FEATURE
LIMITS ON INSURANCE COMPANY Prior
Authorization
Tom James, MD
I
s there a doctor who has not thrown up
their hands in frustration over the prior
authorization requirements of insurance
companies? How many patients have
asked their physicians when they will
hear, at last, whether a test or referral has been
approved? A survey by the Medical Group
Management Association (MGMA) in May
2017, found that 86 percent of practice managers reported that prior
authorization requirements had increased over the prior year while
only three percent felt they had decreased. (1.)
But employers and insurers have turned up the heat on con-
tinued rising health care costs by creating even more roadblocks.
While the intentions of reducing costs may be viewed favorably
by those paying for health care services, the results carry a heavy
burden equally on doctors and patients. Most practices have had
to hire additional personnel to manage the prior authorization
requirement. Insurers have had to increase their staff for the same
reasons. This staff increase imposes higher costs of doing business
for both physician and insurer. The mutual frustration over prior
authorization is not new, it goes back decades. In the 1990s, when
I was Travelers Health Network’s mid-Atlantic medical director, a
Washington DC internist told me that he preferred working with
Travelers over other insurance companies because “Travelers’ music
on hold was the best.”
Prior authorization is, in reality, an inspection process which
was designed to be reserved for those health care services which
are relatively uncommon, are high cost, and for which there is a
demonstrably wide variation in care. However, over time many
insurers have adopted more services requiring prior authorization
without regard to the cost of review by all parties.
On January 17th of this year, a consensus statement was issued
by the American Medical Association (AMA) and several other
major health care financing or delivery organizations (see attached).
(2.)
These organizations came to a consensus statement on prior
authorization and agreed on “five areas that offer opportunities for
improvement” that include:
» » Selective Application of Prior Authorization
» » Review of Prior Authorization Programs and Volume Ad-
justment
» » Transparency and Communication
» » Continuity of Patient Care
» » Automation to Improve Transparency and Efficiency
These broad attributes do have some specific directions behind
them. The goals include the more targeted use of prior authori-
zation so that physicians who rarely have services denied should
not have the same onerous prior authorization requirements as a
physician who is less judicious in the use of health care resources.
This describes the development of “gold carding” which removes
prior authorization for the physicians meeting the criteria of the
insurer, and there should be transparency on the criteria the insurer
uses to develop the gold card.
The second bullet point suggests that health insurers review
their prior authorization list on an annual basis. This is for phar-
maceuticals as well as medical services. In my experience working
within the major insurers in Louisville, this annual review has been
SEPTEMBER 2018
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