The Hidden Costs of Fully Delegated UM

For decades, health plans have relied on delegated vendors to handle the heavy lifting of utilization management (UM), particularly in clinically complex specialties such as oncology and genetics. It made sense to fully delegate: Scale, speed and clinical expertise were achieved where it mattered most.

But the landscape is changing. Health plans are beginning to reconsider what should be delegated and what’s better bought in-house. As pressure from the Centers for Medicare & Medicaid Services (CMS) to provide faster prior authorization turnaround times with greater transparency ramps up, provider relationships more strained and member frustration escalates, many plans are rethinking what should be delegated and what’s better brought in-house. The objective isn’t to ditch delegation altogether, but to find a smarter balance.

In this blog, we’ll unpack the hidden costs of full delegation and explore how a hybrid UM model, one that insources core functions while preserving specialty partnerships, can help plans regain control, improve transparency, and deliver better member and provider experiences.

The Drawbacks of Full UM Delegation

Lack of Transparency: Delegated vendors can be incredibly valuable, but they often operate behind the scenes, making it hard for health plans to see what’s really going on. Leaders in UM transformation have pointed out that without access to detailed data, it’s tough to spot trends, track appeals, or understand how decisions are impacting members and providers. That lack of visibility is a growing concern.

Operational Efficiency and Provider/Member Experience: When UM systems don’t talk to each other and prior authorization workflows are fragmented, things slow down and that’s a problem. Providers are juggling multiple health plan portals, inconsistent criteria, and a lot of administrative hassle. It’s no surprise that frustration is building. Health plans exploring hybrid models are doing so in part to ease that friction and rebuild trust with their provider networks.

Financial and Reputational Risk: Delegation isn’t just handing off work; it’s taking on new costs and risks. Vendor fees, manual corrections, and appeals can add up fast. And when a member is denied care, they often blame the health plan, not the vendor. That misalignment can hurt your reputation. More and more plans are realizing they need to take back control, not just to manage costs, but to protect their brand and deliver better experiences.

Why a Hybrid UM Model Makes Sense — Strategic Insights from Heidi Nielsen

Full delegation may have made sense years ago, but it doesn’t provide the level of control, visibility or agility plans need now. For that reason, many UM leaders, including at Florida Blue, have made the move to hybrid models that use a combination of in-house and vendor oversight. Solutions like Availity AuthAI are accelerating this shift by automating high-volume prior authorization recommendations in seconds, helping plans reduce reliance on traditional delegated models and reclaim operational control.