Beyond the Black Box: Why Health Plans Must Redesign Utilization Management for Transparency

Matt Cunningham, Executive Vice President of Product at Availity

For too long, utilization management (UM) has been the most painful source of abrasion between health plans and healthcare providers.

Care decisions are too often made by third-party vendors with opaque regression algorithms trained on old data. Providers are left wondering why medically necessary care is delayed—or denied. And patients, caught in the middle, suffer the consequences. What was intended as a validation of medical necessity has become a byword for inefficiency, and a root of payer/provider mistrust.

The process is outdated. The model is broken. And the clinical, reputational, and regulatory costs are rising.

This is the backdrop against which AHIP, representing the nation’s leading health plans, and the Blue Cross Blue Shield Association made its June 2025 pledge to modernize the authorization process. The pledge calls for reducing the burden of authorizations, improving decision transparency, accelerating response times, and protecting patients from care delays.

But to deliver on that pledge, health plans must do more than digitize compliance. They must reclaim UM from a generation of delegated, fragmented solutions, and redesign it for a future of clinical integrity, intelligent automation, and transparent collaboration.

The Current Model: Optimized for Cost, Not Care

The legacy model for UM is built around outsourcing designed around costs savings rather than outcomes, affordability, and access to care. In the face of rising administrative complexity, many health plans delegated the authorization process to third-party vendors who promised scalable, efficient decision-making.

Delegated vendors often operate as siloed entities, using disconnected systems and outdated workflows that create delays, data gaps, and miscommunications between providers and health plans. Because these vendors manage prior authorizations on behalf of the plan but lack real-time integration with clinical and administrative systems, providers frequently encounter inconsistent decisions, unclear status updates, and long wait times. These inefficiencies not only frustrate clinicians but also increase the likelihood of redundant work, denials, and appeals, adding administrative burden for all parties involved.

Moreover, delegated arrangements reduce the health plan’s visibility and control over key aspects of the utilization management process. When vendors apply proprietary criteria or make decisions without full context of the member’s benefits or care history, it can lead to decisions that feel arbitrary or misaligned with the plan’s values and policies. This lack of transparency contributes to abrasion with providers, erodes trust, and complicates efforts to implement reforms like real-time authorizations or value-based care models. Ultimately, outsourcing UM in this way impedes the health plan’s ability to deliver timely, clinically appropriate, and member-centered care.

Many of these vendors, however, operate as black boxes:

Using regression-based models that rely on historical patterns, not the context of the current case, or the clinical needs of the patientApplying static rule sets that can’t adapt to emerging therapies or evolving care guidelinesMaking decisions that lack visibility to either health plan or provider, accountability, or clinical nuance

The result? Decisions with no clear clinical rationale. Appeals that clog the system. Burned-out physicians. Frustrated patients. And a growing perception, among regulators and the public, that UM is little more than a bureaucratic barrier to care.

The AHIP Pledge: A Line in the Sand

AHIP’s 2025 pledge lays out five essential commitments:

Improve transparency into UM requirements and decisionsStreamline the process through automation and standardizationSupport continuity of care and transitionsProtect patients from unnecessary delaysReduce the volume of authorizations required

These goals are ambitious, but they are achievable. What stands in the way is not technology, but the entrenched operating model: delegated vendors, disconnected systems, and a human mindset focused on containment instead of collaboration.

The only way forward is for health plans to own UM again, to bring it back in-house or adopt solutions that offer full transparency, clinical decision-making, and interoperable workflows. Bringing UM back in-house gives health plans greater control over clinical criteria, transparency, and turnaround times—helping to improve provider trust and member experience. It also enables tighter integration with internal systems, supporting regulatory compliance, analytics, and continuous improvement in care decision-making.

A Better Model: Transparent, Clinical, and Intelligent

To rebuild UM from the ground up, health plans must commit to three core pillars:

Clinical-First Decisioning. Too often, today’s UM systems make decisions based on what happened with similar requests in the past, rather than what’s clinically appropriate in the present, especially if generative AI in used.

Tomorrow’s UM must flip that script. It must:

Ingest structured and unstructured clinical data from the patient’s recordCompare that data against written policies of what kinds of care a health plan will cover through codified medical policySurface transparent, criteria-aligned recommendations that can be reviewed, understood and trusted by clinicians

Most outpatient authorization requests don’t require debate; they just need confirmation that the documentation supports medical necessity. A clinical-first model accelerates these approvals and escalates only what truly requires human review.

This is the difference between regression models and precision intelligence.

Responsible Automation. Speed matters, but speed without accountability is dangerous.

Delegated vendors often boast about high auto-approval rates. But many of those approvals are made with simplistic if/then logic masking inconsistencies. Worse, some use black-box AI models running on questionable data that health plans can’t audit, regulators can’t validate, and providers can’t trust.

The better solution is AI that supports decision-making, not replaces it:

Automatically approve what clearly meets criteriaPresent pended cases to reviewers in a structured, decision-tree formatProvide clear clinical rationales, end-to-end traceability, and easy to validate audit trails for every decision

This helps ensure that the first decision is the final decision, and the right decision while reducing appeals, improving turnaround time, and empowering clinicians to work at the top of their license.

Transparent, Interoperable Workflows. Providers don’t just want faster decisions. They want fair, explainable, and efficient ones.

That means:

Embedding UM directly into EHR workflowsSupporting FHIR-based API exchange for real-time submission, status updates, and documentation retrievalGiving providers visibility into why a request was approved or denied, and actionable steps as to what’s next.

This level of transparency is the antidote to mistrust. It also provides health plans with a clearer lens on their own performance, enabling better trend detection, audit response, and program improvement.

How Health Plans Can Get Started

Reclaiming UM is a strategic shift, but it doesn’t have to be a leap of faith. For health plans looking to modernize UM in alignment with the AHIP pledge, here are four foundational steps to begin the journey:

1. Conduct a Transparency Audit. Ask: Can your plan, and your providers, see how and why authorization decisions are made today?

Review vendor workflows and identify gaps in traceability.Pinpoint where decisions break down or generate unnecessary appeals.Evaluate how aligned current practices are with evidence-based guidelines.

2. Prioritize Clinical Alignment Over Administrative Efficiency to help ensure that the right care is approved quickly—and consistently. Examine how medical necessity criteria are applied across your UM program.

Assess what portion of requests are low-complexity and could be routed for near-instant approval.Identify opportunities to ingest clinical data and automate structured decision support.

3. Build for Interoperability from the Start

Embrace FHIR® APIs and Da Vinci implementation guides for seamless data exchange.Map existing system silos and begin consolidating UM, claims, and documentation sources.Equip providers to submit and manage authorizations within their native workflows—not just portals.

4. Establish Governance That Supports Continuous Improvement this is where strategy becomes durable and scalable.

Define internal ownership across clinical, compliance, IT, and provider strategy teams.Set KPIs that include both turnaround time and provider satisfaction metrics based on quick approvals.Launch scaled and sequenced rollouts in select markets or specialties to build confidence and momentum

The Call to Action: Redesign, Don’t Just Modernize

The AHIP pledge gave the industry a North Star, but following it requires bold moves. The question is no longer whether UM should change, but who will lead that change.

The health plans that act now won’t just reduce delays and abrasion. They’ll redefine the payer-provider relationship around transparency, accountability, and better outcomes.

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About Matt Cunningham

Matt Cunningham is Executive Vice President of Product at Availity. He brought his Army operations experience to the healthcare industry and has been focused on solving the problem of prior authorizations and utilization management for the past 15+ years.