Access to timely medical treatments is often crucial for patients’ well-being and recovery. However, in the world of medical insurance, preauthorization requirements have emerged as a significant hurdle that often delays patients’ access to the care they urgently need.
Prior authorization, also referred to as precertification, is a step that is often found within the healthcare process that requires doctors and other healthcare professionals to obtain approval from their medical insurance plan before providing a specific service to a patient. This approval is required in order to ensure that the service will be covered by the healthcare plan and eligible for payment.
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The prior authorization process delays their treatment and creates an administrative burden on the physician. In the opinion of most doctors, the process is unnecessary and only serves to benefit the insurance companies, which net billions of dollars each year in profit.
Today we would like to provide you with an overview of the preauthorization process and shed some light on the adverse effects it creates for patients, physicians, and employers.
What Is The Purpose Of Insurance Preauthorization?
Preauthorization, also known as prior authorization, is a process used by health insurance companies to evaluate the medical necessity and cost implications of certain procedures, tests, and medications prescribed by healthcare providers before they are approved as covered expenses.
While insurance companies convey the message that preauthorization serves as a measure to control costs and ensure appropriate utilization of healthcare services, it can hinder timely treatment, impacting patients’ health and quality of life. Additionally, it places a burden on doctors and other healthcare professionals and requires time and effort that would be better spent attending to patient care.
The pre-authorization process was first introduced in the 1960s as part of the utilization review procedure. Utilization reviews were implemented when the legislation for Medicare and Medicaid was first introduced, and the reason behind this process was to ensure that an admission of a patient into the hospital was necessary, which required the confirmation of two doctors. If a patient was referred to the hospital for a procedure that could be safely performed as an outpatient, then a utilization review was done to prevent unnecessary and costly hospital visits.
Prior authorizations have evolved over time, and while initially implemented to audit hospital admissions, they are now being used to assess the appropriateness of specific treatments or medications.
Has The Pre-Authorization Process Gotten Out Of Hand?
Insurance companies argue that prior authorization requirements are in place to ensure that the most cost-effective treatment option is considered before resorting to more expensive alternatives; however, doesn’t this undermine a doctor’s expertise?
Who at the insurance company level is making the decision of whether to approve or deny a request for a course of treatment or medication? What are the person’s qualifications? It may surprise you to know that in most cases, the person who is making the decision to approve or deny the treatment does not have the same level of education or medical background as the doctor who ordered the treatment or medication.
In an article published by CNN Health, Dr. Kanter, a hematologist in Birmingham, AL, said, “I lose hours of time that I really don’t have to argue with someone who doesn’t even really know what I’m talking about,” and “The people who are making these decisions are rarely in your field of medicine.”
The article also stated that both doctors and patients find the entire process confusing, frustrating, convoluted, and much too time-consuming. Doctors feel their professional expertise is being questioned, and patients are not receiving the treatment they need in a timely manner.
The Impact Of The Prior Authorization Process
The preauthorization process that was created years ago to streamline costs and prevent unnecessary hospital visits is now having adverse effects on doctors, employers, and most importantly, patients’ timeliness and quality of care. Let’s take a look at some of these negative impacts.
The Effect Of Prior Authorization Procedures On Employers
Prior authorization (PA) is promoted by health insurance companies as a cost-saving tool for businesses seeking plans for their employees, but many employers do not fully understand the ramifications this process can have on their employees or the impact it may have on their business.
For example, if an employee consults their doctor for medical attention and the doctor is required to navigate through a cumbersome PA process before beginning treatment or medication, the employee has to wait for days (or longer) for the insurance company to make a determination, or they may get denied. The employee may become worse and be unable to work, or their performance on the job may suffer.
An American Medical Association survey revealed that out of the 91% of doctors who were surveyed, 58% said that they had patients who were unable to carry out their job duties as a result of the preauthorization process. Additionally, 33% of these surveyed doctors reported that the PA process resulted in a serious adverse issue, including hospital admission, disability, and, in some cases, the death of the patient.
So while a lower-cost insurance policy may seem attractive at first, it may actually negatively impact an employer’s bottom line, not to mention the impact on the loyalty or morale of the workforce.
The Effect Of Prior Authorization Procedures On Doctors
Doctors often feel that the PA process affects the quality of care they can offer their patients. These physicians have spent countless hours securing the degrees and qualifications that make them experts in their field of medicine. They make a diagnosis and know the best way to treat that patient, yet they have to “prove” or “explain” their reasoning or plan of treatment to an individual (a reviewer employed by the insurance company) who does not possess the same knowledge base or expertise.
According to data collected by the American Medical Association (AMA), each week the average doctor completes at least 45 preauthorizations, which take about 14 hours (two business days) to complete. 35% of physicians have a full-time staff member dedicated solely to this task.
Doctors are spending a large portion of their time justifying their treatment plans for patients instead of actually treating them. How is this an effective use of their time? In addition, the expense associated with having a dedicated employee just to handle this process is not paid by the insurance companies that require it, but instead it is passed down to the patient level in the cost of their healthcare.
Another burden that this process has created for doctors and patients alike is the step-therapy process. Step therapy is an alternative treatment or medication that is dictated by the insurance company that the doctor must try first before being able to treat the patient the way they initially wanted.
So, in addition to the doctor having to justify the treatment they have ordered for their patient, they are basically undermined and told by someone at the insurance company that they must try to treat the patient in a different way or with a different medicine first. If this step of therapy fails, then they may move forward with the doctor’s original treatment.
The AMA reported that 86% of doctors reported that the PA process resulted in ineffective initial treatments through step therapy, extra office visits, emergency room visits, or hospitalization. Almost half of the patients who were required to utilize step therapy ended up requiring urgent care or emergency room visits.
The Effect Of Prior Authorization Procedures On Patients
94% of physicians have reported care delays for their patients due to cumbersome PA processes, and 80% of physicians have had patients who gave up and abandoned their recommended plan of care receive no treatment at all due to PA issues.
25% of doctors have witnessed the PA process cause the hospitalization of a patient. 19% of doctors have witnessed life-threatening events due to a PA process, and almost 10% of doctors have had experience with patient death or serious permanent disability or impairment resulting from delays caused by PA processes.
Patients are paying for healthcare coverage, and their policy may state that it provides coverage for a certain event or condition. However, when access to that coverage is needed, the insurance company’s prior authorization process causes:
- Delayed Treatments
- The preauthorization process often involves gathering and submitting detailed documentation, which can be time-consuming and burdensome for healthcare providers. This delay in obtaining approval can result in patients waiting for their treatments, leading to unnecessary suffering, disease progression, and potential complications.
- Increased Patient Anxiety
- Waiting for preauthorization can be an anxiety-inducing experience for patients, especially if their conditions are urgent or require immediate attention. The uncertainty and stress associated with delayed treatments can have a detrimental effect on patients’ mental well-being, exacerbating their physical symptoms.
- Disease Progression and Worsening Health
- In certain medical conditions, time is of the essence. Delayed treatments can allow diseases to progress, leading to irreversible damage and worsening health outcomes. Conditions such as cancer, cardiac ailments, and chronic diseases require timely interventions, and any delays can negatively impact patient survival rates and their long-term prognosis.
- Financial Burden
- During the preauthorization process, patients may need to bear the cost of medical services or treatments out of pocket until insurance approval is obtained. This financial burden can be overwhelming, especially for individuals already struggling with the costs associated with their medical care.
The Preauthorization Process Needs To Change Significantly
The preauthorization process is intended to lower the overall costs associated with healthcare; however, patients and doctors alike are not seeing these savings. In 2019 alone, the administrative costs directed to the preauthorization process cost providers approximately $528 million, according to the HFMA (Healthcare Financial Management Association). These costs are passed on to the patient.
In addition to the rising costs of health insurance, the impact prior authorization procedures have on patient care and their long-term health is becoming increasingly critical. The current process is not efficient, and 94% of all physicians report that it has caused delays in their patients’ treatment.
The PA process needs to be overhauled, and collaborative efforts among healthcare providers, insurance companies, and regulatory bodies are necessary to streamline pre-authorization procedures, reduce unnecessary delays, and prioritize patients’ well-being.
Healthcare companies are not in business to help people afford medical care but to make money. A report originating from CNN stated that while inflation for American families continues to rise and paychecks are being spread thinner, healthcare companies are reporting record profits. What is wrong with this picture?
United Healthcare reported 17.7 billion in profits for 2021, while the average premium is up by 47% since 2011, and deductible costs require more than 12% of an individual’s income. Almost half of the U.S. adults who are insured are unable to afford their out-of-pocket costs, and around 30% of them do not take the medicine that they need because they cannot afford it.
What You Can Do To Help Fix The Healthcare Pre-Authorization Process
The American Medical Association is spearheading an initiative to address the issues faced by patients, doctors, and employers resulting from the prior authorization process required by medical insurance companies. (#FixPriorAuth) You can learn more about the issues and what you can do to effect change by visiting their website. They have a petition to Congress that you can support and learn more about.
We need a healthcare system that efficiently delivers essential treatments without compromising patient outcomes or causing unnecessary suffering.
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