The Burden of Prior Authorization in Healthcare

A recent survey of physicians conducted by the American Medical Association showed that the average physician spends 14.6 hours a week on Prior Authorization (PA) requests from insurance companies.

While PA’s are seen as a “check” on physicians who may be ordering unnecessary medical treatment, the downstream effects are troubling.

According to the survey:

• Necessary care is delayed 92% of the time
• 84% of physicians see the PA burden as “high or extremely high”
• 92% of physicians think PA’s have a negative effect on clinical outcomes
• The PA process can lead to patients abandoning treatment
• 86% of physicians think the burden of PA’s has increased over the last 5 years

Recently, a client of mine was told that they urgently needed surgery as a delay could cause permanent physical damage. The prior authorization process took over 3 days and throughout that time, you could feel the patient’s stress level rise with every status request that landed in my inbox. Was the PA necessary? Possibly. Did the PA process harm the patient’s well-being? Probably.  

Although insurance companies are working to improve the PA process, it’s helpful to understand why PA’s exist.

Whenever one party pays for another party’s X, there will inherently be a need for checks and balances. Put another way, there will be strings attached and these strings are designed to protect payers (commonly seen as insurance companies, employers, and governments) from fraud and abuse.

We routinely see this dynamic play out in government whenever a politician proposes a new social safety net. The necessary follow-up questions become centered around “who, what, when, and where”, and the answers to each of these questions comes with an administrative cost that is at times greater than the safety net itself.  

While there’s no question about the over-medicalization of the US population, one has to wonder if the ends justify the means and whether we should consider alternatives to our surrogate-based model.

So long as governments, insurance companies, and employers “cover” healthcare benefits for a given population, Prior Authorizations and the inefficiencies that come with them will persist.