Years ago, my wife’s doctor recommended that she get a CT scan for an ongoing health concern. I have told this story many times before. What I have never explained was that this CT scan, and a subsequent MRI, were unnecessary. Her health issue should have been easily diagnosed and resolved on one visit with a follow-up visit to confirm the treatment was working. Instead, she made repeated visits to a specialist, who ordered repeated tests of several types. Years later we still wonder why an obvious diagnosis was missed and what could have been done to avoid unnecessary care.
One (blunt) instrument to avoid unnecessary care is prior authorization. Doctors and patients hate prior authorization. Prior authorization is when your doctor wants to prescribe a certain drug or order a procedure but must seek approval from your health plan prior to providing that care. Critics claim that prior authorization is a rationing tool, designed to wear down patients into forgoing care due to the hassle. Congress and state governments occasionally weigh-in and try to reform the use of prior authorization.
The anecdote I have often talked about my wife’s experience is that she chose the wrong place to get a CT scan. Initially she chose a hospital outpatient department near our home. The hospital had to seek prior authorization before performing the scan. The approval process alerted us to her cost sharing – about $2,700. Oddly enough, Blue Cross Blue Shield of Texas approved the original inquiry for a CT scan at a hospital. My wife’s health plan was willing to allow the expensive scan rather than alerting her to cheaper alternatives. However, I quickly found a free-standing radiology clinic that would perform the same service for $403. Prior authorization saved us around $2,300.
Considering my wife’s experience with prior authorization, I tend to be sympathetic to the practice. I am also somewhat sympathetic because of economic theory. Insurance companies represent a big pot of money. Doctors, hospitals and drugmakers want as much of that money as they can pry loose. Patients go along with their doctor’s recommendation because they are not price sensitive: a. They are sick, b. not knowledgeable about alternatives and c. they are not the party paying the price. Thus, prior authorization is a means to put the brakes on runaway spending. For example, if your doctor prescribes an expensive drug, prior authorization may require step therapy, starting with a cheaper drug before agreeing to the expensive one if a cheaper generic drug does not work. Prior authorization may require physical therapy before approving expensive back surgery, which is statistically no more effective than PT.
The Wall Street Journal reports that major insurers have agreed to streamline prior authorization.
Major insurers will promise to ease so-called prior authorization by creating a common standard for submitting electronic requests by the start of 2027, the people said. They will also pledge that 80% of electronic requests will answered in real time by 2027, though only if the submissions include needed documentation, a potentially significant caveat.
The changes could ease an administrative process that has long been a major pain point for doctors and hospitals, which complain they must hire extra staffers just to deal with the bureaucratic burden of seeking insurer permission to provide care to patients.
Doctors who I have talked to say most requests for prior authorization are unnecessary as the care is often standard and not particularly expensive. They also report that most requests are approved. They conclude prior authorization is a huge waste of their time. Public health advocates also claim prior authorization is often used unnecessarily.
For their part, insurers have long said that their processes aim to ensure patients don’t get inappropriate, unnecessary or wasteful procedures and tests.
More from WSJ:
The insurers will also promise that all authorization denials will be reviewed by medical professionals—something that they have long said they already do—though the agreement appears likely to leave room for the growing use of artificial-intelligence tools in the review process.
I do not have a problem with using AI assisting in care decisions. An AI interface would likely have diagnosed my wife’s condition in milliseconds.
I sometimes wonder why my wife was not informed of cheaper alternatives when she tried to get a CT at a hospital. I suspect most patients would welcome a type of prior authorization if it were consumer focused, providing information on alternatives and cheaper options. It is beyond my comprehension why this is not standard practice.
Read more at WSJ: Health Insurers to Promise Changes to Preapproval Process That Drew Backlash