States, physicians, and healthcare organizations are actively working towards reducing the burden of prior authorizations in the field of medicine in 2023. The aim is to eliminate rigid prior authorization requirements, which has the potential to lower unnecessary expenditures, save time for patients and physicians, and improve access to crucial healthcare services.
According to the “94th Physician Report” by Medical Economics, 39% of physicians spent between one to nine hours on prior authorizations on a weekly basis in 2022. Shockingly, 17% spent more than 20 hours per week on this administrative task. These statistics highlight the significant time and effort expended by healthcare providers in navigating the prior authorization process.
Furthermore, a survey conducted by the Medical Group Management Association revealed that an overwhelming 97% of patients experienced delays or denials for medically necessary care due to prior authorizations. These delays can have detrimental effects on patients’ health outcomes and access to timely treatment.
Recognizing the need for change, several states and legislators have taken action by approving or introducing legislation aimed at reducing the administrative burden of prior authorizations. Congress has also urged the Centers for Medicare and Medicaid Services (CMS) to finalize a federal regulation that would overhaul requirements within Medicare Advantage, enhancing transparency and streamlining the prior authorization process.
One notable example is a bill currently being considered by the California Legislature, which seeks to prohibit prior authorizations for healthcare services if the plan or insurer has already approved, or would have approved, 90% of the prior authorization requests submitted by a provider within the most recently completed one-year contracted period. This legislation also emphasizes the importance of electronic prior authorization processes, making it easier and more efficient for physicians to navigate.
Although prior authorization requirements serve a purpose, a report by the American Enterprise Institute revealed that administrative costs, including those associated with prior authorizations, account for a significant percentage (20% to 34%) of overall healthcare expenditures. However, this same report also recognizes that the administrative costs of maintaining the status quo are smaller than the spending reductions achieved through prior authorization restrictions, making a compelling case for their continuation.
In an effort to strike a balance, payers such as Blue Cross Blue Shield of Michigan and UnitedHealthcare have already taken steps to reduce prior authorization requirements. Blue Cross Blue Shield of Michigan introduced a plan to decrease prior authorization requirements by 20%, while UnitedHealthcare has implemented a two-phase approach to eliminating prior authorizations, resulting in a 20% reduction planwide.
Cigna Healthcare has also made significant changes by removing prior authorization requirements for nearly 25% of medical services, which amounts to more than 600 codes. This ongoing effort to simplify healthcare for both customers and clinicians started in 2020 and has already resulted in the removal of over 1,100 medical services from the prior authorization process.
By streamlining the prior authorization process, healthcare stakeholders can collectively work towards improving access to care, minimizing administrative burden, and enhancing overall patient outcomes. It is crucial for continued collaboration between healthcare providers, legislators, and payers to find innovative solutions that strike a balance between the need for prior authorizations and the smooth delivery of healthcare services.
What is prior authorization?
Prior authorization is a process used by healthcare insurers to ensure certain medical procedures, tests, or medications meet specific criteria before they are approved and covered by insurance.
Why are states and healthcare organizations pushing to reduce prior authorization requirements?
Reducing prior authorization requirements has the potential to lower unnecessary spending, save time for patients and physicians, and improve access to essential healthcare services.
How do prior authorizations affect patients?
According to a survey conducted by the Medical Group Management Association, 97% of patients experienced delays or denials for medically necessary care due to prior authorizations. This can result in delays in receiving crucial treatments and negatively impact health outcomes.
What efforts have been made to streamline prior authorizations?
Several states and legislators have approved or introduced legislation to lighten the administrative burden of prior authorizations. Payers such as Blue Cross Blue Shield of Michigan, UnitedHealthcare, and Cigna Healthcare have also taken steps to reduce prior authorization requirements, resulting in improved efficiency and access to care.