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Why Outsourcing to an Independent Medical Peer Review Organization is a Good Choice

With the new federal healthcare reform laws, healthcare payer and medical management organizations expect to process about 32 million new enrollees during the next 10 years, dramatically increasing the volume of utilization reviews for complex and critical care services. As a result of this increased volume, the outsourcing of first-level physician reviews to an independent peer review organization will become more important than ever.

While first-level physician review is a critical function in healthcare payer organizations, it can be outsourced to an independent medical peer review organization easily and securely, while ensuring high quality and compliance.  A health plan’s decision to outsource first-level physician review is largely based on 6 main factors.


Six Main Factors for Outsourcing


Outsourcing first-level physician review gives payer organizations the ability to reduce fixed overheads and to align physician review costs to actual volumes. Since an Independent Review Organization (IRO) is focused only on providing medical review services, it optimizes cost and streamlines the process of physician recruiting and credentialing, and medical review workflows. IROs are also better able to spread overheads across a large volume of cases. 

Within healthcare payer organizations, Medical Directors are some of the highest paid employees, with total compensation in the range of $250,000 to $350,000 per annum. By outsourcing first-level physician review to an independent peer review organization, health plans and managed care organization achieve a lower unit cost per review while allowing these valuable employees to focus on longer-term initiatives.


Outsourcing reviews also allows internal Medical Directors to focus on higher-level, value-added work that is more strategic in nature. This includes developing medical policy, chairing P & T Committees, providing over­sight to the quality management program, leading performance improvement initiatives, supervising UR and case management personnel, adjudicating complex claims, and participating in appeals processes.


The availability of web-based case management systems and communications technologies makes it easy for utilization review nursing teams and doctors to collaborate remotely, without compromising quality. Independent peer review organizations like AllMed have developed online medical review portals with integrated workflows that greatly streamline the medical review process.


Whether there is a barrage of incoming cases, a seasonal lull, or physician vacations, an independent medical peer review partner has the resources to properly allocate clinical staff to meet dynamic workload needs.


Outsourcing facilitates meeting short, mandated deadlines, regardless of volume fluctuations. An independent medical peer review organization is set up to meet faster turnaround needs and keeps up-to-date on deadlines for various state and federal requirements.


Using an IRO is an efficient and defensible way to properly manage a health plan for both the insurer and the patient. As unbiased advocates for managing healthcare costs, independent peer review organizations ensure that every patient receives the coverage they deserve for complex or controversial cases.

There are many drivers for outsourcing within the healthcare industry including health reform mandates to spend 80% to 85% of all premiums on actual medical care, the pressure to reduce administrative expenses, and the need to convert fixed overhead to variable costs. A business process outsourcing (BPO) partner, like AllMed, offers a complete, cost-effective solution.  Armed with the appropriate tools, a tight focus, and sufficient staff, as well as the ability to spread costs over multiple organizations, an outsourcing partner is able to provide high-quality, defensible reviews on a tight schedule, regardless of volume fluctuations.

Many larger payer organizations are already outsourcing the physician review component of their utilization review programs. Increased competition within the healthcare industry will now force more health plans, third-party adminis­trators (TPAs), utilization review (UR) and medical management organizations to seriously consider this practice.