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Making the Decision to Outsource and Choosing the Right IRO

Outsourcing first-level physician review has become essential as health plans continue to face increased pressure to handle larger volumes while controlling cost. When making the decision to outsource, health plan executives must weigh both the advantages and disadvantages of moving their medical reviews to an external partner. Let’s take a look at the pros and cons of outsourcing medical reviews for payer organizations.



  • Reduces high medial Director payroll costs
  • Shifts costs from fixed to variable
  • Improves ability to adjust costs to review volumes
  • Frees up in-house Medical Directors to work on strategic and higher value-added tasks
  • Leverages web-based medical review portal technology
  • IROs have optimized / streamlined physician review processes at low costs
  • Outsourcing is straightforward and can be set up at a low cost



  • Loss of in-house Medical Director expertise is not enough other work to justify keeping them on staff
  • Need to set up a new business process and train utilization review nurses on new referral procedures
  • Nurse / doctor communications via phone instead of face-to-face



Once the decision to outsource has been made, it is vital that health plans carefully choose the right partner to handle their first-level physician reviews. Independent review organizations are particularly well suited to take on these tasks and already provide BPO services for major health plans.
Health plans interviewed in a study by the American Association of Health Plan (AAHP), the trade association of health insurers, attributed partnering with IROs with increasing member satisfaction, enhancement of health plan credibility with its members, and diminishing the perception that administrators rather than physicians are making coverage decisions.


  • A large pool of board-certified physicians in active practice who have been credentialed and trained to provide utilization review support to nursing teams
  • A telephone hotline for client nurses to be able to discuss specific reviews and to get answers to their questions from physician reviewers with Medical Director oversight
  • The ability to meet same-day or 24-hour turnaround times
  • A web portal that allows clients to send and receive case requests, as well as to monitor status and to provide reporting functions
  • A quality management system that meets the NCQA and URAC delegation standards and fully complies with all regulatory requirements
  • A streamlined and optimized workflow that keeps costs down, along with commitment to continuous improvement and cost reduction

Larger volume fluctuation, increased legislation, and the necessity to control costs have all driven the growth in outsourcing of medical reviews. More and more health plans will have to consider advantages and disadvantages of outsourcing for their companies. Independent review organizations are well-equipped to handle these fluctuations in review volume and offer high-quality defensible reviews while helping companies reduce high payroll costs. By choosing the right IRO partner, health plans can achieve these benefits, maintain their high standards, and meet optimal security requirements, all in a quick turnaround time.