Prior authorization

Prior authorization is a process used by some health insurance companies in the United States to determine if they will cover a prescribed procedure, service, or medication. The process is intended to act as a safety and cost-saving measure, although it has received criticism from physicians for being costly and time-consuming.

Prior authorization is a check run by some insurance companies or third party payers before they will agree to cover certain prescribed medications or medical procedures. There are a number of reasons that insurance providers require prior authorization, including age, medical necessity, the availability of a generic alternative, or checking for drug interactions. A failed authorization can result in a requested service being denied, or an insurance company requiring the patient to go through a separate process known as "step therapy" or "fail first". Step therapy dictates that a patient must first see unsuccessful results from a medication or service preferred by the insurance provider, typically considered either more cost effective or safer, before the insurance company will cover a different service.

After a healthcare provider orders a healthcare service for a patient, the providers's staff will contact the patient's insurer to determine if they require a prior authorization check to be run. If so, a manual process is initiated. The process to obtain prior authorization varies from insurer to insurer, but typically involves the completion and faxing of a prior authorization form. At this point, the medical service may be approved, rejected, or additional information may be requested. If a service is rejected, the healthcare provider may file an appeal based on the provider's medical review process. In some cases, an insurer may take up to 30 days to approve a request.

Insurers have stated that the purpose of prior authorization checks is to provide cost savings to consumers by preventing unnecessary procedures as well as the prescribing of expensive brand name drugs when an appropriate generic is available. In addition, a prior authorization for a new prescription may help prevent potentially dangerous drug interactions. A 2009 report from the Medical Board of Georgia showed that as many as 800 medical services require prior authorizations. According to Medical Economics, physicians have expressed frustration with the current prior authorization process with regards to time spent interacting with insurance providers and the costs incurred based on that time. A 2009 study published in Health Affairs reported that primary care physicians spent 1.1 hours per week fulfilling prior authorizations, nursing staff spent 13.1 hours per week, and clerical staff spent 5.6 hours. A study in the Journal of the American Board of Family Medicine found that the annual cost per physician to conduct prior authorizations was between $2,161 and $3,430. The cost to health plans has been reported at between $10 and $25 per request. It is estimated that current prior authorization practices cost the US healthcare system between $23 and $31 billion annually.

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