Lawmakers side with doctors as they wade gingerly into the medical area of ‘prior authorizations’

Susan Gretkowski, a lobbyist briefs employers on the impacts of health care reform Wednesday last year in Montpelier. VTD/Josh Larkin

Susan Gretkowski, a lobbyist, briefs employers on the impacts of health care reform last year in Montpelier. VTD/Josh Larkin

A debate between Vermont health insurers and physicians over the need for prior medical authorizations is picking up steam in the Statehouse.

Insurers require this extra review before they’ll authorize coverage of certain treatments or medications.

Two parallel bills in the House (link) and Senate (link) seek to make the prior authorization process more transparent. The legislation proposes measures such as requiring insurers to publicly post data and clinical criteria for such decisions; to involve at least one physician in the review process; and give the state the power to penalize insurers $500 for failing to comply with the law.

Although the current legislation is considered a consumer protection bill, there’s a strong physician desire to get rid of prior authorizations altogether.

“Speaking on behalf of my membership, we would love to see prior authorization go away,” said Paul Harrington, who directs the Vermont Medical Society and spoke to the House Health Care Committee. “I can understand why under a fee-for-service reimbursement system there are those who feel you need prior authorizations. I don’t think fee-for-service is going to go away in my lifetime.”

The state’s physician association recently polled about 90 group practices for their take on the prior authorization process. The survey found that:

• 81 percent of practices say it’s “fairly or extremely difficult to determine what requires a” prior authorization.

• 94 percent find the prior authorization process “has a very or somewhat negative effect on their ability to treat patients.”

• 56 percent refer patients to specialists to avoid the process.

• 47 percent say their offices spend more than 11 hours a week dealing with this insurance review.

While physicians want relief from this administrative burden, insurers say they want to ensure that there are proper checks on the system, since they bear the financial risk.

Leigh Tofferi, who lobbies for Blue Cross Blue Shield of Vermont, told VTDigger that the state’s largest insurance provider is aware that prior authorizations are an “imposition on physicians,” but the current fee-for-service payment system doesn’t encourage the best or most cost-effective practices.

“When you get to the point where providers are sharing risk with the insurers, then the need for insurance companies to do the prior authorizations is alleviated somewhat,” he said.

There’s also what’s called “a sentinel effect,” Tofferi added.

“If people know prior authorizations are required, that has an effect on people’s behavior and the way they think about things,” he said. “If there’s no prior authorization, and people know there’s no prior authorization, people won’t pay attention to whether there’s a better or cheaper alternative.”

Tofferi and Susan Gretkowski, who lobbies for MVP Health Care, provided several examples of when their companies require such review. Breast reconstruction or a tummy tuck, for instance, can be necessary for medical purposes. But such operations are often undergone for cosmetic reasons, which aren’t covered by the providers, they said.

MVP requires certain surgeries to be done in high-volume hospitals, and Blue Cross won’t pay for a $300,000 a year drug, which is used to treat one variation of cystic fibrosis, if the drug is being used to treat a different variant.

Rep. George Till, D-Jericho, and Allan Ramsay of the Green Mountain Care Board – both physicians – say that they understand where insurance companies are coming from, but that there’s no evidence to prove the effectiveness of prior authorizations.

“We don’t know that these add any benefit, but we don’t know that they don’t,” Till said. ““We have perverse incentives within the economics of medicine right now, and prior authorizations are a way to try to counterbalance that. So we do recognize there’s a tension here.”

Although Vermont insurance companies provided the state with claim denial rates last month , they didn’t include prior authorization denials.

Till said that removing the administrative burden of prior authorizations would keep doctors in the state and attract doctors from across the country.

To test this notion, Ramsay is proposing a pilot project that does away with the prior authorization process for a sample of physicians. It would allow the state to analyze how prior authorizations affect the quality of care and cost savings.

“I’d like the things that we spend money on in our system to be based on improving the value and the only way I can identify that is if there is evidence to support what they’re doing,” Ramsay said.

This pilot project is something Ramsay and Till would like to fold into the current consumer protection bill.

“It could morph into something more significant,” Till said.

Andrew Stein

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  • Walter Carpenter

    I agree with Dr. Ramsay and Dr. Till. As a patient under the noose of a dire medical condition, I had to deal with prior authorizations. It is like having to ask a teacher’s permission to go to the bathroom, then waiting for this teacher to make the decision. You never know which way it could go. If it is denied you and your doc have to waste valuable energy and time fighting to get this decision reversed — both of which could be better utilized for attending to care rather than chasing through buureacracies.

  • Stewart Clark

    We absolutely need to do away with “prior authorizations”. Folks worry about bureaucrats second-guessing your doctor under government health care; well the insurers certainly are doing this already.

  • Luci Stephens

    As the article above notes, there is some payer rationale for prior authorization in some circumstances. It is, however, cumbersome and can easily result in wrongfully delayed or denied treatment. A large part of the problem appears to be that the individual payers each have their own systems for prior authorization, and that many of these systems are not readily apparent or easily usable. I assume these systems are created by the insurer for their benefit, but that does not translate into effective usability. Perhaps an intermediate step would be a requirement that all prior authorization requirements be absolutely clear, uniform, transparent and easily navigable. They would all apply to the same treatments/ medications, and all would use exactly the same approval/denial criteria, content, format and process. There would be requirements for truly speedy decisions and response, physician responsibility/ accountability for all denials, and a very speedy, fully accountable appeal process. Payers (BCBS, MVP, etc) could participate in developing such a uniform, transparent, responsive system, and then be bound by it.

    If there is to be a fine for non-compliance, it needs to be meaningful and an incentive to comply. Any payer who wrongfully delays or denies a treatment through the prior authorization mechanism and then has to pay only a $500 fine will probably still be many hundreds to thousands of dollars ahead… the payers know how to assess and value the statistical odds of saving dollars now vs. a bigger payout later.

  • Craig Fuller

    Sorry folks but this bill to forces insurers to do what they already do. State regulation (Rule 9-03)already requires them to:

    • Publicly post data and clinical criteria for prior authorization decisions
    • Requires at least one physician in the review process
    • Give Dept. Financial Regulation the power to penalize carriers $500 if they don’t follow the rules.

  • Anne Donahue

    Unfortunately, no one at the hearing asked questions about the disparity in pre-authorization (access barriers) for mental health and substance abuse care. Since despite our parity laws, insurers still subcontract the management of mental health care to other companies, it is difficult to intercept the inequitable practices.
    Whatever rules are in place, when insurers can play the game differently for mental health care, parity cannot be enforced, and mental health care cannot be fully integrated with the mainstream of health care. We learned a long time ago that there is no such thing as “separate but equal,” yet we still allow this double standard.
    Blue Cross/Blue Shield has actually just created a new corporate entity to use to subcontract MH care management, and calls it a breakthrough for integrated care. Huh? If the purpose is not to discrimate, why create something that is allegedly “separate but equal”?

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