For medical patients and providers in America, the term “prior authorization” can elicit gnashing of teeth. This is the mechanism by which insurers review the treatment plan of the provider (which can range from new medications to surgical procedures) and decide whether or not to pay on behalf of the patient. While the idea of prior authorization is eminently reasonable, in practice, it is a source of needless delay, uncertainty, and pain.
Here’s the process in a nutshell: A patient goes to a physician (or another provider) with a medical issue. The provider determines a course of treatment—medications or surgery, for example. The patient’s insurer, public or private, has promised to pay for a variety of procedures—contingent upon the insurer reviewing the provider’s recommended course of treatment. The patient wonders, “Will my insurer pay for this—(as I may not be able to afford to pay)?” The provider wonders, “Will the insurer pay me and, if not, will the patient be able to pay me?” The insurer reviews information on the patient and asks, “Is the provider’s recommendation sensible and necessary?”
The insurer’s question is legitimate. Sometimes, providers recommend high-priced treatments when less expensive ones will do. Sometimes, providers recommend inappropriate courses of treatment. Sometimes, providers are dishonest and inflate patients’ expenses to line their own pockets. Insurers are correct to fear all these problems.
The problem lies in the cumbersome procedures that guide these decisions. Nothing makes this clearer than the fact that in the year 2021 the dominant technology for handling prior authorizations is the fax machine—a device that, outside of medicine, best resides in museums, alongside 8-track tape players and whale oil lamps. A 2018 Council for Affordable Quality Healthcare report says that, in the Digital Age, 88 percent of prior authorizations are handled by telephone or fax machine. If reimbursement for some patients is initially rejected, appeals may take weeks.
The technological means to improve prior authorization are attainable, but inertia keeps things sluggish and arbitrary. Insurers have made the process increasingly slow and onerous, creating a sort of war of attrition on paying for anything—even the most reasonable and common of services—in a timely fashion. The problem could be eased by a system of efficient electronic health records (EHRs), but federal government rules have assured that EHRs remain clunky, inefficient, and the bane of providers.
This is not just a problem of finance and convenience. The hold-ups can inflict pain and even cost lives. Psychiatry is often hardest hit, with those suffering from mental illness or addiction often least able to navigate the delays in receiving medications or drug rehabilitation treatments.
Aside from the wear-and-tear on patients, the paperwork process—even for simple things like blood pressure medication—can wear out physicians. The administrative burden often placed on providers goes uncompensated, so a doctor thinks twice before prescribing the best drug for a patient—knowing the prescription will be hung up in reams of forms and lengthy phone calls with a recalcitrant insurer.
In a private conversation, a doctor recently told one of us, “I have to learn two mutually exclusive ways to understand my patient’s conditions—one to help them and one to get paid.”
A cynic could argue that insurers intentionally use the process to avoid fulfilling their contractual agreement to protect and care for patients in a timely fashion. But one can also point to the burdens with which the federal government has saddled the process.
In mid-January, the Centers for Medicare and Medicaid Services (CMS) had finalized a rule to streamline the pre-authorization process for payers, providers, and patients. It would have established shorter time limits for approvals and rejections and also emphasized the need for a better system of interoperable EHRs. The authors of this piece, along with another colleague, critiqued this proposed rule—mostly favorably, but with some reservations. However, after receiving insurance industry pushback, it appears that, at least for now, the Biden administration has withdrawn the rule.
A better system of EHRs, combined with more sensible rules for prior authorization, could be a win for patients, providers, and perhaps even insurers, with faster treatment, better treatment, and perhaps even improved costs.
