Efforts to Reform Prior Authorization Gaining Traction
The practice known as prior authorization has become the poster child for good intentions gone awry in healthcare. Conceived to prevent unnecessary or low-value medical services by requiring an insurer’s approval prior to ordering certain procedures, tests, or treatments, the process has come under fire by provider organizations for creating barriers to necessary care. In a 2022 survey conducted by the American Medical Association (AMA), 94% of physicians reported care delays associated with prior authorizations, and 89% indicated that the process had a somewhat or significantly negative impact on clinical outcomes.
Drivers of Change
Both doctors and insurers have tried to identify opportunities for meaningful reform of prior authorization, most notably joining forces in a 2018 consensus statement to improve the process. Now, though, the added clout of state and federal legislators may significantly move the needle toward the concurrent goals of providing a guardrail against ineffective, expensive treatment and relieving healthcare providers and patients of onerous bureaucracy.
Why now? In part because the pandemic escalated already high rates of health worker burnout due to administrative burdens and other factors that erode autonomy and get in the way of professional satisfaction. Moreover, the number of prior authorization requests continues to climb. In a 2022 Medical Group Management Association poll, 79% of medical groups queried reported that prior authorization requirements had increased in the previous year. An analysis by Kaiser Family Foundation found that in 2021 over 35 million prior authorization requests were submitted to Medicare Advantage Plans alone, and 82% of appeals resulted in fully or partially overturning initial denials.
This volume is compounded by complexity. Every insurer has different criteria for the type of care requiring prior authorization, how requests are submitted and appealed, and the timeline for issuing a decision. Often denial letters do not contain adequate information about why a request was denied, requiring time-consuming follow-up. In the AMA survey, nearly two in five physicians (35%) employed staff to work exclusively on prior authorizations.
And the situation is no better for patients. Many lack the time or resources to pursue a prior authorization request, which some experts say gives rise to the unintended consequence of health inequity. Dr. Kathleen McManus, a physician-scientist at the University of Virginia, told Kaiser Health News: “The time it takes to juggle a prior authorization request can perpetuate racial disparities and disproportionately affect those with lower-paying, hourly jobs.” In some cases, it causes patients to abandon care altogether, potentially leading to higher costs for providers, patients, and payers.
Action on the Horizon
Fortunately, the American healthcare system is on a course of action that should incentivize more efficient, effective, and equitable prior authorization processes while deterring the use of low-value or inappropriate services. At least 40 states are considering proposals, and last December, the Centers for Medicare & Medicaid Services put forth several recommendations that are broadly supported by groups like AHIP and the AMA. Specific proposals applying to Medicare Advantage, Medicaid managed care, and Affordable Care Act exchange plans starting January 1, 2026, include:
- Automating the process for providers to determine whether a prior authorization is required
- Facilitating the exchange of prior authorization requests and decisions from electronic health records
- Requiring payers to include a specific reason when a prior authorization request is denied
- Promoting better communication between providers and payers and facilitating resubmission when necessary
- Issuing decisions within 72 hours of submission for urgent requests and seven days for standard requests (an alternative time frame under consideration is 48 hours for expedited requests and five days for standard requests)
- Reporting certain prior authorization metrics annually on payers’ websites and other publicly available links
As these and other policies for “next generation” prior authorization rules rapidly take shape, it’s useful to reiterate their original purpose: to implement evidence-based patient and provider friendly tools that improve healthcare outcomes and enhance equity while preventing wasteful or harmful care.
Reviving this goal in a timely fashion will entail specialized support, deep collaboration, and real business process management experience encompassing the interdependent needs of insurers, the provider community, and all of us who rely on these gatekeepers of our health.
If you would like to hear about how BroadPath Healthcare Solutions can help you seize this moment, please visit our website or contact: Brad Burgess, Director of Business Development | 520.276.2730 | [email protected]