Proposal to streamline prior authorization

To help combat unnecessary care (e.g. medical procedures that would not improve patient lives), insurance companies instituted the practice of prior authorization, where physicians are required to obtain authorization for certain procedures before performing them. As this practice proved effective in reducing costs, the practice became more and more widespread (across insurers and across more and more procedures). Physicians have resented this practice, as it introduces another bureaucratic step and allows insurers to affect -- and potentially disrupt -- medical treatment. Kaiser Health News reported on efforts by the Centers for Medicare & Medicaid Services (CMS) to curb this practice, including tightening requirements for insurers' responsiveness and requiring insurers to disclose more information about denials. Some states have passed or are considering relevant legislation. For example, Michigan requires insurers to report prior authorization data.

Prior authorizations pose a natural tension: on one hand, it is meant to curb the underlying cause of unnecessary medical care (which might be due to fraud), and on the other hand, it imposes an administrative cost on providers for which they are not necessarily compensated. One measure that might help the situation include publicizing prior authorization data by insurer so that patients can make more informed decisions about their insurance plan. Another measure might be to have a state-level ombudsman to adjudicate prior authorization disputes. Yet another idea might be to make the insurer (or even the medical team at the insurer) responsible for negative outcomes when procedures are declined. It is also possible that there could be a more effective technique against unnecessary care than prior authorization. For example, if insurers could effectively monitor medical care and accurately identify providers that are less effective than expected, insurers could adjust their network of providers to either drop ineffective providers or to at least steer patients away from them.