Dealing With Prior Authorizations Is Like Running an Obstacle Course for Physicians ― and the Obstacles Keep Getting Bigger
Cover Story — September 2017
Tex Med. 2017;113(9):18-25.
By Sean Price
On most days, prior authorizations are merely a time-consuming headache for San Antonio rheumatologist Rudy Molina, MD. But every so often, they become a full-blown crisis.
"It takes 15 minutes to fill out a prior authorization form, and one day we had 60 requests for PAs," Dr. Molina said. "That means one person is doing nothing but filling out forms all day, doing nothing else for patient care like call-backs or refilling medications and such."
Dr. Molina says the nurse who handled the prior authorizations that day quit soon afterward, saying she didn't want to just do paperwork. Sixty prior authorizations in one day was unusually high, even for a practice that averages 30 to 40 a day like Dr. Molina's. But for most practices, they suck up an inordinate amount of money and time. According to an American Medical Association poll conducted in December, the weekly average of 37 prior authorizations per physician consumes an average of 16 hours of practice time.
"That is an administrative burden and a cost to the practitioner that's not reimbursable," Dr. Molina said. "It's a frustration for doctors' offices as well as the patients."
Despite loud complaints from the medical community, prior authorizations seem to have become more onerous in recent years. A May 16 survey by the Medical Group Management Association (MGMA) found that 86 percent of medical practice leaders said prior authorization requirements have increased in the past year. That is up from 82 percent the previous year.
Meanwhile, the 2016 AMA Prior Authorization Physician Survey found that 75 percent of physicians described the burden of prior authorizations on themselves or staff members as high or extremely high.
Prior authorizations also have made life more difficult for patients. According to CoverMyMeds, a company that provides electronic prior authorization (ePA) services for physicians, more than 185 million prescriptions require preapproval each year. Of those, 75 million are abandoned by patients, in part because of the burdensome process. And prior authorizations might not be saving insurance companies money. A 2013 study published in the Journal of Managed Care & Specialty Pharmacy found that patients with type 2 diabetes who were denied medicine actually had higher medical costs during the following year.
Prior authorizations started in the 1980s as a way to control the cost of prescription drugs. But in recent years, they've ballooned into an industry within the medical industry ― one that touches almost everything doctors do for patients (See "The Role of PBMs," page XX). Agreements between health plans and participating physicians now regularly include rules that allow insurers to require prior authorization on the medical need for surgery, imaging, and medication ― in fact, just about every kind of treatment or test.
Dean Schultz, MD, an Abilene family physician and a member of TMA's Ad Hoc Committee on Health Information Technology, says physician anger toward prior authorizations is mounting. Doctors increasingly are calling for improved procedures and legal reforms that will streamline the process and let doctors spend more time with patients. (See "A Peer? Nowhere Near" and "A Fresh Set of Eyes.")
"I would argue that [insurers] are practicing medicine," Dr. Schultz said. "Because in requiring additional forms, phone calls, and tests, they are rendering medical care, and we are puppets satisfying their ever more burdensome criteria."
Like many physicians, Dr. Schultz has firsthand experience with the burden of prior authorizations.
"I had a patient come in with what I felt like was classic new-onset angina chest pain, and I wanted to set up a stress test," Dr. Schultz said. "And I had not gotten an electrocardiogram ahead of time because I thought the symptoms were classic enough to send the patient for the treadmill cardiac stress test. Well, the insurance company required that I engage in a peer-to-peer consultation."
A peer-to-peer consultation is just one of the permanent obstacles physicians have to negotiate in the prior authorization process. The doctor must call a physician (or nurse) at the insurance company or the contractor who handles prior authorizations for the insurance company to medically justify the prescription or procedure. These contractors are PBMs for medications and medical management companies for medical services.
"They have a checklist," Dr. Schultz said. "So it doesn't matter what you're clinical opinion is, you are required to proceed as the payer dictates if you expect them to pay for the intervention. I called the patient back in and did the electrocardiogram. And I asked the physician at the insurance company what impact the EKG result would have, and he replied that the result would have no impact. It was merely a matter of ensuring that it was done."
Ogechika Alozie, MD, an infectious disease physician in El Paso, says most prior authorizations are merely inconvenient. They delay a sick patient from getting a test or medication and eat up the physician's time. To help avoid that, Dr. Alozie works with a clinical pharmacist at his practice who can handle all prior authorizations for prescription medications. Yet even with this expert help, some patients still have to wait months or years to get medications. But in these cases, the lack of medicine is not just inconvenient. Dr. Alozie says most of his patients have been diagnosed with potentially deadly illnesses such as hepatitis C and HIV.
"Some of my [HIV] patients may be in their 20s, healthier than I am from a physical standpoint," said Dr. Alozie, who is also on TMA's Ad Hoc Committee on Health Information Technology. "But the fact that they don't have HIV medication means they're going to get sick eventually, and if they're having sex ― and all of them are ― they're going to transmit the virus. It's just bad public health. The barriers to care that exist make it hard to give the best care possible."
A handful of specialties face greater problems with prior authorizations than others. Most of them ― such as dermatologists, neurologists, rheumatologists, and oncologists ― tend to have the most expensive medicines.
Dr. Alozie says it's also a big problem for infectious disease specialists like himself. For example, the average 12-week course of medication that cures hepatitis C costs between $60,000 and $80,000. HIV medications clock in at around $2,000 to $3,000 per month.
"I'd say at least 60 percent to 70 percent of the medications I prescribe require a prior authorization, and 100 percent of my hepatitis C medications need one," Dr. Alozie said.
But Dr. Schultz says cost is not the only factor insurance companies and PBMs have in mind when they require prior authorizations.
"I've been told I need to get prior authorizations for metformin ― that's a medicine to treat diabetes that's on the $4 list at Walmart," he said. "I would favor a system that sets a certain cost or price threshold at which you need to get prior authorizations."
Why have prior authorizations become so burdensome in the last few years? Genevieve Davis, TMA's associate vice president of health policy, points to several factors.
"Health plans have added more services to their prior authorization lists, and every health plan has a different process for submitting prior authorizations. There is still no industry standard to be able to submit prior authorizations as electronic transactions," Ms. Davis said. "So they require a lot of administrative work on the part of the physician, and prior authorization requirements can vary by health plan product (Medicare Advantage plans, Medicaid managed care, commercial insurance business)."
Dr. Alozie says the lack of standardization in forms and the difficulty in submitting prior authorizations are the most galling obstacles to him. Texas actually has standardized forms for both prescriptions and procedures. Because of a law TMA helped to pass, the forms were launched in 2015 by the Texas Department of Insurance as an effort to streamline the process. While use of these forms is mandatory in Texas, health plans can still request additional information on other forms. Also, self-funded health care plans and federal plans, like Tricare, are not required to use the forms and can set their own requirements.
The extra prior authorization forms almost always require information that is redundant or irrelevant to the patient's needs, Dr. Alozie says. More importantly, the forms often have to be filled out by hand and transmitted in one of the slowest way possible ― by fax.
"I think it's ridiculous that in 2017 I still have to own a fax machine and send that fax back and forth to an insurance company with billions or hundreds of millions of dollars so that they can approve a medication," Dr. Alozie said. "I mean the prescription goes out electronically, everything else I do is electronic through the electronic medical record, yet to get the medication approved … they still require us to fill out a four- to 10-page form that is usually garbled or in a PDF format, sign it with a pen, and then return it to them by fax."
In a perfect world, Dr. Alozie says, insurance companies and other payers would get rid of prior authorizations.
"But I know that's not going to happen," he said. "So I think the secondary thing is to create an efficient online way that prepopulates the information … and allows me to go in and give a rationale for why I want it. I take care of it electronically and move on."
That electronic option already exists for prescriptions through ePA companies such as CoverMyMeds and Surescripts. Luke Forster-Broten, manager of product innovation at Surescripts, believes that within three to four years about half of ePAs will be able to be done without any physician input beyond entry into the patient's electronic medical record (EMR).
"The EMR system and the PBM's system would be communicating electronically and exchanging all the necessary information to get that approval or denial," Mr. Forster-Broten said.
The problem is that not everybody allows ePAs. Most large insurers and PBMs have adopted the ePA system, but many smaller health plans have not ― reportedly because of the cost of switching over. Only about 50 percent of all prescription prior authorizations are currently done electronically, Mr. Forster-Broten says, though that number is growing. Even among those health plans using ePAs, though, some prescriptions still have to be done on a fax machine.
Several states ― not including Texas ― have mandated the use of ePAs, Mr. Forster-Broten says. But many of those state laws suffer from weak enforcement provisions, making adoption scattershot.
"I think a big part of it is that there's no federal regulation that says they have to process PAs electronically," he said. "So even if they do ePA, many of the health plans and PBMs are only doing it in states where they have those mandates."
Ms. Davis says that while ePAs can save time, that's not always the case.
"If physicians see patients covered under multiple health plan products, they may end up logging into five or more websites in one day to determine the prior authorization requirements and the process they must follow," she said.
Electronic PAs are not the only solution to prior authorizations, and reforms at the state level are making the process easier. For instance, Texas lawmakers passed TMA-backed Senate Bill 680 this regular session. It reduces the burden of step therapy, another established obstacle used in the prior authorization process. (See "Texas' Step Therapy Override.")
Nationally, Mr. Forster-Broten says, reforms are unlikely anytime soon, especially given the controversy over changes to the Affordable Care Act. However, progress has been made on other fronts. In January, AMA issued a set of 21 principles to guide overdue reform in the prior authorization process. The principles were issued in cooperation with other medical groups, including TMA. The principles call for changes that include ensuring patient care is not interrupted and that prior authorizations are done in a timely manner.
Dr. Molina, who served on the advisory committee that drew up Texas' official prior authorization form for prescriptions, says he makes a point of speaking personally with insurers and PBMs about making forms simpler and easier. He believes the current system will improve as more physicians talk with insurance companies, lawmakers, and regulators.
"There is an ongoing discussion within our ranks [of physicians] about how to make it better," Dr. Molina said. "And I do believe it can get better, but we have to have discussions with insurers. We have to create a pathway of treatment that we all agree on and that makes sense to all of us."
Sean Price can be reached by phone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email.
Texas' Step Therapy Override
Earlier this year, the Texas Legislature passed ― and Gov. Greg Abbott approved ― Senate Bill 680, the step therapy override. The law, which went into effect Sept. 1, says a health plan's protocols are no reason to switch a patient to another drug if a physician believes the initial medication is working. Previously, health plans instituted step therapy to save costs. They essentially mandated that physicians initially try prescribing a different, cheaper medication, regardless of the doctor's clinical preference. The new law shortens how quickly a physician can override an insurer's step therapy plan from the current 53 days to just three days, and it prevents patients from having to go through the step therapy process a second time if their coverage changes.
"The legislation passed this session will aide in a physician's ability to seek the best treatment option for their patients," said Clayton Stewart, TMA's associate director of legislative affairs. "Previous step therapy processes allowed health plans to drag out the process of a patient's best medical treatment option. The new law will help in expediting that process and close loopholes that allow a health plan to interfere with the patient-physician relationship."
The Role of PBMs
The insurance industry's commitment to prior authorizations fueled the growth of pharmacy benefit managers (PBMs): contractors who handle prescription prior authorizations on behalf of insurance companies. PBMs, which have been around since 1968, were designed to ensure cost savings for patients by negotiating drug prices and favoring the most effective of any competing drugs.
Today, most of the 4 billion retail prescriptions in the United States are handled by three PBMs ― Express Scripts, CVS Health, and OptumRx. Many physicians argue that the cost-saving function of PBMs has been lost or downgraded in the past 10 years. A wide array of accusers, from physicians to members of Congress, now say PBMs have become middlemen who pay the pharmacy one price, charge the insurance company a marked-up price, and pocket the difference. PBMs also can force rebates from drugmakers for each prescription ― costs that get passed on to consumers.
PBMs have recently started charging "direct and indirect remuneration" (DIR) fees to pharmacies. A report released last February by the Community Oncology Alliance found that DIR fees "lack any reasonable transparency, threaten the viability of pharmacy providers, and, most importantly, increase the cost of drugs to Medicare and beneficiaries."
An overall lack of transparency in PBM deals has drawn the attention of Congress. In just the past few months, several bills have been filed to force PBMs to divulge details about their negotiations with drugmakers over rebates.
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