What To Know About Prior Authorization & How It Impacts You
“Insurance companies come up with [utilization] management guidelines that are arbitrary and focused on lowering costs and not increasing quality of care.”
― Casey Chollet-Lipscomb, M.D., radiation oncologist, Tennessee Oncology
As you make decisions about your cancer treatment, it might be important to understand utilization management (UM). This is a set of techniques that insurance companies use to reduce or contain healthcare costs by influencing patient care decision-making.
When used appropriately, UM techniques can enhance the patient experience and improve quality of care. When used inappropriately, these techniques can hinder patient care.
UM techniques include prior authorization programs, which can be barriers to delivering necessary treatment (American Medical Association, 2021).
What Is Prior Authorization?
Prior authorization (or pre-authorization, PA) is a common UM tool. When PA is required, a member of the healthcare team must obtain approval from a patient’s health insurer to determine if a prescribed procedure, medication, service, or device will be covered by the health insurance plan. This authorization must happen before the patient receives the medical service.
With PA, the health insurer — not the patient’s healthcare team — ultimately decides whether the prescribed treatment or service is medically necessary.
PA is also often required in Medicare Advantage (MA) plans, which allow the use of managed care to control costs for payers. MA plans are a Medicare health plan offered by a private company that contracts with Medicare to provide all Part A (hospital insurance) and Part B (medical insurance), and often Part D (prescription drug coverage) benefits.
The Kaiser Family Foundation found that nearly 4 out of 5 Medicare Advantage enrollees are in plans that require PA for some services. These include inpatient hospital stays, skilled nursing facility stays, and durable medical equipment.
Important PA terms to know include:
Denial: The insurance company refuses to pay for services requested, ordered, or obtained. Denial can happen before treatment/testing (a PA denial) or after treatment/testing (a claim denial). Some reasons for a denial include:
- Paperwork/coding errors
- Questions about medical necessity
- Cost control (“try this first”)
- The service is not covered by your plan
- The service is out-of-network
Appeal: This is your opportunity, with your provider’s help, to ask your insurer to rethink their denial and pay for the service. Timing is important. There are time limits on when you can file an appeal and rules for how soon the payor must respond with a decision.
There are 3 main types of appeals:
- An internal appeal is when you appeal directly to the insurer.
- External appeals are available when there is a question about medical necessity, where you can get care, what types of care might be available to you, and if your coverage is rescinded.
- In urgent cases, an expedited appeal may be requested.
Need to File an Appeal? Follow These Tips
Formulary: This is a list of prescription drugs, both generic and brand-name medications, that are covered by your health insurance plan.
Each insurance company has a different formulary. The list is determined by independent “pharmacy and therapeutics committees” made up of pharmacists, MDs, and other clinical experts.
Changes to the formulary can be made at any time during the plan year.
Consumer Pro-Tip: Download a copy of your plan’s formulary quarterly. Review it with your provider any time you are changing medications or starting a new medication.
How Does PA Impact Patients?
In a CSC survey of approximately 800 cancer patients (“Access to Care in Cancer 2016: Barriers and Challenges”), nearly half of respondents reported that they were told the treatment prescribed to them would require prior authorization.
For patients, PAs can lead to:
Delays – More than 26% of survey respondents experienced significant delays in starting physician-recommended treatment (CSC).
Treatment Changes or Abandonment – High wait times may also lead to treatment abandonment. More than 17% of respondents changed their treatment decision due to the PA requirement (CSC).
Unexpected Out-of-Pocket Costs – Approximately a quarter of respondents reported unexpected out-of-pocket costs due to the PA requirement for physician-recommended diagnostic tests or treatments (CSC).
Rejection of Recommended Service – In a worst-case scenario, the use of PA may lead to a rejection of the prescribed medication or service. If this happens, you and your doctor could appeal the decision.
Prior authorization, when used inappropriately, can be a barrier to patient care and increase physician burden.
How Does PA Impact Providers?
PA can contribute to physician burden. In a 2022 American Medical Association (AMA) physician survey, more than 2 in 5 physicians reported that they have staff who work exclusively on PA. Physician practices complete, on average, 45 PAs per physician weekly. In addition, it can take approximately 2 business days (14 hours) of physician or staff time, weekly, to complete this PA workload (AMA, 2022).
Why Advocacy Is Important
At the Cancer Support Community, we advocate for access to affordable, comprehensive cancer care. It is critical for all healthcare stakeholders ― including healthcare systems, health insurance companies, pharmacy benefit managers, employers, and members of the healthcare team ― to come together to advocate for policies that protect patients.
The ways PA can negatively impact patient care are a perfect example why advocacy is so important. Federal and state policy activities provide opportunities for PA advocacy engagement.
Many states have passed legislation or regulations containing PA conditions, including:
- Mandating the use of electronic prior authorization (ePA) so that patients get their medications, services, or procedures more quickly
- Requiring that a standard PA form is updated and reviewed by stakeholder groups and maintained by the state’s commissioner of insurance
- Implementing deadlines by which the insurer must respond to appeals and provide an explanation why the claim was denied
Federal policies include the following:
1. Improving Seniors' Timely Access to Care Act: This bipartisan bill, introduced in 2019 in the U.S. House of Representatives, establishes several prohibitions, requirements, and standards relating to prior authorization processes under MA plans.
This legislation was born from a consensus statement agreeing that there was too much prior authorization. The statement was signed by Blue Cross, the American Health Insurance Plans, the American Hospital Association, and the American Medical Association.
2. CMS Advancing Interoperability and Improving Prior Authorization Processes Proposed Rule (CMS-0057): At the end of 2022, CMS proposed this rule focused on improving both health information exchange and overall PA processes through policies and technology. This could help keep patients at the center of their own care.
Once this rule is finalized, it is expected that the cost or score* assigned to the Improving Senior’s Timely Access to Care Act by the Congressional Budget Office (CBO) would then drop because the legislation essentially codifies the rule into law. This increases the likelihood of the bill passing.
*A CBO score is the estimated cost of a bill determined by the CBO. The CBO’s economists and budget analysts produce dozens of reports and hundreds of cost estimates for proposed legislation.
How to Be a Self-Advocate
It is important to remember that your voice matters. While Big A advocacy addresses policy and legislation, Little A advocacy involves you being a self-advocate in the healthcare system. Talk to your healthcare provider to see if a prescribed medication, procedure, or service requires PA. Often, your provider will have an idea if this extra step is required.
You can also check to see if your medications require PA by looking up your health insurance plan's drug formulary. Or, call your healthcare insurer directly to request this information.
If you have questions about the PA process, talk with one of our Cancer Support Helpline navigators at 888-793-9355.
Looking for ways to share your story & support cancer advocacy?
- Tell us how prior authorization impacted your cancer experience.
- Share words of encouragement with other cancer survivors.
- Stop by our Action Center for simple ways you can take action now.
- Sign up for our Grassroots Network to make your voice heard with decision makers at every level.
Discover How Your Story Can Inspire Change
Editor’s note: On May 1, 2023, our Cancer Policy Institute held a webinar focused on prior authorization. Speakers Peggy Tighe of Powers Law, Christina Bach, MSW, LCSW,OSW-C, of OncoLink & Cancer Support Community, and Casey Chollet-Lipscomb, M.D., of Tennessee Oncology spoke about the impact of prior authorization and ways to advocate for improvements to the process.
The webinar was part of CSC’s Forum on Utilization Management, which was created to bring patient advocates together for meaningful conversations, ask tough and nuanced questions, and identify new ideas and practices that optimize evidence-based healthcare.
American Medical Association. (2022). 2022 AMA Prior Authorization (PA) Physician Survey.
American Medical Association. (2021). 2021 Update: Measuring progress in improving prior authorization.
Cancer Support Community. (2016). Access to care in cancer 2016: Barriers and challenges. Washington, DC: Author.
Kaiser Family Foundation. (2019). Analysis of CMS Medicare Advantage Enrollment and Benefit Files.