Study Warns Against Lifting Insurer Checks On Care

Critics Say Insurers Too Often Override Recommendations Of Medical Professionals

NOV. 7, 2023…..Beacon Hill considers all sorts of ideas to improve the Massachusetts health care universe each session and an insurers’ group is out with a new study Tuesday showing that one idea that’s been floated — reining in requirements that doctors and others obtain pre-approval from insurance companies before providing medical services or prescription medication — could add as much as $1,500 to patients’ annual premiums.

The notion of restricting “prior authorization” is the subject of a handful of bills this session, including one that has the backing of influential groups like the Massachusetts Medical Society, the Massachusetts Health & Hospital Association, and Health Care For All. But the Massachusetts Association of Health Plans said a study it commissioned shows prior authorization is an important tool for its members to use as Bay Staters already grapple with high health care costs and a strained delivery system.

“Prior authorization ensures patients are receiving care consistent with nationally and locally recognized evidence-based standards and that employer and consumer health care dollars are not spent on inappropriate, unsafe, or harmful care,” Dr. Jan Cook, medical director at MAHP, said. “The Betsy Lehman Center reports that, in a single year, medical errors accounted for $617 million in excess costs in Massachusetts. Restricting or eliminating the very tools used to guard against this will remove vital checks and balances in our healthcare system.”

The new study, which was funded by MAHP and conducted by the independent actuarial and consulting firm Milliman, found that commercial premiums could increase by between roughly $600 and $1,500 per member annually and Medicaid capitation rates could increase by between $270 and $1,100 per beneficiary annually if prior authorization (PA) were eliminated.

“Employers, who typically pay a large share of premiums under employer-sponsored health insurance programs, and some consumers in the individual market could see premium increases if the use of PA is either limited or eliminated. Likewise, commercially insured patients, who typically pay cost sharing (deductibles, copays, etc.), under their health plan, could see increases in their out-of-pocket costs as they would be paying cost sharing on, for example, potentially medically unnecessary services or on services with lower cost alternatives or more appropriate site of care,” the report said. “While cost sharing is limited in Medicaid, state Medicaid programs could see higher expenditures or capitation rates if PA criteria is limited or eliminated.”

Generally speaking, health care providers would like to eliminate or significantly curtail prior authorization because it can add to their administrative burden and is regularly cited as the primary reason for delays in care or for patients opting not to seek a certain treatment at all, which can lead to increased costs down the road.

But health plans, which say they use prior authorization as a way to ensure that services and treatments are medically-necessary, contribute to improved health outcomes and are appropriate uses of health care resources, typically worry that the elimination of prior authorization would lead to a whole lot of additional health care spending.

And MAHP’s report release Tuesday morning came with back-up from a bevy of business groups — Retailers Association of Massachusetts, Associated Industries of Massachusetts, National Federation of Independent Businesses, and the National Association of Benefits and Insurance Professionals in Massachusetts — that said eliminating prior authorization would be detrimental to their members.

“Massachusetts has among the highest health care premiums in the country – we should be finding ways to control costs instead of eroding important tools that ensure evidence-based, safe care. Even if you take the lower estimates provided by Milliman, this impact would be devastating to small businesses and their employees, who are already struggling to pay health insurance premiums,” RAM President Jon Hurst said.

AIM, an organization that holds significant sway on Beacon Hill, said that it supports “plans’ ability to retain tools such as prior authorization to regulate overall system utilization, which was recently highlighted as a major cost growth driver in the Health Policy Commission’s 2023 Cost Trends Report.”

The Milliman paper modeled only the elimination of prior authorization and its authors noted that limitations on prior authorization short of its complete elimination “could have impacts ranging from minimal to estimates closer to the costs of full elimination provided in this report.” The report noted that while “there are ongoing discussions and proposals regarding prior authorization requirements,” it did not base its research on any particular bill or proposal.

Sen. Cindy Friedman, who co-chairs the Joint Committee on Health Care Financing, filed legislation this year (S 1249 / H 1143) with Jon Santiago, a doctor and former state rep who is now the state’s secretary of veterans affairs, to curtail the use of prior authorization. The MMS, MHA and Health Care For All said they worked with Friedman and Santiago to file the bill “that significantly reforms prior authorization processes, prioritizing patient care first – ahead of paperwork and waiting for time-sensitive decisions to be made often by insurance personnel with little to no clinical knowledge.” The House version got a hearing in September before the Financial Services Committee and the Senate bill is pending before the Mental Health, Substance Use and Recovery Committee.

A March survey of physician members of the Massachusetts Medical Society found that one in every four Massachusetts physicians plan to leave medicine within the next two years, with prior authorization cited as the third most significant workplace stressor after documentation requirements not related to clinical care and the lack of support staff. And a June report from MHA estimated that there are 1,200 patients “stuck” in Massachusetts hospitals because they can’t access the next level of care — with administrative delays and prior authorization decisions serving as the most frequently-cited cause of the stalling.

“The physicians of the Massachusetts Medical Society have long recognized the impact of burdensome and convoluted prior authorization policies in delaying and denying medically necessary care for patients, increasing waste in the system, and driving members of health care teams away from clinical practice,” MMS President Dr. Barbara Spivak said. “Too often prior authorization decisions override the evidence-based recommendations of medical professionals and harm patients, while sapping time and resources and, ultimately, driving up the cost of delivering and receiving timely, quality health care.”

Despite the strong feelings about prior authorization on both sides, provider and health plan organizations alike said they are willing to work together to find a solution that might address some of the most troubling aspects of prior authorization without taking it out of the toolbox entirely.

“While prior authorization is a critical tool, MAHP and our member plans are committed to working with providers to make the process simpler,” MAHP President and CEO Lora Pellegrini said. “Working in conjunction with hospitals and physicians, we have successfully standardized prior authorization requirements across the fully insured market relating to behavioral health, prescription drugs, imaging and radiology. With the support of hospitals and physicians, we can move quickly away from antiquated technologies like fax machines towards automated processes that will provide physicians with approvals in seconds. Today, approximately 50 percent of prior authorization requests initiated by providers are not required. Automation will address these mistakes immediately.”