Health Care Buzz: What is prior authorization and how does it work when accessing health care?

How does it work and why is it used? One of the common themes heard in the healthcare industry is the over-utilization of services. This may be referred to as medically unnecessary services when an insurance company denies payment or reduces payment. This is confusing for the patient who has a health problem, sees their doctor, the doctor thinks diagnostic workup is needed to confirm a diagnosis, and then the insurance company rejects the request for prior authorization, essentially refusing to pay for the requested service. The prior authorization process is the most common definition of an insurance plans process for approving only high-value care. How much more confusion can get to the patient? The doctor thinks it is necessary. The test is available in their network. But the insurance plan says no. Is this insurance-directed care or doctor-directed care? And now?

Prior authorization is a tool used by insurance plans to determine whether testing or chemotherapy drugs or hospitalization or nearly any service ordered meets the plans definition of value-based or medically necessary care. Prior authorization can be a concern for the healthcare community as it can cause major delays in treating a patient’s condition along with ongoing dialogue with the insurance plan to try to negotiate coverage, switch to another test, or tell the patient that can they pay for it themselves because the insurer won’t authorize the service and/or will they appeal the plan’s decision (which patient knows how to do that?) or waive the test/procedure?

Many times a patient will hear their provider state, I’m ordering an MRI to see the damage, but I’ll have to wait to see if your insurance will cover it. Or I really need a vitamin D test to rule out this problem with your undetermined muscle pain, but I know your insurance won’t cover it. The patient might think: what should I do if my insurance says no? Is my doctor ordering something that is not medically necessary? Wow, terminology in healthcare can be confusing.

Idea: When a specialized medical exam/procedure/drug is needed for your health, the person you care about the most is you. The provider is better prepared to provide the insurance plan with the medical information it needs during the pre-authorization process. But if the plan denies you assistance, call the insurance plan right away. There is usually a customer service number on the card. This is the first call as you will have to push a bit to get to the right person to discuss their denial. Request to know why it was not approved; what you can do to get approval; and what other options do you have. The patient is the most affected and has the least ability to understand what happened. Cost control and inappropriate use of healthcare resources is the driving factor behind prior authorization of services. Now comes the balance to ensure that the patient receives the most appropriate and timely care, as the patient is also the payer of insurance premiums and co-payments after receiving the service. The country is moving towards value-based care and has a long way to go to develop the definition of not just value-based payment. We won’t be bored, but we hope for a little less frustration through cooperative education.