Prior Authorization: Why It’s Essential in Healthcare

Prior authorization is a crucial healthcare topic related to the relationship between a patient, their healthcare provider, and the insurance company.

This blog will outline everything you need to know about prior authorization, its definition, and its importance to healthcare.

What is prior authorization?

A patient’s physician or healthcare provider can decide what treatment the patient needs. Even then, they cannot proceed with the treatment until the patient’s health insurance company approves it.

This authorization process is known as ‘prior authorization.’

Why does prior authorization exist?

Why a patient’s health insurance company gets the final say on treatment when the doctor has made a decision is a good question. 

There are several reasons for this.

Cost control

One of the reasons a doctor has to send an authorization request is so the insurance company can assess whether:

1. a) The procedure is necessary.
2. b) If there’s a more cost-efficient way to perform the procedure.

The overall idea is to promote efficient use of healthcare resources.

Patient safety

Patient safety is paramount. Before relying on a doctor’s opinion, an authorization process facilitates a chance to review whether:

1. a) The drug the patient will be taking isn’t potentially dangerous.
2. b) Verify if the treatments are necessary and whether there’s a better alternative.
3. c) Ensure any treatment is following evidence-based guidelines.

A monitoring and oversight tool

Insurance companies can collectively analyze prior authorization requests to establish good or bad prescribing patterns with certain healthcare providers. This also helps ensure that patients and the drugs they’re taking are not misused or abused.

Other times, supplementing authorization request data with the latest health statistics and trends can help providers and insurers understand the broader healthcare landscape.

After all, studies show that chronic disease affects 6 in 10 adults today. That highlights why processes like prior authorizations are so critical—they help ensure patients get the right treatments cost-effectively, essential for supporting overall health and preventing future problems.

Who approves a prior authorization?

Insurance companies aren’t medical professionals, so why do they get to approve treatment requests?

Treatment requests will only be approved by fellow medical professionals employed by the insurance company–more on this in the next section.

What are the steps involved in prior authorization?

Prior authorization generally involves several steps.

1. Determining if prior authorization is required

The healthcare provider must check if the proposed treatment needs prior authorization and, if so, whether it is covered by the patient’s insurance company.

Common areas where prior authorization is required include:

• Therapies/hospital visits that go beyond a certain number of visits/days
• Prescription drugs with high misuse potential
• Chemotherapy and radiation therapy
• Non-emergency medical procedures
• Expensive medications
• Transplant services
• Step therapy
• Dialysis

2. Gather and complete the necessary forms

The healthcare provider obtains the necessary prior authorization forms from the insurance company’s website or by contacting the insurers directly.

In the form, they will need to submit the following information:

• Patient and healthcare provider details
• Requested procedure, treatment, or medication, including associated CPT or HCPCS codes, ICD-10 diagnosis codes, and proposed service date.
• Clinical information and a more comprehensive history
  • The patient’s current symptoms
  • Relevant medical history
  • Previous treatments attempted, and the outcomes
  • Supporting evidence
  • Reasons they believe the proposed plan will work
• Medication-specific information (if the request is for a drug.)
  • Drug name and dosage levels
  • Frequency and duration of the treatment
• Urgency of request
• Any other documentation to make their argument stronger

3. Review by the insurance company

The insurance company will review the request using the following steps:

• The admin staff will screen the request to ensure the healthcare provider has submitted the necessary information and that there’s nothing incomplete in their application.
• The request is passed on to a team of clinicians, nurses, or pharmacists (depending on the nature of the request) who review the materials.
• The insurance company will either accept or reject a request. Alternatively, they may ask for additional information before making a decision.

How long does an authorization request take?

The length depends on the authorization requirements. Urgent requests can take as little as two hours, while complex cases may take up to a month.

According to the 2018 American Medical Association (AMA) Prior Authorization Physician Survey, 26% of providers reported waiting three days or more for a prior authorization decision from health plans.

You can always expedite the process using medical courier services.

Can authorization denials be appealed?

Yes, the authorization process does include an appeals process, which generally works on three levels:

• Level one: The doctor and patient contact the insurer to demonstrate the medical necessity and request a re-evaluation.
• Level two: If unresolved, the case is escalated to a medical director at the insurance company who was not previously involved.
• Level three: If still unsatisfactory, the appeal may go to a neutral party, often a physician with a similar specialty as the appealing doctor.

Challenges and criticisms of prior authorization

Like any other, the authorization process draws criticism. Prior authorization criticism can be grouped under two umbrellas.

Patient frustration and delay in care

Patients often feel frustrated when their treatment is delayed or when going through a grueling appeals process. In worst-case scenarios, this can worsen health outcomes and patient quality of life (which would then qualify them for an approved prior authorization request).

Therefore, an argument could be made for prior authorization to apply to preventative healthcare that stops a health condition in its track.

Lack of standardization in coverage decisions

Every healthcare professional will have their view on a patient’s treatment plan. What if one medical provider who advocates for the treatment at the patient’s end is denied treatment by another medical provider at the insurance company’s end?

Who is right in this case?

The second element of standardization is qualifying what needs and doesn’t need prior authorization, so coverage determinations are up for debate.

Can the prior authorization process be improved?

Several efforts could improve prior authorization:

• An electronic prior authorization (ePA) system and other healthcare technologies can streamline submissions and reduce manual work.
• Policy changes that standardize prior authorizations in terms of their process and what necessitates a prior authorization.
• We are integrating prior authorization processes with Electronic Health Records (EHR) systems for automated data entry and submission.
• Artificial intelligence (AI) can be used to improve the manual elements of the process.

Investing in container security is crucial if using electronic means to manage prior authorization. Container security secures sensitive data, and implementing it can safeguard against unauthorized access, data breaches, and potential disruptions to the prior authorization process while remaining HIPAA compliant.

Final thoughts

Despite potential flaws, prior authorization is vital in ensuring the most optical healthcare is provided to a patient in the most cost-effective way. As technology and the means of data sharing evolve, healthcare providers and insurers should work together to find ways to improve the process.

About the author

Kelly Moser is the co-founder and editor at Home & Jet, a digital magazine for the modern era. She’s also the content manager at Login Lockdown, covering the latest trends in tech, business, and security. Kelly is an expert in freelance writing and content marketing for SaaS, Fintech, and ecommerce startups.