Ongoing Prior Auth and Medicare Debates, Cyberattack Fallout, and Policy Shifts

Your weekly briefing: rounding out another busy week in healthcare... From mounting frustrations over prior authorization policies to calls for Medicare payment reforms and concerns about the growth of concierge medicine practices, last week's headlines highlighted the ongoing tensions around balancing patient access with controlling costs and ensuring quality care.

Prior Authorization Debates Continue

Discussions around prior authorization policies remained at the forefront last week. In Kentucky, a bill (HB 317) that proposed exempting high-performing providers from having to obtain prior authorizations failed to advance, despite backing from the Kentucky Medical Association and Kentucky Hospital Association. Those groups cited concerns like denial rates, care delays and administrative burdens. However, insurers argued the policies help prevent waste and ensure appropriate, safe care. At least 15 hospitals also reportedly re-evaluated their Medicare Advantage contracts in 2023 amid prior authorization disputes.

Calls for Medicare Payment Reform

As providers deal with a 4.5% Medicare pay cut in 2024, they took their push for broader reimbursement reforms to Congress at the National Advocacy Conference. Doctor groups urged addressing budget neutrality requirements and updating the payment model, while a bipartisan Senate group reviewed potential changes. "Keep up the pressure," Rep. Larry Bucshon, MD implored doctors, saying the payment issues have become "institutionalized" among members.

Survey Highlights Claims Denials Issue

A new survey from Premier Inc. shed light on the claims denials situation. It found private insurers initially deny nearly 15% of medical claims on average, including 3.2% that were pre-approved via prior authorization. Overturning denials costs the industry $19.7 billion annually in adjudication costs alone, with labor expenses adding billions more. Medicare Advantage had the second highest denial rate at 15.7% after Medicaid. Payers say denials prevent waste, but providers argue they create cash flow challenges when claims are delayed months.

Picking Up the Pieces After Cyberattack

Over a month after the debilitating cyberattack on revenue cycle giant Change Healthcare, the company made progress restoring critical systems like its clearinghouse and claims processing platforms. UnitedHealth, Change's parent, advanced $2.5 billion to affected providers and mapped out a multi-week timeline for bringing capabilities fully back online as it works through a $14 billion backlog of claims. Federal officials continued pressing insurers to increase financial assistance for struggling providers, some offering loans as high as 7 figures.

Concierge Medicine Raises Concerns

Separately, a psychiatrist opinion piece raised concerns over "concierge medicine" practices that drop Medicare patients unless they pay annual fees that can reach up to thousands of dollars. With more doctors potentially pursuing this model amid reimbursement and administrative frustrations, some warn it could exacerbate healthcare access issues. Potential policy responses were suggested, like tying medical licenses to caring for Medicare beneficiaries.

Growing PBM and Pharmaceutical Market Potential

The U.S. PBM market is projected to experience significant growth, driven by the increasing costs of specialty drugs and innovative utilization strategies. This trend reflects the evolving dynamics of pharmacy spend management, highlighting the influence of major PBM players in shaping healthcare costs and access to medications.

• PBM Market to Grow by $188 Billion to 2029
• Projections indicate that the weight loss market could reach $100 billion by 2035, presenting a lucrative opportunity for pharmaceutical companies.

While policymakers and industry groups continued working through challenges like prior authorization, reimbursement models and cybersecurity threats, the impacts of these issues affected providers and patients alike. With costs mounting, perspectives differed on striking the right balance between access, quality and financial discipline.