OBJECTIVE: To describe the mechanisms and outcomes of utilization review conducted by Philippine Health Insurance Corporation on its health providers. METHODS: Utilization review conducted among PHIC-accredited health providers consisted of three components. First part involved retrospective review of claims database wherein the initial focus was on hospital outliers (i.e. small percentage of hospitals that have utilization rates significantly higher than their counterparts) and identification of utilization patterns of care and medical services rendered. Second portion was an external review process wherein a group of practicing physicians functioned as peer review committee evaluating whether the care provided was medically appropriate and necessary. Third part included assessment of the rationality of drug use in selected regions of the Philippines. RESULTS: Based on bed occupancy rate and number of claims filed, 126 PHIC-accredited facilities nationwide were identified as outliers. Majority of the hospitals identified with extreme utilization rates were privately owned and were categorized as primary hospitals. Forty-eight percent (61/126) of the hospitals identified as outliers had extremely disproportionate reimbursements for acute bronchitis. Among the varied clinical cases deliberated on by the peer review committee, management in 33% was found to be inappropriate and unnecessary. Based on review of prescriptions, the average number of prescriptions per patient encounter in selected hospitals was 3 drugs (SD ± 3). Ninety percent of these prescriptions were written in generics. 31% of these prescriptions were for antibiotics. One drug prescription based on existing data costs about P321.00 (Equivalent to $ 6 per prescription). CONCLUSION: Unnecessary, inappropriate, or excessive use of medical services was identified through the different mechanisms of utilization review. The data gathered paved the way to a feedback process for health providers that can possibly translate into reduced inappropriate variations in the use of medical health care services and then perhaps cost-savings.