Health Insurance & Prior authorization Requirements: Its Impact and Recommendations

Health Insurance & Prior authorization Requirements: Its Impact and Recommendations

Insurers use prior-authorization to ensure medical necessity. Medical peer review can be initiated when a prior authorization request or a claim is denied.

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Prior authorization or PA in short, is the approval patients/providers need to obtain from health insurers for certain kinds of medications, treatment procedures, or tests. Absence of prior authorization is one of the major reasons for insurance denial. Sometimes prior authorization requests may be denied for not meeting medical necessity. In such cases, the provider who made the request would be notified verbally and then sent a letter of denial. The requesting physician has the right to a peer to peer review with one of the insurer’s medical directors, and this must be within three business days of the receipt of the verbal notification. If this time limit is exceeded, the requesting physician will have to appeal the denial. When a request for certain provided service is denied also, a medical peer review can be initiated wherein the treating physician will have a peerto-peer conversation with a physician at the insurance company.

Why Prior-authorization Is Necessary Prior authorization is in fact, a necessary process to help optimize patient outcomes, reduce costs, and also reduce waste and errors as well as unnecessary use of medications. Health insurers utilize this process to ensure that the care provided to patients is appropriate and medically necessary. Usually, prior authorizations are requested for treatments that are experimental, new, expensive or complicated and those that have unknown/uncertain outcomes. They say this process helps protect patients and control costs. Typically, the doctor’s office or hospital where the test, treatment, or prescription was ordered is responsible for managing the paperwork that would give insurers the clinical information they are looking for.

Providers Say Prior-authorization Has a Negative Impact However, physicians, patients and patient support groups have been constantly raising their voices against the PA process. An AMA (American Medical Association) survey of around 1,000 practicing physicians regarding the effects of PA on patient care found that more than 9 in 10 respondents considered PA to have a significant and somewhat negative clinical impact. 91% of the surveyed group reported significant delays while 28% reported that the delays had led to a serious adverse event such as disability, hospitalization, and even death for one of their patients. Insurers on the other hand, defend the practice of prior authorization. In a joint statement submitted to the Committee on Small Business, AHIP (America’s Health Insurance Plans) and BCBSA (Blue

Cross

Blue

Shield

Association)

emphasized

the

important

role

of

prior

authorizations in care management. This process enforces best practices and guidelines for care management, and helps physicians identify and avoid care techniques that could harm patient outcomes, as for instance, designating prescriptions that may lead to

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opioid addiction. While acknowledging the fact that there are problems with the present prior authorization system, the AHIP and BCBSA referred to their efforts to collaborate with other industry players to establish practical solutions. They said they would focus on working with healthcare providers to safeguard patient data and their physical as well as financial conditions, and streamline processes so that patients have efficient and easy access to care.

Useful Recommendations Given the fact that both providers and patients are often frustrated with the prior authorization requirements, constructive steps need to be taken to ease the process and benefit from its real value. The Academy of Managed Care Pharmacy (AMCP) makes the following recommendations that could address the prior authorization challenge.

•

Collaborate and communicate clearly with the providers all through the PA process

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Take advantage of health information technology solutions to minimize paperwork and waste while improving the experience of both patients and treating physicians

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Avoid broad or rigid PA requirements for drug therapies that are commonly used as part of emergency care

•

Provide advance notice of any formulary changes to patients and providers

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Allow for timely PA approval for medically necessary exceptions and for timely handling of appeals of denials.

The AMCP highlights nine important PA concepts that would help promote prior authorization best practices: •

Appropriate medication use, and patient safety

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Clinical decision making

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Automated decision support

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Evidence-based review criteria

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Emergency access

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Transparency and advance notice

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Emergency access

•

Provider collaboration

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Cost-effectiveness and value

•

Need for timeliness and avoiding disruptions in therapy

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Meanwhile, last year 6 major industry groups including the AMA and America’s Health Insurance Plans agreed to adopt five steps that could help improve the prior authorization process. These are: •

Reduce the number of prior authorizations required based on the performance of physicians

•

Increase communication and thereby reduce wait time

•

Review medications and procedures that require authorization and regularly evaluate which require prior authorization

•

Protect the continuity of care for patients with ongoing treatments since this would ensure they don’t face care gaps when coverage or prior authorization requirements change

•

Expedite the adoption of electronic standards for prior authorization.

Insurance attorneys and medical records services that assist them, provider organizations and other entities involved know that prior authorization is indeed a valuable tool. Its use can be optimized by making the processes more transparent and streamlined. As a medical management tool, prior authorization would help ensure patient safety, and reduce healthcare costs as well as administrative burden. Meanwhile, patients have the responsibility to stay vigilant regarding the prior authorization requirements for their care.

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