Impact of prior authorization on patients and physicians

Impact of prior authorization on patients and physiciansDon McCanne MD – Mar 2018

Prior authorization is unique to our dysfunctional health care financing system here in the United States.

It is the requirement that permission be obtained from private insurers to provide certain procedures and services or to prescribe certain medications for the patients. What is its purpose?

Our health care system should be designed to benefit patients.

What a quaint notion! I doubt there’s anyone left who believes healthcare is “designed to benefit patients” when so much money is involved. The corporations that have sprung up to dominate healthcare are created and designed to make money for shareholders.

Some argue that maximizing corporate profit is a “moral imperative” in our capitalist system now running amok without any societal restraint.

So considering that, prior authorization should refine and improve the heath care recommendations of the patients’ health care professionals. Wait a minute.

A distant clerk at an insurance company is going to provide better health care advice than a physician or nurse practitioner at the scene? Of course not. So if prior authorization is not designed to benefit the patient, then what is it for?

To understand that, we need to understand what the private insurance company is for. There are basically two functions.

  1. One is to pool risk and redistribute funds based on medical need, though for self-insured employers, the insurers may provide only administrative services.
  2. And that is the second function of insurers – to sell us administrative services and as much as the market will bear.

And I would add a third, possibly more lucrative function: to invest the money received from premiums and generate profits for shareholders.

if the insurer creates enough onerous administrative barriers then the patients and their professionals suffer administrative fatigue and may abandon the attempt to receive authorization for beneficial health care services.

The insurer is then able to keep the funds that were not drawn out of the risk pool. With persistence, sometimes including appeal processes, almost all prior authorization requests are approved indicating that the services requested are almost invariably appropriate.

This delaying tactic also allows them more time to profit from investing the customer’s premiums (or even just accruing interest on them).

Prior authorization is designed as a barrier to appropriate care – clearly not beneficial but detrimental to patients.

Why does Wall Street pay so much attention to the medical loss ratio of the insurers – the percentage of premiums that are paid out in medical benefits? It is because the lower the ratio, the greater amount of administrative services that have been sold and thus the greater the profits realized.

Our policymakers are still fixated on managed care, but their tool of prior authorization provides just one more demonstration on why the private insurers and their managed care excesses have to go.

Below are the Results of the 2017 AMA Prior Authorization Physician Survey conducted December 2017

Patient Impact

Average wait time for PA responses

Q: In the last week, how long on average did you and your staff need to wait for a prior authorization (PA) decision from health plans?

  • 64% report waiting at least one business day
  • 30% report waiting at least three business days

Care delays associated with PA

Q: For those patients whose treatment requires PA, how often does this process delay access to necessary care?

  • 92% report care delays

Abandoned treatment associated with PA

Q: For those patients whose treatment requires PA, how often do issues related to this process lead to patients abandoning their recommended course of treatment?

  • 78% report that PA can at least sometimes lead to treatment abandonment

Impact of PA on clinical outcomes

Q: For those patients whose treatment requires PA, what is your perception of the overall impact of this process on patient clinical outcomes?

  • 92% report that PA can have a negative impact on patient clinical outcomes

Physician Impact

Physician perspective on PA burdens

Q: How would you describe the burden associated with PA for the physicians and staff in your practice?

  • 84% report high or extremely high burden

Change in PA burden over last five years

Q: How has the burden associated with PA changed over the last five years for the physicians and staff in your practice?

  • 86% report PA burdens have increased over the past five years

Additional PA practice burden findings

  • Volume: 29.1 average total PAs per physician per week (13.9 prescription, 15.1 medical)
  • Time: Average of 14.6 hours (approximately two business days) spent each week by the physician/staff to complete this PA workload
  • Practice resources: 34% of physicians have staff who work exclusively on PA
  • Repetition: 79% of physicians are sometimes, often or always required to repeat PAs for prescription medications when a patient is stabilized on a treatment regimen for a chronic condition

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