Prior Authorization Is Under Review

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I just couldn’t believe it.

Like all of you, I receive many requests to see patients urgently. And like all of you, I can’t possibly accommodate all of those requests. So I triage: I look through the referrals and try to differentiate patients who want to be seen from those who need to be seen.

When winnowing these requests, I’ve noticed that I’ve developed a subconscious soft spot for younger patients, who may be adults chronologically but not by other metrics. My 20s were rough enough; I can’t imagine what it must be like to deal with my first job and a new diagnosis of systemic vasculitis.

Thus, I found myself facing a young woman with a new diagnosis of microscopic polyangiitis, fresh from her hospitalization for the same. I had no room in my schedule to see her, but as clinicians know, that is often a relative statement: As we used to say in elevators pre-pandemic, there’s always room for one more. The suddenness and severity of her diagnosis tugged at my heartstrings, so I nudged a colleague into letting me borrow one of his clinic rooms for an hour, so I could complete her evaluation.

Frankly, there was not much left for me to do. The excitement took place in the weeks prior, when she presented to a local hospital with pulmonary-renal syndrome. Her diagnosis was confirmed by a renal biopsy, and the attending nephrologist dutifully prescribed pulse steroids and rituximab, while waiting for me to see her.

In these cases, I find that I mainly serve as a storyteller. I share with them stories of my other patients, who have come before them and traveled similar roads. I describe the terrain and the obstacles others have faced. And then I try to answer the many unanswerable questions they have about how the diagnosis will impact the lives they had hoped to live.

The patient took all of this remarkably well. Her parents, not so much. One attended her visit in person while another attended by phone—yet another concession made to the pandemic. Her parents didn’t appreciate my observation that these diseases seem to be attracted to people who crave certainty and control in their lives, as if fate enjoyed irony.

The patient greeted this observation with peals of laughter. Her parents, not so much. Apparently, the patient was a bit of a free spirit, whose spontaneity befuddled her parents, both of whom were engineers. Her mother joked darkly that this disease was just one more example of their daughter doing something to drive them to distraction.

Questions answered and parents reassured, the patient left with an order for routine lab tests and instructions on how to taper her prednisone.

A few weeks later, she reached out.

Her insurance company informed her that one of my orders did not match the standard of care for her diagnosis and that I would need to obtain prior authorization before the insurer would consider paying for anything.

Financially, insurers function as investment banking companies that, on occasion, pay out a claim. Insurers literally have no motivation to process those claims quickly or efficiently. Prior authorization has mutated into a tool that helps insurers hold on to your money to line their pockets.

I just assumed this had something to do with her order for rituximab. In the U.S., three biologic compounds have been approved by the U.S. Food & Drug Administration (FDA) as biosimilar to the reference product, rituximab. These competitors are not, however, interchangeable with the reference product. To be deemed biosimilar, the FDA must conclude there is no clinically meaningful differences between the innovator and the reference product. To be deemed interchangeable, the two compounds must be so similar that one can automatically be substituted for the other, without any further action on the part of the prescriber.

To date, none of the biosimilars available for use in the U.S. are interchangeable. Therefore, a prescription for Rituxan is not interchangeable with a prescription for Truxima, and my new hobby seems to be scheduling peer-to-peer reviews during which a retired urologist passes along the preferences of the pharmacy benefit manager.

I was surprised when my patient informed me the order for rituximab wasn’t the issue. Her insurer wanted me to contact them to discuss my order for a C-reactive protein.

The C-reactive protein is a pentraxin, a family of proteins that form a key component of the innate immune response. Because these proteins are expressed in response to inflammation, they allow us to track inflammation numerically, like using a thermometer to track a fever.

The average price of a C-reactive protein test at a local lab is $15. Presumably, due to economies of scale, her insurance company would pay a fraction of that asking price. On the other hand, if she walked into her local Quest Diagnostics and just asked for the test to be run, no questions asked, she would see a $59 charge on her credit card.

None of this seems to reach the costs that might merit review. How did we fall into the modern system of prior authorization, and more importantly, what’s the way out?

Prior Authorization 101

Apparently, a lot of this is Baylor’s fault.

At the beginning of the 20th century, it was common practice for mining and lumber companies to employ a staff physician, who would provide medical care for the employee and his family in exchange for a modest fee.

Justin Ford Kimball, the vice president of Baylor University, decided to implement the same system to provide medical care for faculty. This gave rise to the first employer-based insurance, creating a model for healthcare delivery that is now standard throughout the U.S.¹

Employer-based insurance increased the average citizen’s access to healthcare, including inpatient procedures and evaluations. With this increased access, however, came concerns for abuse. Hospitals became worried that some providers were needlessly admitting patients to enhance their bottom line.

Utilization review, in its initial conception, was a mechanism for hospitals to police providers. Physicians suspected of admitting patients for dubious reasons would have their actions reviewed by hospital physicians to ensure hospital resources were being used appropriately.² Gradually, responsibility for utilization review expanded from individual hospitals to insurers as a method to contain costs; at the same time, the scope of activities eligible for utilization review also expanded.³

Utilization review, in its most common form, occurs post hoc. When utilization review occurs pre hoc, it is known as prior authorization. Also known as precertification, pre-authorization, prior approval and predetermination, it is the requirement that healthcare providers obtain approval of the patient’s insurer before a medication or service is provided.

The argument is that prior authorization encourages the appropriate use of medical resources. What are the downsides?

In 2019, the American Medical Association (AMA) conducted a survey of physicians regarding prior authorization.⁴ This is what we told them:

• 91% of patients experience some delay in receiving care due to prior authorization;
• 86% of physicians reported that prior authorizations have increased over the past five years;
• 24% of physicians reported this delay led to an adverse outcome;
• 16% of physicians reported this adverse outcome led to a hospitalization; and
• 74% of physicians reported that patients may abandon treatment while waiting for authorization.

Another study demonstrated that approximately two-thirds of prescriptions rejected by pharmacies required prior authorization; of these, only 29% of patients will eventually receive the originally prescribed drug, and 40% will abandon therapy altogether.⁵

The rationale supporting the use of prior authorization seems reasonable: healthcare fraud is responsible for up to $68 billion in expenditures annually, and it makes sense to think that insurers should act to prevent it.⁶

The problem is that the cure is worse than the disease. The Center for American Progress estimates that billing and insurance-related costs are $496 billion annually.⁷ By creating a system in which all providers are automatically suspect, American healthcare actually loses money. One study estimates that collectively, we spend $93 billion annually on imple­menting, contesting and navigating prior authorization.⁸ So why do it? Why insist on prior authorization for tests or treatments like a C-reactive protein, which are likely to be approved, eventually?

The answer, of course, is money. Every abandoned treatment represents revenue. Just delaying payments by a month or two can bolster the bottom line for insurers. Anthem Blue Cross and United HealthCare, for example, are billions of dollars richer from having delayed or denied payments to hospitals and providers.⁹

Insurance float refers to the funds held due to the gap between when premiums are received and when claims are paid. The fact that the insurance industry has a name for this phenomenon should have been your first clue that this is lucrative. Insurance float is tantamount to an interest-free loan, which insurance companies invest to generate income. For a large insurer, even a delay of a few days when distributed over many policy holders can be enormously profitable. In 2019, for example, Anthem generated $1 billion from investing insurance float, accounting for 15% of its adjusted pretax income.¹⁰

Financially, insurers function as investment banking companies that, on occasion, pay out a claim. Insurers literally have no motivation to process those claims quickly or efficiently. Prior authorization has mutated into a tool that helps insurers hold on to your money to line their pockets.

Prior Authorization Reform

The AMA, along with organizations representing pharmacists, hospitals, medical groups and insurers, released a consensus statement that identified the following targets for reform:¹¹

• Selective application of prior authorization: Target specific providers based on their prior adherence to evidence-based medicine;
• Prior authorization program review and volume adjustment: Stop requiring prior authorization for drugs that are unlikely to be denied;
• Transparency and communication regarding prior authorization: Make prior authorization requirements and rationale transparent;
• Continuity of patient care: Make it easier for patients to remain on their chronic, established therapies; and
• Automation to improve transparency and efficiency: Create national standards for electronic transfer of records, to reduce the burden on providers.

The first substantive movement in this direction was H.R. 3107, the Improving Seniors’ Timely Access to Care Act of 2019.¹² The Act proposed multiple changes to the way Medicare Advantage programs use prior authorization, including:

• Establishing an electronic prior authorization process with uniform requirements for clinical documentation;
• Creating a process for real-time decisions for certain items and services that are routinely approved;
• Increasing transparency to improve communication between the insurer, patients and providers; and
• Adopting policies that adhere to evidence-based guidelines.

The bill had 281 co-sponsors in the House of Representatives and was endorsed by 370 professional organizations, including the American College of Physicians and the ACR.¹³ Despite this, the bill failed to make it out of the Committee on Ways and Means. It was reintroduced in 2021 as H.R. 3173 and in the Senate as S. 3018.

Once again, state legislatures are proving more nimble. As of this year, in Kentucky, Illinois and Georgia, reviews of prior author­ization requests for prescriptions must be conducted by a physician, preferably with the same specialty as the provider. In Kentucky and Illinois, prior authorization requests must receive a response within five days and prior authorizations for medications used to treat chronic illness remain valid for one year, even if the dosages are changed.¹⁴

Texas plans to go further. In addition to requiring prior authorization be conducted by a physician in the same specialty as the provider, H.B. 3459 creates a new exemption from prior authorization. Rather than assuming every prescriber is intent on committing fraud, insurers are now required to review the prescribing practices of individual practitioners. If the insurer concludes that 90% of the prior authorization requests from a specific provider for a specific service would have been approved, then the provider is exempted from having to obtain prior authorization for that service in the future.¹⁵

Easier said than done. The law has been passed, but lawmakers and lobbyists continue to haggle over how, exactly, the law will be implemented. But it’s a start.

Eventually, this issue must be solved on a national level. Creating uniform requirements across states and insurers that adhere to the standard of care is the only way forward. Prior authorization should be a scalpel, not a sledgehammer, used intelligently and precisely to excise the lesion. Because we all have better things to do than talk to insurers about a C-reactive protein.

Editor’s note: This article was updated on Feb. 28, 2022, to reflect current information on interchangeability for biosimilars in the U.S.