Prior authorization, kind of do a deep dive into this issue since I think there's likely to be some action on it later this year. We're just going to go through a brief summary of the issue, provide some definitions, maybe a history of the practice, give you guys some literature review, and then discuss some potential legislative solutions that are coming down the pipe. So what is prior authorization? Well, the insurers frequently define it as a procedural check that's run by third-party payers prior to issue of coverage for services, but for a lot of the providers, it's considered one way that providers deny payment for medical services that they want to perform. When you think about it, there's really two buckets for denials. There's prior authorization, which is a prospective denial, and then there's retrospective denial of care. An example of that would be a surprise bill. So the goal of prior authorization is to minimize unnecessary resource expenditure in areas where it's frequently applied or places like non-coverage of prescription drugs, unnecessary diagnostic tests, and low-value surgical interventions. So how often do insurance companies deny our claims? Well, it's not frequently reported by the pure commercial payers, but the accountable care marketplace plans have to report this data in order to participate in the plan. The average in-network's denial rate from this study was 17%. It varied significantly depending on the state and the individual provider, and there were some outliers. In fact, Anthem Blue Cross Blue Shield of Tennessee denied 57% of their in-network claims. Do patients appeal their denials? From this study, there was about 40 million denied claims. Only 0.2% were appealed by the beneficiary. So the answer is the patients don't or typically won't do it. So who's responsible for the appeals? We are. And this is a very labor-intensive process. This is my office's seven steps for appeal. You guys, I'm sure, have a very similar program or algorithm that your office staff works through. But manual submission is very labor- and resource-intensive. How intensive is it? In this study, the average physician practice spends about two days per week interacting with insurance plans, performs 40 prior authorizations per week. The annual cost per provider is around $70,000, and the estimated cost to the industry is $20 to $30 billion. Is prior authorization becoming more common in practice? In a 2019 survey, 86% of AMA members felt like it was becoming more common in practice. However, Medicare historically did not require prior authorization, so where did the practice come from? Well, it was introduced by commercial payers, and then Medicaid picked it up in the mid-90s. Medicare Advantage introduced the practice in 2003 to the Medicare beneficiary population. And why this matters is because the CBO estimates that one half of all Medicare beneficiaries will be Medicare Advantage by 2026. This could be 25 to 30 million covered lives. And accountable care plans picked up an additional 20 million beneficiaries over the last 10 years. So we have 40 to 50 million people now who are going to be requiring prior authorization that perhaps didn't previously. Well, so we know what the concerns are with this. The payers are concerned that it interferes with patient autonomy, delays care, and increases administrative burden. So let's look at some literature. In this study, 7,000 MRIs for low back pain resulted in peer review. 20% of these orders were denied coverage. So in a group as small as 7,000 patients, when we look at an average cost MRI of $2,600, that's more than $3.6 million in savings in this study. Additional studies supporting cost savings, Medicare in Michigan had a 58% reduction in non-preferred medication. Pennsylvania showed lower rates of opioid abuse and overdose when the pharmacies did a double check of the prescribers' recommended treatment. And Medicare Power Mobility Device Project, which is maybe the flagship demonstration project by Medicare, saw a 57% reduction in spending for wheelchairs in the geographic area of the study. So it saves money, but it doesn't always save money. In this study, looking at the impact of commercial plans on utilization of services for low back pain, year one of the program, the patient population had lower incidence of spinal fusion, and they were able to save money with their prior authorization plan. But in year two, there was a rebound effect, and many of the individuals that delayed surgery ultimately ended up getting a surgical intervention, and total spending per beneficiary increased by $2,000. So in some cases, we may just be delaying definitive care and actually increasing cost. So how do we fix the process? Well, several techniques have been recommended. Designating providers with gold status, those who have high compliance to the rules, follow evidence-based algorithms, can opt out of prior authorization participation, sunsetting prior authorizations that have a high or frequently overturned an appeal, or there's limited financial benefit, but maybe the optimal adjustment that we can do is increasing automation and electronic processing. The Council on Affordable and Quality Health Care did a report in 2019 that was presented to the Congressional Budget Office estimating that the healthcare industry providers plus plans could save $10 billion through further automation of electronic, excuse me, further automation of administrative transactions. Specifically, the providers could save $350 million in direct cost savings, and the healthcare plans about $100 million in direct cost savings, so hard dollars, actual money currently being spent. So these are good numbers, and the data's good for the providers. So the solution, H.R. 3173, Improving Seniors' Timely Access to Care Act. This bill creates a pathway to standardize pre-certification electronic processes for prior authorization. It requires plans to enlist qualified professionals to oversee approval protocols. They have to provide real-time decisions for items and services that are frequently approved. They have to increase their transparency, so they have to publish the percentage of requests approved and the turnaround times for their claims. And finally, something that's a source of frustration for a lot of surgeons, it prohibits denial of surgeries that are furnished to patients during other surgeries for which prior authorization was already received, which can be very frustrating if you feel like you need to do a procedure, but it wasn't authorized. Most of us probably go ahead and do the procedure, but you realize you're not going to get reimbursed for it. So what can we do? The legislation has bipartisan support. We're hoping to see some action on it in the second half of this year. We need to follow it for any changes in 2021, stay engaged with our key congressional allies, and continue to support the PAC. Thank you.

prior authorization

healthcare providers

denial rates

patient care

HR 3173