I often write about the time my wife almost got a CT scan at a hospital outpatient clinic not realizing she had arbitrarily picked the second most expensive service location. Inside the hospital is the most expensive location. The hospital business office told her they would have to get prior authorization from her health plan before they could schedule the scan. That also gave the hospital a reason to calculate her cost-sharing and inform my wife that she was expected to pay $2,700 prior to the service. That was not even the price, just her share of the bill after her deductible was met. BlueCross approved the scan but by that time I had found an alternative location that charged only $403. I’ve often wondered why Blue Cross didn’t alert my wife that there were far cheaper options. She had no idea prices vary and hospitals are expensive. Most people probably don’t either.
Prior authorization in health care is a rationing tool. It is when your health plan requires your doctor to seek approval before a given procedure is authorized to be reimbursed. Doctors hate it because it leads to additional effort, bureaucracy and wasted time. Insurance companies require it because sometimes patients stop asking or a denial results in cost savings for a treatment that is questionable.
I don’t really have a problem with prior authorization if it is conducted in a way that is not unnecessarily obstructive. It could even benefit patients if it were coupled with provisions to alert them about prices and that cheaper options are available.
Public health advocates oppose prior authorization because they perceive it as a barrier to care. According to the American Medical Association nine states have passed legislation limiting prior authorization. The lobby group hopes to encourage more states to follow suit. The New York Times wrote about prior authorization in the Medicare Advantage program, “When ‘Prior Authorization’ Becomes a Medical Roadblock,” saying:
Traditional Medicare rarely requires so-called prior authorization for services. But virtually all Medicare Advantage plans invoke it before agreeing to cover certain services, particularly those carrying high price tags, such as chemotherapy, hospital stays, nursing home care and home health.
Traditional Medicare is also often the target of scams, paying bills the federal program should know are fraudulent. Medicare pays suspect bills anyway only to (sometimes) seek to recover funds years later after the perpetrators have fled the country. For instance, last year millions of medically unnecessary urinary catheters were billed to Medicare for patients who didn’t need them. Virtually all commercial insurance carriers in the Medicare Advantage program use prior authorization sometimes.
“Most people come across this at some point if they stay in a Medicare Advantage plan,” said Jeannie Fuglesten Biniek, associate director of the program on Medicare policy at KFF, the nonprofit health policy research organization.
In 2021, those plans received more than 35 million prior authorization requests, according to a KFF analysis, and turned down about two million, or 6 percent, in whole or in part.
The above analysis is consistent with physicians I’ve spoken with who said most requests for prior authorization are granted. That’s one reason they believe prior authorization is a waste of their time. They too often are required to seek prior authorization for medically necessary care that is not particularly expensive nor controversial. It’s just a paperwork exercise their office staff has to do.
“The rationale plans use is they want to prevent unnecessary, ill-advised or wasteful care,” said David Lipschutz, associate director of the nonprofit Center for Medicare Advocacy, which frequently hears complaints about prior authorization from both patients and health care providers. But, he added, it’s also “a cost-containment measure.” Insurers can save money by restricting coverage; they’ve also learned that few beneficiaries challenge denials, even though they are entitled to and usually win when they do.
In 2018, a report found “widespread and persistent” problems related to denials of prior authorization and payments to providers. It noted that Advantage plans overturned 75 percent of those denials when patients or providers appealed.
Analysis shows that only about 11% of denials are appealed. Yet about two-thirds of Medicare Advantage plan enrollees know they can appeal. Only about one-third don’t realize there is an appeal process. When plan members appeal after being turned down they usually win. The question is why more people don’t appeal denials?
Prior authorization is a rather blunt cost-saving (rationing) instrument. It has a place but is often used unnecessarily. As more states pass legislation against prior authorization let’s hope they don’t throw the baby out with the bathwater.
Read More at New York Times: When ‘Prior Authorization’ Becomes a Medical Roadblock
You are such a schmuck Devon. I suppose that when you’re playing poker you let the card player across from you look at your hand before he bets! I really like “PreAuthorization” because if my wife has 53% survival odds I enjoy PreAuthoization SLOWING everything down to SAVE the insurance company money. It’s “THRILLING” to think they might say, “No!”
I know, Devon let the oposing trial attorney listen to your strategy meeting with your lawyer!
Some PhDs are total imbeciles!
Ron, I’m pragmatic. In the absence of price rationing there necessarily has to be some other mechanism. Let’s assume federal law outlawed prior authorization and required health plans to pay whatever hospitals charged. We both know what would happen. What patients really need is some type of mandatory disclosure where they can easily get a second opinion (maybe even an AI opinion) and the prices of competing providers.
I use my wife as an example because it an anecdote where prior authorization saved BlueCross hundreds and saved my wife $2,300. However it is far from perfect. As I said, it’s a blunt instrument.