The prior authorization predicament

Prior authorizations are not just a frustrating impediment to providing patients with quality care. To physicians, they represent hundreds of millions of hours of lost productivity and billions of dollars in revenues with little benefit
to patients.

Doctors face numerous frustrations in caring for patients, but few are as infuriating-or expensive-as prior authorizations. 

Consider their impact on productivity. A 2010 American Medical Association survey found that physicians spend an average of 20 hours per week (a number that some doctors say is too low) on prior authorization activities. With approximately 835,000 physicians practicing in the nation, that represents 868.4 million hours given over annually to this administrative task-not counting the time spent by other staff members.

As for the dollar cost, physicians spend an annual average of nearly $83,000 interacting with insurance plans, according to a 2011 study published in Health Affairs. That means the total cost to physicians for prior authorizations is around $69 billion annually.

Holding down costs

What are we getting for all that time and money? For the vast majority of providers, and many industry medical industry observers, the answer is “very little.” They say payers-commercial insurance companies, Medicare, Medicaid, and pharmacy benefit managers (PBMs)-use prior authorizations as a way to hold down costs, and that the short-term focus on the bottom line often results in far higher costs later on, in the form of patients requiring hospitalization and/or emergency department treatment. 

To payers, however, prior authorizations are more about efficacy and ensuring patient safety. 

“My goal is to act as the patient’s advocate, to get them whatever type of drug or whatever level of care they need,” says Damon Raskin, MD, an internist in Pacific Palisades, California, and medical director of a drug and alcohol rehabilitation center in nearby Malibu. “And the goal of insurance companies is to maximize profits for their shareholders. And those things are oftentimes opposed.”

NEXT: Is the prior authorization problem getting worse?

Raskin cites weight-loss drugs such as Qsymia (phentermine and topiramate) and Belviq (lorcaserin HCI), for which he often has difficulty obtaining coverage from third-party payers. “If I can get the patient down to a normal weight I’m obviously going to be saving them expensive drugs for diabetes, hypertension, and high cholesterol and decrease the risk for higher morbidity and mortality,” he says. “So I think their (payers’) restrictions are very short-sighted.” 

The role of PBMs

The challenge is especially acute when dealing with PBMs, because they generally focus only on drug costs, rather than the patient’s general health, says Randy Vogenberg, PhD, RPh, principal of the Institute for Integrated Healthcare in Greenville, South Carolina.

“The PBM’s job is all about managing money, and not paying out what they determine to be unnecessary costs,” says Vogenberg. “If it means more costs on the medical side, that’s unfortunate, but they say ‘that’s not our job.’”

A similar dynamic exists among public payers says David Dranove, PhD, a professor of health industry management at Northwestern University’s Kellogg School of Management and coauthor of the blog “Code Red.” “As a matter of public policy we’ve reached a consensus that doing things the way we’ve always done them, in terms of giving physicians unfettered decision-making authority is no longer acceptable,” he says. “So someone’s got to intervene, and right now the intervention is coming from payers and government entities.”

Is the problem getting worse? Certainly most doctors and practice managers would say so. And while no one has studied changes in the demand for prior authorizations over time, evidence can be found in Medicare’s prescription drug benefit: In 2013, 21% of the brand-name medications covered under Medicare Part D required prior authorization, and 35% were subject to some form of utilization management.

In 2006, when Part D went into effect, those numbers were 8% and 18%, respectively, according to a Kaiser Family Foundation study.

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NEXT: How practices can respond

Short of refusing to accept any form of insurance, there is little that individual physicians can do at this point to avoid prior authorizations, health policy experts say. “I don’t think there are ways of getting out of it altogether,” says John F. Hoadley, PhD, research professor at Georgetown University’s McCourt School of Public Policy in Washington, D.C.  “The solutions are probably at a higher level than any individual doctor, or for that matter any individual health plan.”

Despite their unavoidability, however, physicians and practice managers can  minimize the costs and headaches prior authorizations frequently bring. One of the easiest is to find out in advance what information or documentation a payer will require. 

“Being aware of what will require prior authorization, and making sure that you’ve already tried the cheaper meds or whatever the requirements are is really important,” says Kevin de Regnier, DO, a solo family practitioner in Winterset, Iowa. “That way, when you do get to the point where you have to request the prior auth, you’re less likely to get it rejected because you didn’t try something or didn’t include the right piece of information.”

Sherry Hughes, LPN, a member of de Regnier’s staff, estimates that the practice submits between 18 and 36 prior authorization requests weekly, each lasting between 20 and 60 minutes. 

Use technology

Technology may also help practices reduce the burden of prior authorizations. Electronic health record (EHR) systems can be a particularly valuable tool in this regard. For example, Ortho NorthEast, a 70-provider (30 physicians and 40 non-physician providers) orthopedics practice in Fort Wayne, Indiana, has tailored its GE Centricity EHR to alert a physician if he or she doesn’t provide the needed documentation for a prior authorization.

“If we know that a particular plan will require trying physical therapy before approving surgery, and we don’t have any physical therapy in the documentation, then the EHR will send a warning, ‘this request may fail, please indicate why physical therapy is contraindicated,’ explains Mona Reimers, CPC, FACMPE, Ortho NorthEast’s director of revenue services. 

“It goes along with the need just to document in general on medical necessity, so it’s not all bad that we have a chance to pause and ask, ‘did the doctor forget to include something in the record? ” Reimers says. 

In the nearly 10 years she has been with the practice, the number of requests for prior authorizations has “gone way up,” Reimers says, to the point where some payers are requiring at least a notification of every non-emergency procedure. 

Ortho NorthEast has approximately 200 prior authorization requests outstanding at any time, says Reimers, requiring the full-time services of six employees at an annual cost of about $180,000, including benefits. In addition, the practice has developed two sophisticated software programs to help track the status of prior authorization requests. One shows the number of prior authorizations the practice will require over the next 30 days and how many of those are actually in progress. 

NEXT: How to expedite the process

The other prioritizes the pending authorization requests based on the amount of work they are likely to require, so that staff members can know which requests to work on first. With so many authorization requests outstanding, such tracking tools are crucial, says Reimers. “Otherwise you’d spend half your day just making lists of patients that you have to check on.”

Payer websites can expedite the process

Payer companies’ websites can be another tool for expediting the prior authorization process, both as a source of information for the company’s authorization requirements, and a way to submit the request. On the other hand, electronic submissions risk getting lost with no possibility of follow-up, says Hughes. “We find it works a lot better on the phone. It takes longer, but you’re talking to a person and they can tell you right away if there’s any additional information they need. It really expedites the process.”

Along with general categories of steps for expediting prior authorizations, individual practices often develop techniques based on their own needs and experiences. Raskin notes that certain words or phrases can sometimes be helpful. He cites the example of the sleep aid Rozerem, the brand-name version of Ramelteon. He often prescribes it for patients with substance abuse issues because it is non-addictive, despite being more costly than the generic version. Saying that the patient has a history of addiction and chronic insomnia generally is enough to obtain coverage. “That’s an example of where a little buzzword or phrase will let me get approval pretty quickly,” he says. 

Another effective strategy, he says, is to start a patient on samples of a drug. If the patient responds well, “that’s often a good justification to say it would be medically unwise to stop this medication at this time.”

NEXT: Can you charge for prior authorizations?

Charging a fee for obtaining a prior authorization may be an option, but only when the patient is out of network, says Alice Gosfield, JD, a healthcare attorney in Philadelphia and Medical Economics editorial consultant. Most payer-physician contracts prohibit charging such fees, but if the patient is out-of-network “they (the physician) have no contractual relationship with the plan. The relationship is between the subscriber and the health insurer, and the physician is just facilitating the interaction,” Gosfield says.  (Medical Economics could not find any physician who charges for prior authorizations.)   

Some specialists try to avoid prior authorizations by referring the patient back to the PCP to obtain a prior authorization. “I’ve had patients tell me they needed a test or procedure or referral recommended by a specialist and that only the PCP could do it,” says Jeffrey Kagan, MD, an internist in Newington, Connecticut and Medical Economics advisory board member.

“I’m not sure how much is true rules of the insurance company and how much avoidance of extra work by the specialists. A similar dump by some specialists is to send patients back for pain meds so the specialists do not have to prescribe them,” he says.

De Regnier has been asked by specialists to obtain prior auths for procedures, but not medications. “My response was to let them know that it wasn’t my job.  They evaluated the patient and know the reason they are ordering the test or procedure,” he says. He solves the problem by making it clear that he won’t be making any more referrals to the specialist. “They back off pretty quickly,” he says.

Of course, pushing back is effective only when it’s against another independent physician, notes George G. Ellis, Jr., a Boardman, Ohio internist and Medical Economics advisory board member.  Specialists employed by a health system don’t have to worry about getting referrals from primary care doctors outside the system, he notes.

Prior authorizations for generics

Recently some PCPs have begun seeing a new development: prior authorizations even for some generic medications, or for medications patients have been using successfully for a long time.

“PAs for generics is a new phenomenon. It comes up frequently with patients over 65 who are on medications that appear on the ‘Beers list’ (medications that are potentially unsafe for the elderly) says Yul Ejnes, MD, MACP, an internal medicine practitioner in Cranston, Rhode Island. While coverage is usually extended, he says, “the benefits manager puts us through the process of getting prior auth supposedly just to let us know that the medication may be dangerous. 

“In my view, this is a misuse of the prior auth process - it was intended to manage benefits, not educate physicians,” he adds. 

Raskin has also started getting such requests. “It may be that even though it’s a generic it may not be on the payer’s formulary, or maybe they got a better deal on some other drug,” he says. “They don’t give reasons, they just want us to fill out the paperwork.”