{{Short description|Process in American health insurance}} {{About|the one in the health insurance industry|the one in the banking industry|Authorization hold}} {{missing information|controversy and criticism|date=October 2023}} '''Prior authorization''', or '''preauthorization''',<ref>{{Cite web |title=Preauthorization - Glossary |url=https://www.healthcare.gov/glossary/preauthorization/ |access-date=2024-12-08 |website=HealthCare.gov |language=en}}</ref> is a utilization management process used by some health insurance companies in the United States to determine if they will cover a prescribed procedure, service, or medication.
== Overview == Prior authorisation is a check run by some insurance companies or third-party payers in the United States before they will agree to cover certain prescribed medications or medical procedures.<ref name=KansasBoardofPharmacies13>{{Cite report |author=David R. Schoech |author2=Dr. Robert Haneke |author3=Chad Ullom |author4=Dr. Jim Garrelts |author5=Michael Lonergan |author6=Dr. John Worden |author7=Nancy Kirk |author8=Debra Billingsley |date=January 2013 |title=Study on Electronic Transmission of Prior Authorization and Step Therapy Protocols |url=http://www.rxobserver.com/wp-content/uploads/2013/01/2013-epa-Study-Report1.pdf |publisher=Kansas Board of Pharmacies |access-date=15 May 2014 |archive-url=https://web.archive.org/web/20160811021039/http://www.rxobserver.com/wp-content/uploads/2013/01/2013-epa-Study-Report1.pdf |archive-date=11 August 2016 }}</ref> According to insurance companies the reasons they require prior authorizations include age, medical necessity, checking for the availability of a cheaper generic alternative, or checking for drug interactions.<ref name=KansasBoardofPharmacies13/><ref name=Reinke12/> There is controversy surrounding prior authorisations and public opinion does vary about why insurance providers require it. The primary controversial reason is that it benefits some insurance companies as they allegedly avoid paying for expensive patient treatments and increase business profits at the expense of patient health. A failed authorisation may result in a requested service being denied or an insurance company requiring the patient to go through a separate process known as "Step therapy". Step therapy dictates that a patient must first see unsuccessful results from a medication or service preferred by the insurance provider, typically considered either more cost effective or safer, before the insurance company will cover a different service.<ref name=Reinke12>{{cite news |title=Prior Authorization for Safety, Not Just for Economy |author=Thomas Reinke |url=http://www.managedcaremag.com/archives/1212/1212.prior_auth.html |work=Managed Care Magazine |date=December 2012 |access-date=20 May 2014}}</ref><ref name=Albright10>{{cite news |title=Parity Rules: Worth the Wait? Delayed Release of Parity Implementation Rules Keeps Everyone |author=Brian Albright |url=https://www.questia.com/read/1G1-220203603 |work=Behavioral Healthcare |date=1 January 2010 |access-date=20 May 2014}} {{Dead link|date=October 2020}}</ref>
== Process == After a request comes in from a qualified provider, the request will go through the prior authorization process. The process to obtain prior authorization varies from insurer to insurer but typically involves the completion and faxing of a prior authorization form; according to a 2018 report, 88% are either partially or entirely manual.<ref>{{Cite web|url=https://www.fiercehealthcare.com/payer/caqh-core-updates-rules-for-prior-authorization|title=Council of Affordable Quality Healthcare CORE updates rules for prior authorization|website=FierceHealthcare|date=4 June 2019 |language=en|access-date=2019-06-05}}</ref>
At this point, the medical service may be approved or rejected, or additional information may be requested. If a service is rejected, the healthcare provider may file an appeal based on the provider's medical review process.<ref name="AMA11">{{Cite report |author=American Medical Association |date=June 2011 |title=Standardization of prior authorization process for medical services white paper |url=http://sppan.aapainmanage.org/assets/standardization-prior-auth-whitepaper.pdf |access-date=15 May 2014 |archive-url=https://web.archive.org/web/20160910201601/http://www.sppan.aapainmanage.org/assets/standardization-prior-auth-whitepaper.pdf |archive-date=10 September 2016 }}</ref><ref name="Moeller09">{{cite news |title=Manage medical advances with automated prior authorization |author=Douglas Moeller |url=http://www.highbeam.com/doc/1P3-1852737291.html |archive-url=https://web.archive.org/web/20160309121809/https://www.highbeam.com/doc/1P3-1852737291.html |archive-date=9 March 2016 |work=Managed Healthcare Executive |date=1 August 2009 |access-date=30 May 2014}}</ref> In some cases, an insurer may take up to 30 days to approve a request.<ref name="Bauman13">{{cite news |title=Proposal seeks to streamline health-insurance paperwork logjam |author=Valerie Bauman |url=http://www.bizjournals.com/seattle/news/2013/02/08/docs-say-getting-buried-in-paperwork.html?page=all |work=Puget Sound Business Journal |date=8 February 2013 |access-date=30 May 2014}}</ref>
Streamlining the prior authorization process includes standardizing processes for different prior authorization workflows, reducing manual touches, and improving efficiency. Providers should also work closely with payers to ensure that they understand the requirements for each prior authorization. This means capturing the necessary information upfront and securing an agreement from the payer to cover the services. Providers should also track the status of prior authorizations to ensure that they are approved in a timely manner so that payments are not delayed<ref>{{Cite web|url=https://www.agshealth.com/blog/cutting-through-prior-authorization-headaches-strategies-for-providers/|title=Cutting Through Prior Authorization Headaches, Strategies for Providers|website= AGS Health|date=9 May 2024 |language=en|access-date=2024-05-09}}</ref>
== Purpose and costs == Insurers have stated that the purpose of prior authorization checks is to provide cost savings to consumers by preventing unnecessary procedures as well as the prescribing of expensive brand name drugs when an appropriate generic is available.<ref name=Saxton05>{{cite news |title=Medicaid to require prior OK for outpatient surgeries |author=Michelle Saxton |url=http://www.highbeam.com/doc/1P2-13892131.html |archive-url=https://web.archive.org/web/20181119172201/https://www.highbeam.com/doc/1P2-13892131.html |archive-date=19 November 2018 |work=The Charleston Gazette |date=25 August 2005 |access-date=30 May 2014}}</ref><ref name=Terry07>{{cite news |title=Prior Authorization Made Easier |author=Ken Terry |url=https://www.questia.com/read/1P3-1373234691 |work=Medical Economics |date=19 October 2007 |access-date=30 May 2014}}</ref> In addition, a prior authorization for a new prescription may help prevent potentially-dangerous drug interactions.<ref name=Reinke12/> A 2009 report from the Medical Board of Georgia showed that as many as 800 medical services require prior authorizations.<ref name=MAG09>{{Cite report |author=Medical Association of Georgia |date=January 2009 |title=A Study of Prior Authorization/Precertification of Physician Services |url=http://www.mag.org/sites/default/files/downloads/MAG%20Prior%20Authorization%20Study.pdf |publisher=The Exchange Atlanta |access-date=15 May 2014 }}</ref>
According to ''Medical Economics'' in 2013, physicians have expressed frustration with the current prior authorization process with regards to time spent interacting with insurance providers and the costs incurred based on that time.<ref name=Bendix13>{{cite news |title=Curing the prior authorization headache |author=Jeffrey Bendix |url=http://medicaleconomics.modernmedicine.com/medical-economics/news/curing-prior-authorization-headache |work=Medical Economics |date=10 October 2013 |access-date=22 May 2014}}</ref> A 2009 study published in ''Health Affairs'' reported that primary care physicians spent 1.1 hours per week fulfilling prior authorizations, nursing staff spent 13.1 hours per week, and clerical staff spent 5.6 hours.<ref name=HealthAffairs09>{{Cite report |author=Lawrence P. Casalino |author2=Sean Nicholson |author3=David N. Gans |author4=Terry Hammons |author5=Dante Morra |author6=Theodore Karrison |author7=Wendy Levinson |date=May 2009 |title=What Does It Cost Physician Practices To Interact With Health Insurance Plans? |url=http://content.healthaffairs.org/content/28/4/w533.full |publisher=Health Affairs |access-date=15 May 2014 }}</ref> A 2012 study in the ''Journal of the American Board of Family Medicine'' found that the annual cost per physician to conduct prior authorizations was between $2,161 and $3,430.<ref name=JABFM12>{{Cite report |author=Christopher P. Morley |author2=David J. Badolato |author3=John Hickner |author4=John W. Epling |date=22 August 2012 |title=The Impact of Prior Authorization Requirements on Primary Care Physicians' Offices: Report of Two Parallel Network Studies |url=http://www.jabfm.org/content/26/1/93.full |publisher=Journal of the American Board of Family Medicine |access-date=15 May 2014 }}</ref> The cost to health plans was reported at between $10 and $25 per request by 2013.<ref name=KansasBoardofPharmacies13/> It was estimated in 2009 that prior authorization practices cost the US healthcare system between $23 and $31 billion annually.<ref name="HealthAffairs09" />
== Legislative and technological developments == A number of legislative and technological developments attempt to optimize the prior authorization process:<ref>Sublead generalization supported by all the citations in this section</ref>
In 2011, the American Medical Association recommended a uniform prior authorization form with real-time electronic processing. The proposed process would involve a physician ordering a medical service, their staff completing a standardized request form, and an electronic submission process with same-day approval or denial. Denial reasons would be clearly stated, allowing physicians to easily submit an appeal.<ref name=AMA11/>
In February 2012, the Maryland Health Care Commission presented the state legislature a plan of a standardized, electronic filing system for prior authorization requests.<ref name=Ransom12>{{cite news |title=Insurance 'prior authorization' wastes time, money |author=Gene Ransom |url=https://www.baltimoresun.com/2012/02/09/insurance-prior-authorization-wastes-time-money/ |work=The Baltimore Sun |date=9 February 2012 |access-date=22 May 2014}}</ref> In response to a 2012 prescription e-filing bill, the Kansas Board of Pharmacies advocated for an electronic prior authorization process with immediate approval for prescriptions.<ref name=KansasBoardofPharmacies13/> In 2013, the Arizona House of Representatives formed a research and advisory committee.<ref name=Levine14>{{cite web |url=http://azcapitoltimes.com/news/2014/02/07/in-arizona-getting-patient-therapies-approved-is-an-out-of-date-proposition/ |title=In Arizona, getting patient therapies approved is an out-of-date proposition |author=Todd Levine |date=7 February 2014 |work=Arizona Capitol Times |publisher=The Dolan Company |access-date=22 May 2014}}</ref><ref name=AZState13>{{cite web |url=http://legiscan.com/AZ/text/HB2400/id/767520 |title=Bill Text: AZ HB2400 |author=Arizona State Legislator |date=28 March 2013 |work=House Bill 2400 |publisher=LegiScan |access-date=22 May 2014}}</ref> By 2013, a Washington State Senate proposal was submitted and would require the state Insurance Commissioner to standardize on a prior authorization form.<ref name=Bauman13/>
As of May 2013, the National Council for Prescription Drug Programs had adopted a standardized process for exchanging electronic prior authorizations.<ref name=Webb13>{{cite web |url=http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/real-time-prior-auth-standards-approved?contextCategoryId=39 |title=Real time prior auth standards approved |author=Jennifer Webb |date=1 July 2013 |work=Managed Healthcare Executive |publisher=Advanstar Communications, Inc. |access-date=29 May 2014}}</ref> The American Medical Association found the average annual savings per physician from digitization to be approximately $1,742.<ref name=Toolkit>{{cite web |url=http://www.ama-assn.org/ama/pub/advocacy/topics/administrative-simplification-initiatives/electronic-transactions-toolkit/prior-authorization.page |title=Electronic Prior Authorization Toolkit |work=ama-assn.org |publisher=American Medical Association |access-date=29 May 2014}}</ref> Additionally, a case study by pharmacy benefit manager Prime Therapeutics demonstrated 90% faster payer response time through electronic prior authorization systems compared with the manual prior authorization process.<ref name="ClinicalTrialsWeek14">{{cite news |author= |date=6 January 2014 |title=Prime Therapeutics Electronic Prior Authorization Program Provides Efficiencies for Health Care Professionals and Their Patients |work=Clinical Trials Week |url=http://www.highbeam.com/doc/1G1-354779648.html |access-date=29 May 2014 |archive-url=https://web.archive.org/web/20160314054937/https://www.highbeam.com/doc/1G1-354779648.html |archive-date=14 March 2016}}</ref>
A 2019 consensus statement from several healthcare organizations supported standardization.<ref>{{Cite web|url=https://www.managedcaremag.com/archives/2018/9/prior-authorization-overhaul-sought|title=Prior Authorization Overhaul Sought|date=2018-09-03|website=Managed Care magazine|language=en|access-date=2019-04-16}}</ref>
In 2025, Montana lawmakers are working on legislation to limit the use of prior authorization by health insurers.<ref>{{Cite web |last=Dennison |first=Mike |date=2025-02-13 |title=Montana Looks To Regulate Prior Authorization as Patients, Providers Decry Obstacles to Care |url=https://kffhealthnews.org/news/article/montana-legislation-bills-prior-authorization-denials-delays-2025/ |access-date=2025-02-16 |website=KFF Health News |language=en-US}}</ref> Patients and physicians are pushing for reforms, arguing that restrictive prior authorization policies delay essential care and consume valuable time that could be spent with patients. Two legislators from Montana introduced or began drafting bills aimed at curbing insurers’ ability to impose these requirements.<ref>{{Cite web |last=Cass |first=Andrew |date=2025-02-13 |title=Multiple Montana bills target prior authorization |url=https://www.beckerspayer.com/payer/multiple-montana-bills-target-prior-authorization.html |access-date=2025-02-16 |website=www.beckerspayer.com |language=en-gb}}</ref>
== References == {{reflist|2}}
Category:Health insurance in the United States Category:Healthcare in the United States Category:Managed care