Examining Prior Authorization in Health Insurance | KFF

Long used as a tool to control spending and promote cost-effective care, prior authorization in health insurance is in the spotlight as advocates and lawmakers call for closer scrutiny of its use on all forms of health coverage.

what is prior authorization?

Prior authorization (also called “prior authorization” and “prior certification”) refers to a requirement by health plans for patients to obtain approval for a health care service or medication before the medication is provided. attention. this allows the plan to assess whether the care is medically necessary and is otherwise covered. Standards for this review are often developed by the plans themselves, based on medical guidelines, cost, utilization, and other information.

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The process for obtaining prior authorization also varies by insurer, but involves submission of administrative and clinical information by the treating physician and sometimes the patient. In a 2021 American Medical Association survey, a majority of physicians (88%) rated the administrative burdens of this process as high or extremely high. Physicians also noted that prior authorization often delays the care patients receive and leads to negative clinical outcomes. another 2019 independent study concluded that research to date has not provided sufficient evidence to draw conclusions about the health impacts and net economic impact of prior authorization in general.

How often is prior authorization used and what is its impact?

There is little information on how often prior authorization is used and for what treatments, how often authorization is denied, or how revisions affect patient care and costs.

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A summary of the 2021 edition of KFF found that the majority (99%) of Medicare Advantage enrollees are in plans that require prior authorization for some services. Additionally, 84% of Medicare Advantage enrollees are in plans that require prior authorization for a mental health service.

a recent report from us. uu. the department of health and human services (hhs) office of inspector general (oig) found that 13% of prior authorization denials by medicare advantage plans were for benefits that should have otherwise been covered by medicare . The OIG cited the use of clinical guidelines not listed in Medicare coverage rules as one of the reasons for improper denials, as well as managed care plans requesting unnecessary additional documentation. The OIG recommended and HHS agreed that the Centers for Medicare and Medicaid Services (CMS) should take a closer look at the adequacy of the clinical criteria used by Medicare Advantage plans when making coverage determinations.

what’s happening now?

Concern over the use and impact of prior authorization by health plans has led to the consideration of various measures to regulate the practice or make it more transparent.

clinical coverage criteria. the use of health plans’ own “homegrown” clinical criteria to make coverage decisions has come under scrutiny. California, for example, now prohibits plans from using their own clinical criteria for medical necessity decisions, requiring commercial insurers to instead use criteria that are consistent with generally accepted standards of care and are developed by a non-profit association for the relevant clinical specialty. It’s worth noting that state laws like this would not apply to employer-sponsored self-insured plans.

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use in behavioral health. The Mental Health Parity and Addiction Equity Act (MHPAEA) requires commercial insurers, employer-sponsored plans, and certain Medicaid plans to document the use of prior authorization for covered health care and behavioral health services. Plans must provide a comparative analysis that includes justification and evidence for prior authorization, as well as all other non-quantitative coverage limits. Although compliance with this requirement has been slow according to a recent federal agency report to Congress, enforcement at the federal and state levels has increasingly required plans to eliminate prior authorization for specific behavioral health treatments due to alleged violations of parity.

transparency Increased transparency about how the prior authorization process works is also gaining some momentum. hour. 3173, with 306 co-sponsors, would require medicare advantage insurers to report to hhs the types of treatment that require prior authorization, the percentage of prior authorization claims approved, denied, and appealed. Similarly, some states have required this type of data reporting as part of their mental health parity implementation, while some regulators are urging greater reliance on data reporting for MHPEAA compliance. Such data transparency proposals are similar to current law requirements under the Affordable Care Act for private plans to report data on claims payment practices and denials. Although this federal law applies to all commercial insurers and employer-sponsored plans, to date it has not been largely implemented and requires only limited reporting of non-group plans sold through healthcare.gov.

establishment of rules for prior authorization. Other current legal regulations governing prior authorization are limited.

• The Affordable Care Act prohibits the use of prior authorization related to emergency care.
• Some states have moved to prohibit prior authorization for certain behavioral health care. for example, new york prohibits the use of prior authorization during the first few days of a hospitalization for a mental health condition for children.
• michigan recently passed a law requiring the use of standardized prior authorization methods and new transparency reports.
• several states have adopted or are considering “gold card” laws that would require health plans to waive prior authorization for services ordered by providers with a prior authorization approval history.

administrative reforms. last year, cms finalized a regulation to streamline the prior authorization process for medicaid and private health plans offered on healthcare.gov through new electronic standards and other changes. Although the rule was later withdrawn, similar changes may be made by HHS. hour. 3173 would require cms to implement an electronic prior authorization program for medicare advantage plans with the ability to make decisions in real time. the insurance industry has generally supported electronic prior authorization reforms to speed up review times.

The debate over additional standards to limit use or regulate prior authorization may well involve trade-offs between claims spending versus access to care for patients and administrative burden for providers. promoting transparency of this process and how it works in practice could help inform what those trade-offs might entail.

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