Practice Management Alert

There’s good news from the AMA on fixing a broken system.

Having useful work-arounds for the cumbersome and time-consuming prior authorization process helps practices cope, but most doctors would prefer for insurers to carry out a total restructuring of prior authorization.

Fortunately, an extraordinary coalition of 16 organizations – including the American Medical Association, American Hospital Association and American Pharmacists Association – has come together to propose a set of principles for prior authorization that would return patients and doctors to the center of healthcare.

These 21 principles, put forth in early 2017, would still maintain the cost savings that any utilization management program is designed to achieve.

The coalition’s principles for prior authorization can be broken down into five major categories:

• Clinical validity. Any prior authorization rule “should be based on accurate and up-to-date clinical criteria, and never cost alone.” The coalition also suggests that the rules should be flexible on a case-by-case basis, and have a transparent appeals system.
• Continuity of care. This category includes principles to prevent the disruption of ongoing patient care, from a grace period for continuing existing courses of treatment to a guarantee that prior authorizations are valid throughout a patient’s entire treatment.
• Transparency and fairness. These principles call for prior authorization information to be widely available to the public. The coalition claims that insurers “need to be transparent about all coverage and formulary restrictions and the supporting clinical documentation needed to meet utilization management requirements.” Principles include putting out all information electronically, as well as making statistics on approvals and denials readily available.
• Timely access and administrative efficiency. This category includes a call for electronic communication to replace prior authorization requests conducted by telephone. It also sets hard time limits for insurers to respond to requests and appeals, and encourages much more prior authorization standardization from one insurer to the next.
• Alternatives and exemptions. These principles push for prior authorization to focus on the few practices with out-of-control spending, rather than on the large majority that operate responsibly. They also encourage insurers to allow exemptions from the prior authorization process for practices that run their own utilization management programs, such as “preferred provider” or financial risk-sharing payment plans.

These common sense ideas to reform prior authorization were developed out of the difficulties the coalition organizations heard about from their members. Hopefully, the principles will form the starting point for a discussion among healthcare stakeholders about a better way to balance cost and quality. “The AMA and its partners know the physician offices – they understand the struggles,” says Rhonda Buckholtz, VP of Strategic Development for Eye CareLeaders.

Prior Auth by the Numbers

75% … of reporting practices say that the prior authorization burden is “high or extremely high.”
36: Mean number of PAs that a physician and staff process per week.
16: Mean number of hours that a physician and staff spend processing PAs per week.
90% … of physicians report care delays related to PAs
34% … of physicians report they have staff solely dedicated to PAs.
60% … of physicians report they wait at least one business day for PA responses.
26% … of physicians report waiting at least three business days for PA responses.
79% … of PA requests are eventually approved.
7% … of PAs are approved on appeal.

Source: 1000 practicing physicians surveyed in December 2016 by the American Medical Association. 40 percent were PCPs and 60 percent were specialists.

“We are excited to see the potential this proposal has, and how it can help our doctors’ offices in the future.”

Editor’s note: To see the proposal “21 Principles to Reform Prior Authorization,” go to https://www.ama-assn.org/sites/default/files/media-browser/principles-with-signatory-page-for-slsc.pdf.