Health Insurers and Prior Authorization
Like sands through the hourglass, so are the days of prior authorization
Importantly, services (medications, imaging studies, etc.) that need prior authorizations require healthcare providers to acquire consent from the patient’s health insurance before the cost of the service is covered by the company.
The process can be lengthy and can frequently put off patients getting the care they need. These roadblocks can often trigger frustration and apprehension for doctors, hospitals and patients while adding to the mountain of paperwork doctors and hospitals must complete.
What are the effects of prior authorizations on the medical industry?
It’s like being on an un-merry-go-round
Truth is, one of the more irritating tasks for physicians and other healthcare providers is securing prior authorizations for matters such as testing and prescriptions. In the eyes of some, prior authorizations are not anything more than insurance companies injecting themselves into the provider’s decision-making activity, generating glitches for both providers and patients.
Moreover, prior authorizations have produced a restraint on the revenue stream of many healthcare provider organizations. If a treatment procedure doesn’t get authorized, the provider can’t continue with the service. In some instances, such interruptions bring about a loss of revenue since the patient ultimately decides to proceed without the treatment or because such circumstances compel additional negotiations before the insurance company will sanction the procedure.
The prior authorization process is often further muddled by a mixture of factors:
- Plenty of mandatory steps, each presenting the possibility for interruptions and mistakes.
- Involvement by many people including patients, healthcare professionals, and the patient’s health insurance company.
- Absence of standards, especially when it comes to payer policies.
- Shifting payer rules that must be continuously reviewed and amended.
- Thousands of payers and health plans all competing for a rapid response.
- Manual assessment of prior authorization requests and medical charts by clinicians.
Depending on the complexity of the prior authorization application, the volume of manual work required, and the prerequisites specified by the insurance company, a prior authorization can take anywhere from a single day to a month to process. The AMA’s Prior Authorization Physician Survey disclosed that 26 percent of healthcare providers reported waiting three days or more for a decision.
The AMA found, on average, a medical practice will complete 29.1 prior authorization requests per physician per week that take 14.6 hours to process. About half of the requests are for medical services, while the other half are for prescriptions.
According to another AMA survey, 75 percent of physicians participating reported that issues related to the prior authorization process can cause patients to abandon their recommended course of treatment. In the same survey, 28 percent reported the prior authorization has led to a serious adverse event for a patient in their care. Says Matthew Hahn, MD, author of Distracted: How Regulations are Destroying the Practice of Medicine and Preventing True Health-Care Reform, “The more hoops a doctor or practice has to jump through to obtain care for their patients, the less likely that care will take place.” He adds, “The burden created by prior authorizations is extremely taxing to physicians and medical practices, creating minutes to hours of work just to obtain basic care for their patients. This translates into added administrative costs for practices, and incredible distraction from patient care, which is difficult even under optimal conditions.”
Tags: health insurance, healthcare, healthcare providers, Medical Billing, medical credentialing, medical practice, prior authorization, utilization management
