Rethinking Prior Authorization

By Nick van Terheyden aka Dr Nick, Principal, ECG Management Consulting
Twitter: @drnic1
Host of Healthcare Upside Down#HCupsidedown

The term “prior authorization” probably brings shudders to many listeners—not just to doctors and clinicians, but also to patients, and even to hospitals and health systems. If you or your family have never experienced the frustration that often accompanies the prior authorization process, chances are you will at some point in the future.

Here’s what happens: you visit your doctor, they order care for you, and then they discover that the care—or more accurately, the payment for that care—is being denied. So begins multiple rounds of communication and submission of documents and supporting evidence as various parties negotiate the elements of care and determine its appropriateness.

Meanwhile, you and your family wait.

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Prior authorization exists largely because our healthcare fee-for-service model creates incentives for care that don’t always align with the best interests of patients. Like many other industries, healthcare has its share of bad actors, necessitating a range of administrative overhead requirements that must be fulfilled before care can be delivered and payment received. Sadly, these barriers impact everyone—not just the minority who are acting in bad faith.

That raises an interesting question: could the transition to value-based care eliminate the need for prior authorization? While there are many variants of value-based care, at its heart is a capitated care model where one party takes on the responsibility for all the care of an individual, and embedded in that responsibility is the risk and cost.

Medicare Advantage (MA) is one of the largest programs based on the principles of capitated care. It still suffers from some of the same challenges to efficiency as fee-for-service programs, but it also demonstrates how value-based care can succeed. Alina Czekai is vice president of strategic partnerships at Cohere Health, and she previously served as a senior adviser at the Centers for Medicare & Medicaid Services. She joins me to discuss, among other things, reducing the burden of documentation requirements on patients and providers. Here are a few excerpts.

Medicare Advantage can be a template for value-based care.

“Overall, I definitely think these plans are working. These MA plans are also the organizations in our country that are leading a lot of the forward thinking around value-based care. They’re championing new payment models like bundled payments. They’re looking at different capitated programs, different risk arrangements. They’re also holding the physicians in their own networks to increased levels of scrutiny when it comes to cost quality. But of course, like anything in healthcare, there are always ways to improve.”

Prior authorization is a pain for everyone.

“Prior authorization is a huge headache for physicians and their staff. I know there was a recent AMA survey that said around 94% of physicians report delays in patient care as a result of prior authorization. And 82% of them reported that prior authorization can lead to treatment abandonment altogether. It’s also [a burden] for health plans—many of them are putting a lot of money into their administrative processes [e.g., call centers, nurse reviewers]. But most importantly, prior authorization is a challenge for patients and their caregivers. When a patient is going through a medical event or needing care, the last thing they want to think about is, ‘is my care going to be approved, is my care going to get paid for by my health insurance company?’ So there is definitely a big opportunity here to improve prior authorization.”

If we can’t get rid of prior authorization, we can at least make it better.

“There are a number of ways that we can improve the process. It’s really around leveraging technology, leveraging clinical intelligence, having transparency around the criteria for a prior authorization. What requires prior authorization? What does not? What are the clinical criteria being approved for offering and rendering clinical care services?

“I would love for our country’s healthcare system to be in a state where we don’t need to so tightly regulate or police these types of programs. I hope that one day we get to a state that is totally value based, where the incentives and the infrastructure are already aligned. But until then, I think we can continue to use these programs and policies—but transform them, innovate them, and really build a new infrastructure for the healthcare delivery system of tomorrow.”

About the Show
The US spends more on healthcare per capita than any other country on the planet. So why don’t we have superior outcomes? Why haven’t the principles of capitalism prevailed? And why do American consumers have so much trouble accessing and paying for healthcare? Dive into these and other issues on Healthcare Upside/Down with ECG principal Dr. Nick van Terheyden and guest panelists as they discuss the upsides and downsides of healthcare in the US, and how to make the system work for everyone.

This article was originally published on the ECG Management Consulting blog and is republished here with permission.