Analysis Details the Burdens
of Prior Authorization

By Jonathan Springston, Editor, Relias Media

A single facility that employs 24 people to handle only prior authorizations. A health system that spends $11 million every year to comply with prior authorization requirements. These are some of the more eye-popping findings detailed in a new report that draws a through-line from frustrating commercial insurance practices (especially prior authorization) to treatment delays and denials to provider burnout.

Commercial insurers use prior authorization to make sure providers order care that not only is covered under patients’ plans but also follows established treatment guidelines and protocols. What once may have sounded reasonable on paper now appears to be spiraling out of control in practice.

The report, prepared by the American Hospital Association, details why prior authorization presents so many problems, including varying submission requirements, documentation volume, and lack of enough staff to handle the process. On top of administrative burdens, prior authorization can lead to delays and even denials of care, leaving clinicians scrambling to find alternative solutions. If this goes on often enough and for long enough, it can take a toll on healthcare providers. Patients may be caught in the middle. Without a complete understanding of the situation and frustrated with a perceived runaround, patients may give up on moving forward with seeking treatment.

The authors of the report identified several possible solutions, including standardized processes, financial penalties for health plans that abuse denials, and full-time health plan staff availability to speed authorization requests. The July 2020 issue of Hospital Access Management (HAM) includes an article about how one health system is working on upfront agreements between providers and payors about what medications do not need prior authorization. These agreements could prevent so many requests from clogging the system.

Another dispute that is becoming more prevalent is a site of service denial, which happens when a health plan refuses to pay for a claim because a service was performed at a hospital instead of at a cheaper outpatient setting. More information about the challenges these denials pose for patient access staff and possible solutions is available in this article from the December 2020 issue of HAM.