analytics and care management.
Continuous Improvement — Audit regularly, adjust SLAs, and incentivize innovation including AI triage and automation.
Learn more about outsourcing utilization management & download a free 12 point UM vendor evaluation checklist.
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Sources
Health Affairs
Active steps to reduce administrative spending associated with financial transactions in US health care
https://www.healthaffairs.org/do/10.1377/hpb20220909.830296/
Council for Affordable Quality Healthcare (CAQH)
2023 CAQH Index Report
https://www.caqh.org/hubfs/43908627/drupal/2024-01/2023_CAQH_Index_Report.pdf
American Hospital Association (AHA)
Health care administrative transactions cost $18B more last year, report says
https://www.aha.org/news/headline/2023-02-02-report-health-care-administrative-transactions-cost-18b-more-last-year
Association of American Medical Colleges (AAMC)
The Complexities of Physician Supply and Demand: Projections From 2021 to 2036
https://www.aamc.org/media/75231/download
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