Prior authorization (prior auth, or PA) is a management process used by insurance companies to determine if a prescribed product or service will be covered. This means if the product or service will be paid for in full or in part. This process can be used for certain medications, procedures, or services before they are given to the patient.
Healthcare.gov defines prior authorization as “approval from a health plan that may be required before you get a service or fill a prescription in order for the service or prescription to be covered by your plan”. The general process has many names including precertification, pre-authorization, prior approval, and predetermination.
Services (medications, imaging studies, etc.) that require PAs need healthcare providers to obtain approval from the patients’ health insurance before the cost of the service is covered by the company. The process is long and can often delay patients from receiving the care they need.
Therefore, prior authorization is a process that healthcare providers and patients come across frequently.
Getting prior authorizations approved involves many people – primarily patients, healthcare professionals, and the patients’ health insurance companies.
When it comes to a medication prior authorization, the process typically starts with a prescriber ordering a medication for a patient. When this is received by a pharmacy, the pharmacist will be made aware of the prior authorization status of the medication. At this point, they will alert the prescriber or physician. With this notification, the physician’s office will start the prior authorization process. They will collect the information needed for the submission of PA forms to the patient’s insurance. This can be done via automated messages, fax, secure email, or phone.
In many cases, providers may need to directly call the insurance companies, which often requires long periods of waiting—and maybe even persistent calls for a couple of days. There are high possibilities of miscommunication with the patient. Patients may not be aware of what is going on or who is involved.
Additional miscommunications can happen when trying to initiate or submit the prior authorizations. These result from either pharmacists or doctors not starting the requests, fax machine malfunctioning, or having difficulties getting a person on the phone. The process can take days or weeks to get resolved with the patient having minimal information on what is happening.
The prior authorization process begins when a service prescribed by a patient’s physician is not covered by their health insurance plan. Communication between the physician’s office and the insurance company is necessary to handle the prior authorization. In order to receive approval, the prescriber may need to complete a form or contact the insurance company to explain their recommendation and the need for the particular service based on patient factors that are clinically relevant. The prior authorization is then reviewed by clinical pharmacists, physicians, or nurses at the health insurance company.
Upon review, the request can either be approved or denied. If the prior authorization was denied by the insurance company, the patient or prescriber may have the ability to ask for a review of the decision and appeal the decision.
The physician can also recommend an alternative drug or service that is covered by the patient’s health insurance plan. In some cases, an insurance company may require patients to start on a less costly medication or service. This is to see if the patient sees results or has a need for more costly therapy.
If prior authorizations are just a way to “cost- control” why are they important and what is the benefit, besides increasing profits for the insurance companies? To understand this, we must delve into the various reasons why prior authorizations exist. In pharmaceutics, many times they are used to help lower costs by ensuring that patients have tried using a lower cost alternative before using more expensive medications (ie. generic) before brand medications. In addition, prior authorizations serve as a checkpoint to verify that a patient truly needs the medication prescribed and that they are receiving appropriate therapy.
The overarching benefit is to ensure safety, optimize patient outcomes, as well as reduce costs to the patient and the healthcare system as a whole.These prior authorizations save money for insurers by bypassing unnecessary or expensive treatment options when other equally effective options exist that are included in the plan’s formulary. The formulary includes the list of medications that are covered under an insurance plan. This process is needed not only to ensure minimizing prescription costs, but also to verify that what is being prescribed is medically necessary and appropriate for the patient.
Plans analyze data and evidence to understand which treatments are best to improve patient health. Insurance companies continually update their formularies to include drugs that are most effective to treat different disease states that are also cost effective. This ensures that medications that are covered by plans will reflect guideline changes. Prior authorizations also verify that certain medications aren’t being duplicated if patients see multiple specialists. This keeps patients safe from potential adverse effects and encourages appropriate medication usage.
According to the 2019 AMA prior authorization (PA) physician survey, 91% of patients experience some delay in receiving care due to lengthy prior authorization procedures. The most worrying statistics revealed in this survey were that 24% of physicians reported that PAs have resulted in adverse events in patients, due to the delay of medication receipt. Even more detrimental, 16% reported that PAs have led to patient hospitalization because of the delay. In many cases, patients have abandoned treatment plans altogether secondary to the difficult process, which was reported by about 74% percent of physicians. Imagine being a patient having to go through multiple tests, procedures and discussions with a provider to find the right therapy for you, only to realize that the medication you need requires a prior authorization that can take days to weeks to resolve. For some patients the regimens may allow for a wait, but there are many others that have conditions that can rapidly worsen.