Why insurers are scaling back prior authorizations

By Non Tepper / September 7, 2023

Some health insurance companies are rethinking prior authorization amid a groundswell of complaints from patients and providers and intensifying government scrutiny.

Health insurance companies employ prior authorization rules to constrain costs and to limit unnecessary care, much as insurers place limits on coverage in other ways. Yet big players such as UnitedHealth Group, Cigna and several Blue Cross and Blue Shield companies have announced plans this year to relax their precertification policies. Provider groups have applauded these announcements, albeit cautiously.

According to providers, health insurance companies have imposed prior authorization requirements on an ever-increasing number of services and products in recent years, interfering with patient care and burying them in paperwork. In an American Medical Association survey last year, doctors reported they spend an average of 14 hours each week on prior authorization requests. Eighty-eight percent described the burden as high.

Why do insurers require prior authorizations?

Insurers contend prior authorization serves as a necessary tool to manage healthcare spending. Without limitations, providers could order an unlimited number of procedures—including unneeded or unsafe ones—and choose to conduct them in the costliest settings, driving up spending and exposing patients to care that may be inappropriate.

While provider groups don't entirely reject the concept, whether prior authorization does what insurers say it does is in the eye of the beholder.

The health insurance trade association AHIP said last year that 91% of insurers surveyed reported that prior authorization policies improve quality and affordability and 84% said they enhance safety.

Yet the AMA survey found that more than six in 10 doctors think prior authorization forces patients to engage in needless actions such as ineffective step therapy treatments or superfluous office visits.

Both camps agree that the prior authorization process could be better. In 2018, AHIP, the American Hospital Association and other organizations issued a consensus statement endorsing further automation, more risk-sharing contracts and greater reliance on evidence-based care guidelines.

What are health insurance companies doing?

Some health insurers are dropping select prior authorization requirements and investing in technology to streamline reviews.

Cigna announced last month that it would eliminate prior authorization requirements for 600 genetic tests, surgical procedures and durable medical equipment requests for its 16.5 million commercial enrollees. UnitedHealth Group will move forward with a plan to eliminate nearly 20% of prior authorization requirements for its 47.5 million commercial, Medicare Advantage and Medicaid members this year. Elevance Health, which operates Blue Cross and Blue Shield plans in 14 states, announced in July that it has connected to more than 1,700 hospitals’ electronic health records and established “bi-directional data exchanges” to speed precertification requests.

Cigna plans to scrap another 500 prior authorization requirements for its 592,000 Medicare Advantage members this year. UnitedHealth has said it will implement a “gold card” program next year through which qualifying providers can simply notify the insurer about pending care rather than request preapproval. Health Care Service Corp., which operates Blue Cross and Blue Shield plans in five states, is expanding a pilot project that uses artificial intelligence to evaluate some prior authorization requests for its more than 18 million members.

Why are policymakers getting involved?

The federal government has undertaken a slew of regulatory and administrative actions to curb health insurance industry practices that rankle patients and providers, including clarifying when and how prior authorization can be used under Medicare Advantage, Medicaid and health insurance exchange plans.

Last year, Surgeon General Vivek Murthy called on insurers to reduce prior authorization requirements, streamline paperwork and develop simplified, common billing forms to fight workforce fatigue and boost health system finances.

The Health and Human Services Department Office of Inspector General reported in July that the largest Medicaid carriers denied an average of 12.5% of claims, more than double the rate for Medicare Advantage insurers. Last year, the inspector general issued findings that Medicare Advantage plans improperly denied 13% of prior authorization requests.

The inspector general recommends federal and state regulators toughen the rules around prior authorization and beef up oversight. In turn, Congress has asked the investigative agency to evaluate whether insurance companies provide access to medically necessary care.

What are federal authorities doing?

Federal agencies are focused on accelerating prior authorization responses and excluding certain patients and procedures from insurers' rules.

The Health and Human Services, Labor and Treasury departments issued a proposed rule in July that would limit prior authorizations for mental health and substance abuse services for those covered by employer and government-sponsored health benefits.

The Centers for Medicare and Medicaid Services finalized a rule in April restricting prior authorizations under Medicare Advantage. For example, insurers must honor previously approved prior authorizations for the full duration of a patient’s treatment and provide a 90-day grace period for members in the midst of treatment who switch from other policies. The agency also required insurers to establish utilization management committees to annually review prior authorization requirements and barred plans from enacting prior authorization requirements for emergency behavioral healthcare.

Last year, CMS proposed a rule to create a electronic system for processing prior authorization requests and to shorten wait times under Medicare Advantage, Medicaid and exchange plans.

What is Congress doing?

In July, the House Ways and Means Committee approved the bipartisan Improving Seniors Timely Access to Care Act of 2023, which would require Medicare Advantage insurers to process prior authorization requests electronically and in real-time. The House passed the same measure by voice vote in 2021 but the Senate did not act before 117th Congress adjourned, so lawmakers had to restart the process during the current congressional session..

Reps. Dr. Michael Burgess (R-Texas) and Vicente Gonzalez (D-Texas) introduced the Getting Over Lengthy Delays in Care as Required by Doctors (GOLD CARD) Act of 2023, which would exempt physicians from Medicare Advantage prior authorization requirements if insurers had approved at least 90% of their requests from the previous year. The legislation is modeled after a Texas law that took effect last year.

The Senate Homeland Security and Governmental Affairs Committee's investigative subcommittee wrote Aetna parent company CVS Health, Humana and UnitedHealth Group seeking internal documents about how they handle prior authorization requests and how they use artificial intelligence.

What are states doing?

States have used their authority over individual and small-group insurance to impose changes to prior authorizations. The "gold card" is the most common action, starting in West Virginia four years ago and followed by Louisiana, Michigan and Texas. More than two dozen state legislatures are considering measures to rein in prior authorizations, according to the AMA, which has created model legislation for state lawmakers to follow.

Insurers dispute the effectiveness of gold card programs: Just 46% of companies AHIP surveyed reported that these initiatives reduce administrative burden and improve provider satisfaction, and 20% said they result in higher costs and poorer quality.