Delegation Dilemma: Why It's Time to Have a Health Plan Reconsider Utilization Management

Delegating Utilization Management (UM) functions to third-party suppliers over the years was a practical response to rising healthcare costs, regulatory complexity, and distributed networks. Suppliers commit to operational relief, clinical efficiency and scalable expertise. But what once seemed like a sensible outsourcing strategy is now revealing cracks, in many cases, exposing health plans to new risks.

Recent federal regulations, especially the interoperability and prior authorization final rules for CMS (CMS-0057), have clearly shown that responsibility for timeliness, transparency and facts cannot be uninstalled. Meanwhile, most major business plans have been committed to improving the speed, equity and visibility of UM processes through the commitment created by the AHIP and Blue Cross Blue Shield Association.

As an industry, we need to ask tough questions. Is delegating suppliers delivered with a commitment to better, faster, and more transparent decisions? Or do they just move the pain to another part of the system?

Delegation is not a strategy

Many health plans piece together a network of delegated UM suppliers across business or specialty areas. Each vendor has access to its own rules engine, data air inlets and appeal workflow. In principle, delegated vendors operate outside the core infrastructure of the health plan, which leads to the loss of visibility and control of the reasons behind authorization decisions, program effectiveness and impact on their networks.

The patchwork model introduces five major risks:

1. Lack of transparency – Providers and even internal teams often have limited visibility into the reasons behind prior authorization decisions made by suppliers, especially when inconsistent or uncollected standards.
2. Poor communication and misalignment – Clinical and operational workflows collapse when health plans, vendors and providers do not operate from a common infrastructure or language.
3. Regulatory exposure – With the imminent CMS deadline looming, payers are still at the barrier to supplier performance and integration into mandatory workflow standards. If the entrusted partner fails to meet timely standards or returns a structured reason for rejection, the audit trail ends with a health plan.
4. Operational complexity – The spread of suppliers does not reduce friction; it just reorganized it. Providers must browse multiple portals, phone trees, and formats, and have different expectations.
5. The erosion of trust – The delegation did not do well, and further fracture payer relationships were already tense, which were already related to the entire authorization plan. Frustration is not directed to the supplier when the provider is unable to make timely decisions, explainable decisions, or faces high rejection from opaque systems. It targets health plans.

For providers, delegated UM doesn't feel like simplification – it feels like it's dispersed. Authorization for a single patient may be through multiple portals, forms and response schedules, depending on the vendor being processed by the request. Clinicians often don’t know who is making the decision, which guidelines are applied or how to challenge inappropriate denials. Lack of transparency fuels delays, rework and frustration.

Finally, the traditional supplier payment model (whether the result is, the per capita fee is charged, monthly fees – which generates inconsistent incentives. Health programs bear the brunt of wear and tear and audit risks, but do not gain efficiency from the process of improvement. Such arrangements do not reward performance and hinder innovation.

New tasks for decision making

The construction framework for modern medical operations begins with a fundamental shift in decision-making methods. Health programs need to move from fragmented processes to models based on codified health care policy; can be explained to providers and internal stakeholders; audits throughout the authorization process; and provide advice in real time.

• Editing – Healthcare policies and standards should be structural and transparent, not hidden in PDFs or interpreted.
• Can be explained – Both providers and internal stakeholders should understand why decisions are made and what information is used to support it.
• Audit – Every approved, rejected or pending request should be traced back to a defined policy, not just a comment or spreadsheet from the vendor.
• real time – Speed ​​is essential, but not at the expense of trust or supervision.

A modern UM platform powered by AI and policy-driven automation is making this vision possible. And they are not theoretical. In a production environment, health plans have returned prior authorization approval in less than 90 seconds and have identified more than 75% of cases in real time without sacrificing clinical accuracy or compliance standards.

Some health plans may consider that UM decisions in all service lines and professions are completely unrealistic, especially given staffing challenges and operational limitations. But this is not a call to be fully inserted. It is a call for intelligent orchestration and reimagine the call for decisions and where to make them. Modern UM infrastructure ensures that partnerships with your policies and fully visibility comply with your terms. Automation and AI can handle routine decisions at scale, allowing clinicians to focus on exceptions rather than upgrades.

Not every situation requires all processes. More and more health programs are exploring hybrid models – modern platforms make routine decisions internally, while niche areas such as genetics or emerging specialties may still leverage commissioned partners with specific expertise. The key is that all partners, both internally and externally, operate in a unified infrastructure with shared policies, audit trails and real-time reporting. The delegation should be selective, strategic and in accordance with the terms of the health plan.

Build a better one

Health plans should reassess whether they are still serving their strategic, regulatory and clinical goals.

The better question is not to ask, “How do we better oversee suppliers?”, and the better question is: “Do we still need suppliers to manage this process?”

If a vendor-managed UM cannot provide transparency, coding and real-time decisions under your control, it's time to reframe the model, not just reintegrate it into the view. Consolidating UM operations to a unified infrastructure can preserve control over policies, accelerate care decisions, and ensure audits are ready for all business aspects.

The delegation may have been a necessary freeze in the past. But today, this is often a barrier to the transformational health program trying to lead. The future of leveraging management will not be defined by outsourcing and insertion. It will be defined by ownership, integration and accountability. Even if certain components are still delegated, health plans must retract control of decision-making infrastructure.

Imagine providers gain real-time decisions that they can trust, patients avoid unnecessary delays, and programs can confidently report performance to regulators and stakeholders. This is not the concept of the country in the future. This is an achievable reality if we are willing to go beyond the delegation and take ownership of the decisions that define nursing access.

Photo: Miragec, Getty Images

This article passed Mixed Influencer program. Anyone can post a view on MedCity News' healthcare business and innovation through MedCity Remacence. Click here to learn how.