Prior Authorization: The What, How, And Why

What is Prior Authorization?

Prior Authorization is also known as Prior certification or Prior Approval. It is the process of receiving pre-approval from an insurance company for a particular medication or a treatment process. The Insurance Companies have introduced Prior Authorization to ensure that the medicine or the course of treatment has coverage under the particular healthcare plan.

The doctors or the healthcare professionals should ensure the process of Prior Authorization is complied with and obtain prior approval before offering the treatment course, service or medication. Prior Authorization is intended as a cost-saving and a savings measure by insurance companies for the benefit of patients. Prior Authorization procedure aims to reduce unnecessary prescription drug usage, waste, and error. 

The ultimate aim is to keep healthcare costs in check.

Benefits of Prior Authorization for Physicians and Patients

•  Prior Authorization reinforces value-based patient care initiatives
• It helps the Physicians to guide the patients through quality healthcare with the assistance of insurers.
•  It is a part of a broader medical management strategy in which the providers are offered evidence-based resources to facilitate better healthcare. 
•  Brings down unnecessary health care spending on tests, treatments and procedures
•  Prior Authorization has a positive impact on safety and the affordability of care for patients.
• Physicians ensure compliance with the coverage and payment plans of the healthcare providers.
• Reduction of unnecessary usage of medical treatments which are not essential and sometimes even harmful to the patients.
• Prevents abuse of opioids and painkillers 
• Beneficiaries of a particular health care plan can avoid costly out-of-pocket medical expenses.
• A 24 –hour help centre/ support center will walk patients through the exact coverage provided by the plan. This enables patients to plan current and future treatments. 
• As per the Government Accountability Office report (2018), Prior Authorizations generated savings to the tune of US$ 1 million to US$ 2 million for CMS healthcare.

Benefits of Prior Authorization For Hospitals and Private Clinics

• Proper Prior Authorizations can save a considerable amount in operational costs for private clinics and hospitals
• Help to improve speed-to-care delivery. This means that patients can be scheduled for  timely care reviews. This increases both patient satisfaction and physician utilization.
• Reduce claim denials and accelerate cash flows to the private care clinics and hospitals.
• Helps to reduce patient debts and POS collections for clinics. This also maximizes patient satisfaction.
• A streamlined Prior Authorization process ensures that private clinics and hospitals can refocus on their primary business, i.e., patient care.
• Clear precedents are established whether a particular product or service is covered by  an insurance plan. This reduces the financial ambiguities, and necessary medical treatment can be dispensed quickly.
• With prior Authorizations in place, both premiums and deductibles are kept in control for payees.
• It is an evidence-based, rational process to promote appropriate drug use.

Who Develops The Guidelines And Policies That Govern Prior Authorization?

Pharmacists and other healthcare professionals develop guidelines and administrative policies for Prior Authorization. Each managed care organization sets guidelines and criteria most appropriate to its specific patient population and makes its own decisions about how they are managed.

Why Do Insurers Require Prior Authorization?

Insurers require Prior Authorization because they want to offer a controlled second opinion on the age, medical necessity, and availability of a low-cost generic alternative or the drug interactions. The objective is dual-pronged; better treatment alternatives combined with the reduction of cost or medicines or medical treatment. PA ensures that physicians and doctors do not carry out unnecessary medical procedures or prescribe high-cost branded medications when cheaper generic alternatives are available. Also, the second level of check aims at preventing harmful drug interactions. 

The insurer must ensure that.

– The medicines are medically necessary rather than to treat a cosmetic condition. 

– It is an update-to-date recommendation and won’t react negatively with other drugs or a course of treatment that has already been underway.

– It is the most economical treatment option available.

– There is no duplication of the treatment, especially if the patient is under treatment by multiple specialists.

– An ongoing or recurrent treatment, for example, physical therapy prescribed, is beneficial to the patient.

How Does the Prior Authorization (PA) Process Work?

Soft PA: The Doctor/Physician fills out the prescription. The pharmacy will inform the physician that Prior Authorization by the insurer is required. The Physician/Doctor fills out the appropriate forms and obtains approval from the insurance company. The treatment proceeds ahead after approval from the insurer.

Hard PA: The Prior Authorization sought from the insurer fails. The doctor submits more information requested by the insurer, or; the insurer may recommend a different course of treatment or medication. In such a case, the treatment proceeds only after such Prior Authorization.

Criteria used by Insurance companies and health plan providers to grant Prior Authorization

In the case of patients in clinical trials:

– FDA approved labeling

– Patient selection criteria

– Checkpoints used in clinical trials

In case of Prescriptions:

– Sometimes, a generic version and an expensive brand-name drug are both available to treat the same illness. The health plan provider will check whether treating the patient using the cheaper generic drug will not have identical recuperative effects.

– Expensive drugs 

– Drugs prescribed for cosmetic reasons (e.g., hair growth, etc.)

– Higher medicine doses prescribed need justification

– If the patient’s condition is non-life-threatening, then drugs prescribed will be vetted

– Medications whose coverage the health plan provider does not provide but are deemed necessary for the patient’s care by the consulting physician.

– Medicines that have strong side effects and assess their impact on the patient’s health.

Difference between in-network and out-of-network patient care

If you are receiving treatment from an in-network treatment facility, then the process of approval is probably faster. But if the treatment facility is out of network, then Prior Authorization is a must. PA is a must when the consultant physician prescribes a costly course of treatment or medication.

Under federal rules established to ensure timely treatment for the patients, health plans require pre-approval within 15 days for non-urgent care or non-life-threatening conditions and within 72 hours for urgent-care patients or others who need emergency treatment. 

How To Obtain Prior Authorization?

Prior Authorization is a check or a control process by insurance companies before they agree to cover specific treatment options. The process to obtain Prior Authorization is to complete a Prior Authorization form and fax/ mail or email the form to the insurer. The form is usually completed manually though parts of it are computerized. The form can be approved, partially approved, or rejected by the insurance company or healthcare plan provider. Sometimes, the insurer may require the doctor/caregiver to provide additional information about the treatment plan or medications prescribed.

 In case of rejection by the insurer, the health provider can file an appeal with the insurer. The appeal process and the resolution of the appeal can take up to 30 days. A failed approval process may also result in the insurer requiring the patient to go through a separate process known as step-therapy. Also known as the “Fail-first” process, this treatment process requires the patient to see the unsuccessful outcome of a treatment plan or medication. Only then, the insurer will provide approval for an alternative course of treatment. The clean approval cycle takes anywhere between 1-10 days, whereas; in case of rejection, the appeal process can take between 2 days to 2 months. 

Reasons Why Insurers May Deny Your Prior Authorization

 Insurers may deny your PA due to certain reasons

1)If the proper steps are not followed by a primary caregiver, doctor, or pharmacist.

2) The Doctor’s office did not contact the insurer’s office within the deadline.

3) Improper information filled in the forms, incorrect patient details, or service code.

4) The pharmacy didn’t bill the insurance company properly

5) Claims sent to the wrong insurance company due to outdated information

6) The insurer failed to notify the pharmacy

7) The approval elapsed within a defined period, typically 30 days.

Some medications get rejected due to medical necessity, and this affects 51% of the prescribed medicines according to private practices and causes hardship to patients.

Recommended Solutions To Prevent Denials Of Private Authorizations

1. Electronic systems instead of manual systems: Manual systems mean a cumbersome process flow of documents and frustrating follow-ups with the insurance companies and health care plan providers. Electronic Prior Authorizations integrate seamlessly with Electronic Health records so that Prior Authorization can be applied and obtained without delays. This eliminates unnecessary paperwork, faxing forms, and making multiple phone calls. Such activities constitute an additional unreimbursed cost for private care. Also, such e-processing of Prior Authorizations helps in reducing the processing time from days to minutes.
2. Electronic referral management software can automate Prior Authorization in hospitals. Such management reduces the number of front-end denials. Costs of an Electronic Prior Authorization reduces to US$ 1.89 compared to the US$ 7.5 for a Manual system of obtaining Manual Prior Authorizations. Submitting Prior Authorization requests using iAssist is HIPAA compliant and secure, like using a fax machine. This type of processing provides automation which rapidly increases efficiency. Also, the electronic system of managing Prior Authorizations helps bring greater transparency to the process and speedier resolutions to claims.
3. Physicians, private care, and hospitals must check the Prior Authorization policy of insurers to gain awareness of the allowed list of treatments, exemptions, imaging procedures, MRIs, and brand-name pharmaceuticals. These require PA. Doctors who stick to generic drug prescriptions for treating chronic illnesses get faster prior approval.
4. Having a centralized system in the private practice and assigning and enforcing responsibility on certain individuals in the private practice ensures prior approvals are received fast.
5.   Same day authorizations mean patients can get their prescriptions filled on the same day and there is also cost transparency at the point of care.

Key Takeaways

Prior Authorizations require pre-approvals for certain medicines and treatments prescribed by the caregiver. Prior Authorization is a cost-effective solution for payers. It also protects them from unnecessary or harmful treatments, which private clinics and hospitals sometimes carry out. On the flip side, getting the prior approvals is tedious, time-consuming, labor-intensive, and unreimbursed. This dilutes resources that can be more effectively used to treat patients and improve patients’ health. Sometimes, the inordinate delay results in deterioration in the patient’s condition. As a result, more expensive solutions are used to treat the patient.

Many primary care providers and the American Medical Association have proposed solutions to prevent headaches and stress for both patients and primary caregivers. Electronic Prior Authorization would simplify the system and reduce the time wasted and costs in pursuing Prior Authorizations. Primary caregivers and hospitals should also update themselves about the Insurance companies and Health Care plan providers’ norms. This would also help minimize the time required for obtaining Prior Authorization and create a tri-partite optimal working environment. Cooperation and understanding would go a great deal in resolving conflict and reducing denial of claims.

References

https://getreferralmd.com/2018/04/prior-authorization-problems-healthcare-2/

https://www.ama-assn.org/practice-management/sustainability/prior-authorization-practice-resources

https://healthpayerintelligence.com/news/pros-and-cons-of-prior-authorization-for-value-based-contracting

https://www.nipponlifebenefits.com/learning-resources/the-benefits-of-prior-authorization-and-precertification/

https://www.assistrx.com/five-benefits-electronic-prior-authorization/