Original purpose: Why does the prior authorization process exist? The stated reason is to prevent overprescribing expensive new medications when a trusted, cheaper, older medication is available. The process may also prevent a patient from being prescribed medications they may not need or that could interact dangerously with other medications they take. Finally, screening requirements may remind physicians to do routine checks, such as annual tuberculosis tests for patients receiving a TNFi.
Although those intentions are worthwhile, the evidence that healthcare costs have lessened or that patient safety has improved as a result of prior authorization use is very limited.
Does the prior authorization process truly save money for patients and society at large, or does the cost just get shifted?
Physician cost: A 2019 survey completed by the American Medical Association (AMA) found that physicians spend an average of 14.4 hours each week completing these authorizations and complete, on average, 33 prior authorization requests per physician, per week.1 A practice of just three physicians would require one full-time employee to focus solely on prior authorizations.
Eighty-six percent of physicians say their perspective of the burden of prior authorizations is either high or extremely high.
A study published in Health Affairs delved deeper and found that converting the time into dollars, practices nationwide spend an average of $68,274 per physician per year on prior authorization requests. This comes to an estimated $23 billion to $31 billion annually.2 Physicians are spending an astronomical amount on administrative costs to complete prior authorizations.
Even more worrisome is that the majority of physicians (86%) report this burden has continued to increase over the past five years.
After an initial denial, a physician may appeal, which can sometimes take weeks or more. Some insurance companies demand that appeals occur in writing only. Some companies allow an appeal over the phone with an insurance company-compensated physician. This process is commonly referred to as peer-to-peer.
Often, these peer physicians are not in the same field as the requesting physician. Frequently, they are authorized only to explain why a decision was made and have no power to reverse a decision. This can be especially problematic for specialists who deal with rare diseases, such as pediatric rheumatologists.
Drug formularies: Formulary changes contribute to much of the chaos. Each insurance company has its own formulary and set of rules regarding what it will and won’t cover, making the formulary process almost impossible to navigate.
