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June 19, 2024
David Burda
Economics Outcomes Policy

Prior Authorization Is a Big Waste of Time 

Prior authorization (PA) has been and continues to be a huge thorn in the side of healthcare providers who need PA approval from health plans for coverage of medical procedures or treatments for patients.

PA unnecessarily delays care, which puts patients at risk, according to providers. That’s in addition to the costly and time-consuming administrative burden of seeking PA approvals and appealing PA denials.

Health plans, in turn, say PA is essential in protecting patients from inappropriate care, unproven care or care that offers little or no therapeutic value, according to the medicine evidence.

The conflict between providers and health plans over PA used to be inside baseball, strictly an industry conversation. Now PA disputes are daily front-page news. That’s in addition to PA becoming a favorite target of investigative healthcare journalists.

If anyone is looking for the truth about PA in this polarized debate, they can find it in a short section in the latest annual June report to Congress from the Medicare Payment Advisory Commission (MedPAC). Though MedPAC doesn’t say this outright, what it found was PA was a big waste of time.

MedPAC researchers looked at 37.5 million PA determinations made by Medicare Advantage (MA) plans in 2021. The average number of PA determinations per MA enrollee was 1.5, and it ranged from a low of 0.3 per enrollee to a high of 2.8 per enrollee.

Here’s the big news:

  • 95% of PA determinations by MA plans in 2021 were “fully favorable.” The plans approved PA requests for procedures or treatments deemed necessary by their providers at full coverage and payment 95% of the time, according to MedPAC.
  • 4% of the PA determinations were “adverse,” meaning plans denied coverage and payment.
  • 1% were “partially favorable,” meaning the plans approved the procedure or treatment but at a reduced level of coverage or payment.

Further, after a provider appealed an initial PA denial:

  • MA plans reversed their decision and fully approved the PA request 80 percent of the time.
  • MA plans affirmed their decision and denied the PA request 18% of the time.
  • MA plans reversed their decision and partially approved the PA request 1% of the time.

A couple of things jump to mind after reading these stats.

If health plans approve almost all PA requests by providers, why couldn’t plans and providers automate the PA process? Lots of health systems are predicting big changes to healthcare with technology. Why spend so much manual labor filling out forms and sending them back and forth when the result is almost always the same?

Bigger picture, why are health plans making providers go through burdensome PA processes at all if the eventual outcome is the same? My guess is health plans hope providers don’t file initial PA requests or don’t appeal adverse PA determinations because they know the paperwork burden in front of them. If you ever appealed your property tax assessment, you know exactly what I’m talking about. It’s easier to pay the bill than fight it.

In my opinion, the new MedPAC report clearly shows prior authorization is a big waste of time and money. No wonder healthcare costs so much.

Thanks for reading.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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