It’s Time to Reform Prior Authorization Requirements
Why Policy Change Is Necessary
When the American Academy of Family Physicians (AAFP), the American Medical Association (AMA) and 15 other health care organizations agree that insurers’ prior authorization requirements are an impediment to optimal care, it is time for policymakers to pay attention.
Rather than just a nuisance for clinicians and patients, research finds that prior authorization requirements complicate medical decision-making, delay or interrupt care and can lead to life-threatening situations, especially when patients require timely treatment for serious health problems like opioid use disorders. This is why the New York State Attorney General’s Office successfully sued two large insurers for requiring physicians to complete lengthy prior approval forms for medication-assisted treatment (MAT), despite studies showing MAT is highly effective in treating opioid addiction. Besides delaying needed care, the state’s investigation revealed that one of the health plans denied almost 8 percent of MAT coverage requests in 2015 and the first half of 2016.
At the same time, onerous prior authorization policies cause providers (physician practices, pharmacies and hospitals) to divert valuable resources away from direct patient care. For example, a 2010 AMA survey found that US physicians – approximately 835,000 individuals –
spend an average of 20 hours per week on prior authorization activities and two-thirds of these practitioners wait several days to receive authorization for drugs, while 10 percent can wait more than a week.
Putting a price tag on the financial costs to clinicians, a 2011 study estimates that time spent interacting with multiple health plans on claims and billing and obtaining prior authorization for patient services costs at least $82,975 per physician annually in the U.S.
Responding to the unreasonable hurdles for patients and the high costs for physician practices,
in 2017, the AMA formed a coalition of physicians, medical groups, hospitals, pharmacists, and patients and issued a set of 21 principles intended to ensure patients will have timely access to treatments. Key principles include:
- Any utilization management program, such as prior authorization, must be based on accurate and up-to-date clinical criteria and never cost alone
- Utilization management programs, such as prior authorization, should allow for flexibility, including the timely appeal of prior authorization denials
- A prior authorization approval should be valid for the duration of the prescribed/ordered course of treatment. This eliminates the need to obtain approval each time the patient refills the prescription
- Insurers should offer a 60-day grace period for any prior authorization protocols for patients who are already stabilized on a particular treatment
- If health plans require prior authorization for non-urgent medical care, insurers should make a determination and notify the physician within 48 hours; for urgent care, the determination should be made within 24 hours.
Now, the AMA and other medical societies are working to improve the prior authorization process through policy changes. At the state level, the AMA developed model legislation including requirements that insurers must respond to make a pre-approval determination within one business day for urgent care and two business days for non-urgent care and must notify physicians at least 60 days before any change to prior authorization policies takes effect. This has been reinforced with the efforts of physician groups to pass state laws or issue new regulations to standardize the forms and process used by health insurers to implement any pre-approval requirement.
Patients Rising NOW supports the AMA’s 21 principles for reforming prior authorization and utilization management practices, including enacting state uniform prescription drug prior authorization laws.
At the state level, we are working with other advocacy organizations to raise awareness of the need to reform burdensome prior authorization requirements, leading to changes in regulations or enactment of state legislation. Currently, 41 states are either considering policy changes or have taken regulatory or legislative action. This includes 20 states that have introduced or enacted laws or implemented regulations requiring the use of uniform prior authorization standards.
Patients Rising also supports the AMA’s call for all state attorney generals to take action similar to New York State that will end insurer’s prior authorization requirements for medication assisted treatment so those addicted to opioids will receive help quickly. We agree with the AMA Task Force to Reduce Opioid Abuse that there is no medical, policy or other reason for payers to use prior authorization for substance abuse disorders.
At the national level, we support passage of the Standardizing Electronic Prior Authorization for Safe Prescribing Act (H.R. 4841) introduced by Reps. Johnson, David Schweikert (R-AZ), Ben Ray Lujan (D-NM), and Mike Thompson (D-CA) in January 2018. Designed to “allow patients to obtain needed prescription drugs without unnecessary delay,” H.R. 4841 would mandate standardized electronic prior authorization for Medicare Part D beneficiaries. The bill would also require the Department of Health and Human Services (HHS) to create standards defining electronic transmissions based on the National Council for Prescription Drugs Programs (NCPDP) SCRIPT standard,  which facilitates the transfer of prescription information between pharmacies, prescribers, medical institutions and insurers.
American Medical Association. Standardization of prior authorization process for medical services white paper. June 2011.
Commonwealth Fund. Press Release August 4, 2011. “Physician Practices in the U.S. Spend Nearly $83,000 Annually Per Physician on Administrative Costs, Nearly Four Times as Much as Canadian Practices Spend.” Accessible at: http://www.commonwealthfund.org/publications/press-releases/2011/aug/physician-practices-and-administrative-costs
American Medical Association. Prior Authorization and Utilization Management Reform Principles. Accessible at: https://www.ama-assn.org/sites/default/files/media-browser/principles-with-signatory-page-for-slsc.pdf
American Medical Association. 2018 Prior Authorization State Law Charts. Accessible at: https://www.ama-assn.org/sites/default/files/media-browser/public/arc-public/pa-state-chart.pdf