Prior Authorization: Continual Bad Rap – Magnified

During the last several months, the federal government has been siding with healthcare providers in an all-out assault on the prior authorization process, which requires providers to get approval from insurers before giving certain treatments to patients.

The Kaiser Family Foundation recently noted that few things about the American healthcare system infuriate patients and doctors more than prior authorization.

But why? The prior authorization process was originally designed to prevent doctors from ordering expensive tests or procedures that are not indicated or needed, with the aim of delivering cost-effective care; the process’s architects focused on the costliest types of care only, such as cancer treatment. Considering the rampant overutilization and expense in the healthcare sector, that sounds pretty good.

However, these days, opponents claim that this process is doing exactly the opposite, providing no guardrails against useless, expensive treatment, but instead preventing patients from getting the vital care they need by commonly requiring prior authorization even for many commonplace medical encounters.

For example, a new survey touted by the American Medical Association (AMA) last week found that one in three physicians blamed prior authorization for a patient’s serious adverse event, including hospitalization, permanent impairment, or death, while 86 percent of physicians surveyed alleged that prior authorization rules led to greater use of healthcare resources overall.

Relatedly, last December I appeared on a Monitor Mondays broadcast to highlight a proposed rule from the Centers for Medicare & Medicaid Services (CMS) that would purportedly improve and streamline prior authorization processes. And at the time, health plans, providers, and their respective trade associations were expressing great support for the proposal.

Oh, how quickly things change. Not only are providers and patients now suggesting that the proposal doesn’t go far enough, putting its future on shaky ground, but since gaining the support of members of Congress and even the U.S. Surgeon General – who just 10 days ago publicly stated that eliminating prior authorization would go a long way toward addressing the nationwide crisis of clinician burnout – these groups have gained real momentum. As such, their cries for reining in a process they feel harms and frustrates patients have amplified.

One of the more remarkable and persuasive trends that’s been seen lately is the way prior authorization opponents have drawn the support of insurers, when such entities are typically the principal champions of prior authorization use. But it can be tough to support it as a cost-saving mechanism when you consider this simple scenario:

As physicians increasingly feel that the prior authorization system is convoluted and time-consuming, as well as a challenge to their medical expertise, they wash their hands of the process entirely and just send patients to the emergency room, which they consider a more efficient approach to getting patients needed drugs and/or services.

The result, of course, is that emergency care costs both insurers and patients much more money. And again, this runs in direct contrast to the intended effect of using prior authorization in the first place.

While there is no miracle cure for the prior authorization issue seemingly running rampant in healthcare, what can be done here to at least mitigate some of the perceived challenges with the process?

Several health plans are taking matters into their own hands, revising their policies to cut down the number of prior authorizations by eliminating the need for patients to obtain permission for certain diagnostic procedures. Other plans have adopted artificial intelligence and other tech functionalities to accelerate prior authorization decision-making.

Meanwhile, according to a 2022 CAQH report, 35 percent of providers and payers still perform prior authorization manually, by phone, mail, fax, or email, and at a cost of about $14.50 per manual request. With 43 million manual requests reported, that’s more than $623 million.

By electronically automating these requests, the cost per request would radically decline to $3.50, saving hundreds of millions of dollars, along with countless hours of administrative burden and aggravation.

Finally, by the end of last year, more than 40 states had either considered or taken action to reform the prior authorization process, indicating that those patient and provider cries for help are being heard by lawmakers across the country. It’ll be interesting to see if that trend continues this year, during state legislative sessions.

But regardless, until all stakeholders involved come together and find consensus on a tangible, real-world fix to this issue, there will always be someone waiting impatiently for relief.

So, while the pile-on to prior authorization’s already bad rap persists, perhaps we should try giving the system a little hands-on TLC, an approach that may aid in prior authorization reaching its full potential, while avoiding many of the pitfalls.

In the meantime, I like the idea of considering the nature of prior authorization on a broader scale, which a healthcare blogger I read recently summed up quite aptly, noting that it is really a microcosm for the healthcare industry as a whole – well-intended, unnecessarily complex, indisputably damaged, but ultimately, fixable.