The Hidden Cost of Prior Authorization: How Health Insurance Practices Harm Patients adn Providers
For decades, health insurance companies have touted prior authorization as a tool to control costs and protect patients. But the reality is far from the promise. This bureaucratic process, which requires health care providers to obtain approval before performing certain services or prescribing medications, has become a significant barrier to timely care. It’s time to ask: Is prior authorization doing more harm than good?
The Origins of Prior Authorization
Prior authorization was introduced in the mid-1980s as a marketing strategy by health insurance companies. According to David Rosenbloom, an officer of the health Data Institute at the time, insurers wanted to show they were “doing something” to address rising health care costs. Some even charged extra for “pre-admission certification.” However, there was no evidence then—and still isn’t—that prior authorization improves care quality or saves money.
The Human Cost of Delayed Care
The consequences of prior authorization delays are staggering. A recent national survey by the American medical Association found that 25% of physicians reported delays leading to hospitalizations, life-threatening emergencies, or even permanent disability or death.For patients with mental illness, the impact is even more pronounced.A 2023 Kaiser Family Foundation survey revealed that 23% of these patients faced difficulties with prior authorization, frequently enough preventing them from accessing critical treatments.
The Financial Burden on Patients and Providers
Prior authorization is responsible for nearly half of all medical claim denials, creating a domino effect of additional denials that increase costs for patients and providers. One in six patients reported issues with prior authorization, and more than half of those also faced other claim denials, such as being unable to obtain prescribed medications. Meanwhile, 95% of physicians say prior authorization significantly contributes to physician burnout.
A call for Change
To address these issues, experts reccommend three key actions:
- Abolish prior authorization for medical care and prescriptions.
- Require insurance companies to post denial rates in all marketing materials.
- Ensure speedy and fair appeals for denied claims.
These steps would not only improve patient outcomes but also reduce the administrative burden on health care providers.
Key Statistics on Prior authorization
| Issue | Statistic |
|—————————————-|——————————————————————————-|
| Physicians reporting harm from delays | 25% (American Medical Association survey) |
| Patients with mental illness affected | 23% (Kaiser Family Foundation survey) |
| Physicians experiencing burnout | 95% (American Medical Association survey) |
| Claim denials linked to prior auth | nearly 50% (Kaiser Family Foundation survey) |
Conclusion
Prior authorization is a broken system that prioritizes insurance company profits over patient care. By eliminating this practice, we can create a health care system that truly serves the needs of patients and providers alike.The time for reform is now.
What are your thoughts on prior authorization? Share your experiences and join the conversation about how we can build a better health care system.
How Insurance Companies Can transform Healthcare by Ending Claim Denials and Delays
The healthcare system in the United states is often criticized for its complexity and inefficiency,particularly when it comes to insurance claim denials and delays. According to David L. Rosenbloom, professor emeritus at Boston University School of Public Health, these issues could be significantly reduced—or even eliminated—if insurance companies were held accountable for their practices.
Rosenbloom, who served as commissioner of health and hospitals for the city of Boston from 1975 to 1983, argues that ending prior authorization, publishing denial rates, and ensuring fair, speedy appeals would not only improve patient outcomes but also reduce anxiety and increase access to medical services.
The Problem with Prior Authorization and Claim denials
Prior authorization is a process where insurance companies require healthcare providers to obtain approval before delivering certain treatments or medications. While intended to control costs, this practice often leads to delays in care and needless stress for patients.
“Denying claims is a very effective way for health insurance companies to make money,” Rosenbloom explains. “Only about half of all bill denials are ultimately overturned, resulting in payments to care providers.”
The appeals process is equally problematic. Fewer than 1 percent of patients appeal denied claims, and most lose in a system controlled by insurance companies. Many patients aren’t even aware they have the right to an external appeal.
The Role of Pharmacy Benefit managers
Pharmacy benefit managers (PBMs), often owned by health insurance companies, further complicate the issue. They increase profits through prior authorization,sometimes paying only for brand-name drugs that offer them kickbacks. This practice not only limits patient choice but also drives up costs.
A Path Forward: Openness and Accountability
Rosenbloom suggests that requiring insurance companies to publish their prior authorization denial rates on all marketing materials and platforms would empower patients and plan sponsors. While the Affordable Care Act mandates that insurance companies compile denial rates for plans offered on its marketplaces,this information is not widely available,and enforcement is lacking.
“Ending prior authorization, publishing denial rates, and forcing speedy, fair appeals would eliminate the majority of medical claim denials and delays in care,” Rosenbloom asserts.
These changes could also foster an habitat for legitimate research into policies that improve patient outcomes, enhance the quality of care, and prevent wasteful or harmful medical practices.
Key Benefits of Reform
| Reform | Impact |
|——————————–|—————————————————————————-|
| End Prior Authorization | Reduces delays in care and patient anxiety |
| Publish Denial Rates | increases transparency and helps patients make informed decisions |
| Ensure Fair, Speedy Appeals | Empowers patients and reduces financial burden on healthcare providers |
The Bigger Picture
Contrary to fears that these reforms would raise healthcare costs, Rosenbloom argues that timely access to care may actually save money. Delaying or denying care frequently enough leads to more severe health issues, which are costlier to treat in the long run.
By holding insurance companies accountable, we can create a healthcare system that prioritizes patient well-being over profits. As Rosenbloom puts it,“These changes would increase access to medical services and reduce patients’ anxiety.”
The time for reform is now. Patients, healthcare providers, and policymakers must work together to demand transparency and fairness from insurance companies. Only then can we ensure that everyone has access to the care they need,when they need it.
David L. Rosenbloom is a professor emeritus at boston University School of Public Health. He served as commissioner of health and hospitals for the city of Boston from 1975 to 1983.
