Reforming Prior Authorization in California

How automation and other solutions could reduce delays, improve patient outcomes, and make care more affordable

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Reforming Prior Authorization - Woman's hands clenched together while waiting for medical care

 

Last year, CHCF brought together consumer advocates and experts from across California’s health care system to focus on prior authorization, a common practice by health insurers to review and approve drugs, diagnostic tests, and medical treatments before agreeing to pay for them. These practices really are quite common — according to CHCF’s most recent health policy poll, 40% of Californians needed to wait for a prior authorization in the last year. And a significant proportion of that group waited for authorization of the same treatment, procedure, or medicine more than once.  

The results of our stakeholder work were published last summer and discussed at a CHCF webinar in December. Relevant then, they are particularly timely now given the renewed national attention to the practices of health plans like UnitedHealthcare, the nation’s largest health insurance company.  

The shocking killing of Brian Thompson, the company’s CEO, on December 4, 2024, provoked a gut-wrenching national conversation about how these insurance practices are implemented and the urgent need to reform them. Public anger over how some insurers delay and deny claims reinforces numerous academic studies, independent investigations, and significant anecdotal evidence that suggest prior authorization processes are fundamentally broken for patients, providers, and plans alike.

California Perspectives on Prior Authorization

In the two sidebars that follow this article, California experts share their views on the importance of requiring advance reviews and offer an example of how current processes can harm patients.

Providers often don’t know and can’t easily find the criteria that health plans use to decide if a certain type of care should be considered medically necessary. The process to appeal denials is often inefficient and time-consuming. Repeated prior authorizations during treatment can disrupt a patient’s care, exposing them to the risks of medical harm or high out-of-pocket costs. Finally, there’s little public information about how often prior authorization processes are used or how well they work. 

Prior Authorization Must Be Fixed, Not Abandoned

So why not just do away with prior authorization for specific services or for certain providers? How about ending it entirely? Because there is equally clear evidence and broad consensus that, when done properly and judiciously, prior authorization plays crucial roles in ensuring Californians can access the right care at the right time, and in lowering the total cost of care for patients and the system as a whole.  

For example, it can help ensure that patients seek care from credentialed providers in their network, which makes patients less likely to get saddled with unexpected bills after a procedure. It can protect patients from getting care known to be ineffective or inappropriate based on clinical studies or guidelines. And it can result in switching to equally effective but lower-cost care options, such as generic drugs instead of name brands. 

So while stakeholders strive to improve prior authorization processes, they must not overcorrect, which would make health care more expensive for Californians. We can and should prioritize both goals — affordable care and better access to care.  

Possible Solutions 

What can policymakers, industry leaders, and consumer advocates do together to retain the benefits of prior authorization while improving the processes by which this important function is carried out? The patient advocates, behavioral health specialists, health care providers, health systems, and health plans convened by CHCF suggested these four concrete steps:  

  1. Lean into automation. Recent federal regulations emphasize automating many mundane administrative parts of the prior authorization process, such as confirming a patient’s health plan coverage, determining the need for prior authorization, and facilitating information exchange between providers and health plans. This can eliminate frustrating delays and inefficiency. California could go further by mandating or incentivizing automation of prior authorization processes for all payers and providers subject to state regulation.  
  2. Generate more public data. Federal regulations make Medicare, Medicaid, and ACA marketplace plans collect and publicly report items and services that require prior authorization, the percentage of authorization applications that were denied, the percentage reversed upon appeal, and other metrics. California could apply these requirements to all state-regulated plans and to provider organizations that perform prior authorizations. This transparency could lead to improvements and increased accountability.  
  3. Reduce repeat prior authorizations. Several states have addressed the frequency with which prior authorizations are required by extending the time frame during which an approval remains valid. California could develop an approach that avoids the need for repeat authorizations for chronic care or other care that is subject to well-defined clinical protocols. In addition, California could consider straightforward and broader protection for patients who change health plans during a course of treatment.  
  4. Develop transparent principles. All California health plans periodically evaluate whether to revise the list of services subject to prior authorization, but the public knows little about the rationale and motivation for these decisions. Disclosing this information could enable providers and patients to better understand the reasoning and could build public trust in the review process. 

Reforms in the Offing  

Fortunately, several federal and state reforms consistent with these priorities are underway and should bear fruit soon. Perhaps most important, the federal government is about to require Medicare and Medicaid managed care plans to move toward automation and release prior authorization metrics. Private insurers like Blue Shield of California and Humana are already voluntarily testing and piloting ways to automate their prior authorization systems.  

While promising on their own, none of these efforts is sufficient to bring the scale and speed of change that is needed by Californians. As health care leaders build these reforms, CHCF’s report can inform efforts to effectively and responsibly repair prior authorization so that it makes our health care system more affordable while ensuring fewer patients and providers experience delays in care, administrative burdens, and significant frustration. 

Prior Authorization Processes in California Can Be ‘Kafkaesque’

Health plan prior authorization processes have commonly been called burdensome, onerous, frustrating, or pointless. But Jack Resneck Jr., MD, former president of the American Medical Association and current chair of the UCSF Department of Dermatology, describes the hellish experience an insurance company put one of his patients through as “Kafkaesque.”

Resneck was treating a patient who had “severe head-to-toe eczema,” and because of that condition couldn’t sleep or work. Resneck found a targeted biologic medication that worked for the patient in a manner that was truly transformational and life changing, as he was able to sleep and return to work.

Everything was going great until, several months later, the patient was unable to get his prescription refilled at a pharmacy. Resneck diligently filled out the paperwork describing how well the patient had responded to the treatment and — as the insurance company required — faxed it over.

The prior authorization request for the prescription refill was rejected.

“I was horrified,” Resneck said. “The reason it was rejected was that the patient no longer met the severity criteria. Not enough of his body was covered, he was not missing enough sleep. He wasn’t itching enough. I was like: ‘Wait a minute. That means the drug is working!’”

It turns out the insurance company wanted to take the patient off the medication for several weeks to let his eczema flare up again.

“Just completely ridiculous,” Resneck said during an episode in the AMA Advocacy Insights Webinar Series. It took more than 20 additional telephone calls until he prevailed, and the patient’s prescription was refilled.

While the experience had a positive conclusion, Resneck noted that the time he spent battling the health plan was time he could have been spending with other patients.

— Adapted from a 2023 article by Andis Robeznieks
that was published on the AMA website

 

Prior Authorization Can Help Patients

David Joyner, the CEO of Hill Physicians Medical Group, a network of more than 6,000 primary care and specialty care physicians in Northern California, said prior authorization plays an important role in ensuring health care is safe and affordable. While doctors make appropriate referrals over 90% of the time, the complexity of the health care system can lead to mistakes or subpar recommendations, he said. This includes sending patients to a more expensive, out-of-network provider or clinic because the referring physician or their office staff don’t realize there is a cheaper, in-network option.

The prior authorization process also allows plans to catch rare but potentially dangerous referrals before a patient receives care that could potentially cause them irreversible harm, Joyner said. He recounted how one physician referred a patient to undergo two fat-removal surgeries for weight loss. However, when the network’s specialist looked over the referral, he concluded it wasn’t safe to remove so much tissue in just two phases and recommended several smaller surgeries instead.

“It’s not that often that we actually end up with a pure denial of a service,” Joyner said. “What’s much more common is we find out about something that could be redirected before the referral has been given to the patient, before it’s been scheduled, and that can result in a much, much better outcome.”

Melissa Major, CEO of Sharp Rees-Stealy Medical Group’, a health care system in San Diego, said prior authorization helps ensure patients receive services in-network, leading to more coordinated and lower-cost care. She gave the example of an elderly patient who entered an out-of-network hospital due to an emergency. Physicians at the hospital recommended he remain there in a lower-acuity unit. But when Sharp Rees-Stealy was notified of the referral, they were able to arrange a better alternative. Instead of staying at the hospital for an extended period, the patient was transferred to an in-network skilled nursing facility for a couple of days.

The medical group then connected him with their primary-care-at-home team, so he could return home and be with his family and also receive ongoing supportive services such as in-home medical tests and transportation to appointments. That reduced stress on the patient and his caregivers and likely saved them and the medical group thousands of dollars in hospital bills.

— Claudia Boyd-Barrett

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