The move to modernize prior authorization: What employers should know 

Enforcing prior authorization requirements has been a core task of health plan administration for many decades – one that ongoing advances in medical treatments and drug therapies have made increasingly complex. Like many administrative tasks, it has become increasingly automated and, in the process, increasingly opaque. Facing criticism about prior authorization — specifically, the number of denials and delays in getting approvals — many carriers have promised to make changes to their prior authorization processes.  

Before we dive into those details, it is worth revisiting why prior authorization exists in the first place. Underpinning virtually all health plan coverage is the belief that services must be medically necessary and of proven benefit – not experimental or investigational. The prior authorization process is the mechanism by which health plans operationalize this concept. Service requests are submitted, usually by the treating physician, and reviewed against medical necessity guidelines and medical policies and an approval or denial is issued. Of note, not every service is formally put through this workflow; health plans tend to focus on services that are more frequently overused or more costly treatments – which are likely to be associated with more serious medical issues. In these cases, it’s understandable that delays in getting treatments approved are upsetting to patients and their families. 

Under growing pressure from the Department of Health and Human Services, most major insurers have recently signed onto a pledge to modify their prior authorization processes. This includes a commitment to: 

• Standardize electronic prior authorization, decrease turn-around time and consolidate prior authorization requests that relate to one service into one review.
• Ensure that potential denials are reviewed by medical staff.
• Improve member-facing communication surrounding the prior authorization process and service determinations. 
• Coordinate continuity of care regarding previously approved services when members switch health plans. 
• Reduce the number of services that are subject to prior authorization.

While many details remain unknown, it would be hard to argue with operational efficiencies that improve member satisfaction and understanding of the process. It will be particularly interesting to see how the health plans modify or reduce the constellation of services targeted for prior authorization and still ensure adherence to requirements for medical necessity and proven therapies. One logical approach might be to use data to identify rarely denied services or providers with low denial rates and exempt these from the prior authorization process.   

Here are some considerations for plan sponsors following this progress:  

• Keep abreast of your carrier’s specific plans as the pledge evolves into action.
• Understand potential member impact and communicate key changes to your membership.
• Determine if plan documents or member communications require edits based on changes in carrier prior authorization practices.
• Obtain details of prior authorization list changes and request baseline and ongoing data or reporting to ascertain if dropping prior authorization for certain services will significantly affect plan cost.

We will continue to follow developments in this story and keep you informed.