The Prior Authorization Process – Important Facts to Understand

Pre-authorization, also termed pre-approval or prior authorization signifies a restriction imposed on certain health services, tests or medications by the health insurance company. It requires the treating doctor to first check and be given permission before the health plan will cover the service or medication. Prior authorization helps both the physician and the insurer understand that the healthcare service is medically necessary for the patient. Private insurers as well as government payers such as Medicare, Medicaid and Tricare require prior-authorization for certain medical services and medications. Medical record retrieval and review is an important step when determining whether the patient is eligible to receive the requested treatment.

Here are some drugs that need prior authorization.

Typically, when the treating physician decides that a patient needs a service or medication and it requires pre-authorization, the doctor’s office will put a request to the patient’s health plan to obtain approval to perform the service or obtain the medication. Though some health plans allow patients to file their own pre-approvals, usually this process starts from the doctor’s office. The medical director for the Hawaii Medical Service Association in Honolulu, Larry Hsu, MD says that pre-authorization is used in less than 10% of claims. Moreover, approval is often given even before the request reaches the medical director’s or any other clinician’s purview. He added that non-clinicians were usually the first people to look at a request, and that they or any other member of the health plan can approve the request in keeping with procedures and policies. Clinician involvement is required for those requests that can’t be approved by the first line of defense. If a pre-authorization is approved, it doesn’t guarantee payment but indicates that the health insurer intends to pay for the service or medication requested. Additionally, the insurer is not promising to pay 100% of the costs. The patient is responsible for his/her share of the cost as they would be for any service or medication including co-payments or co-insurance set forth by the patient’s health plan’s design. 

Many patients and physicians themselves view the prior authorization process as an impediment to timely provision of medical care, it has its values.

There are certain important considerations to keep in mind with regard to the prior approval process. These include the role of nurse recommendations, when should specialists be in, how candid insurers must be about their various processes, and so on. The overall ideas and objectives of the pre-authorization process would be similar though the exact process may differ from one organization to the other.

From the health insurer’s point of view, clinicians who review the pre-approval request must review the patient’s medical record and decide whether to approve the request or send it to the medical director for review.  Specialty input can be requested if uncommon health conditions are involved. Ideally, any medical policy must be written in a manner that the clinician can evaluate a patient’s medical record against the coverage criteria.

A pre-authorization request is approved or denied according to guidelines developed by an expert team comprising physicians and other healthcare professionals, and pharmacists, says David Marcus, director of employee benefits, National Railway Labor Conference, Washington DC (as quoted in a managedhealthcareconnect.com article). In fact, such guidelines are the first step to ensure medical necessity and coverage. Clinicians reviewing the pre-authorization request can refer to the guidelines and the patient’s medical record and decide whether to approve the request or send it for review to the medical director.

Often, non-physicians such as physician assistants and nurse practitioners may be entrusted the task of making treatment decisions in keeping with clinical protocols. Typically UM (Utilization Management) nurses are knowledgeable and well-trained professionals and collect the appropriate information required in each case. They have the ability to approve a case if they are convinced it meets the criteria in their review. When they are unable to do so, they pass the findings on to the medical director along with the relevant patient medical records. Only a medical director can deny a case once the request reaches his/her purview. The medical director may ask for more information or request the UM nurse to collect the information. Providers have to respond within 30 days. Once that time period is over, the medical director would either adjudicate if the requested information is provided or close it quoting lack of information. The medical director can deny a case without adequate information in only one instance, i.e. if the requested service is not a covered benefit or has exceeded a benefit limit. 

Most experts agree that the medical director should carefully review the case and if he/she is not familiar with the topic, or has doubts regarding the request, should research the issue. They can contact a specialist or call the requesting physician to clarify. Alternately, they can send the case for a specialty review. Melissa Andel, a health policy director at Applied Policy in Washington, DC, believes that a medical policy should be written in a manner that even a clinician without training in a specific specialty will be able to evaluate a patient’s medical record against the criteria for coverage. It is the onus of payers to communicate with their medical review team and medical directors to ensure that existing policies and procedures are followed. Health insurers must also explain that their process includes review of medical records. Patients and providers must understand that prior-approval decisions are made fairly based on medical evidence and according to established guidelines regarding standards of care. More importantly, they should also be informed that medical directors are not paid any incentive based on denials.

When it comes to prior-authorization, health insurers must communicate to the public why medical chart reviews is necessary. In addition, they must also make it clear how insurance coverage policies are made so that the public has a clear idea regarding what is required before a treatment or medication is covered and why. Also, the public should understand that pre-authorizations are valid only for a specific amount of time and may require periodic renewal. In case the test or service that received approval is not scheduled during the specified time frame, the requesting doctor’s office will have to resubmit the request asking for approval.

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