The Prior Authorization Problem

Prior Authorizations were created to control healthcare costs. The control mechanism might limit cost for a particular health care plan but have created costs for the providers, the patients and the pharmacists.

Prior authorization is a set of rules used by pharmacy benefit managers and health insurance plans to minimize medication costs. The information is not readily available to the provider at the point of care. To obtain approval the pharmacist is notified by the insurance plan after the prescription is sent to the pharmacy. The pharmacist then notifies the provider that additional information is required prior to the plan considering approving the medication. The provider must complete a form to initiate the process. Many prescriptions are not filled because of this complicated process.

Providers spend 10-20 hours each week completing prior authorization forms. Some providers hire medical assistants and nursing staff to complete the paperwork. The prior authorization paperwork does not require the provider’s expertise to complete. This is because the prior authorization forms include the specific questions required for possible approval and an electronic signature from the provider. The additional staff costs the provider or the hospital thousands to millions of dollars each year. This contributes to the overall cost of healthcare in the U.S.

In addition to cost, 10-20 hours of extra clerical paperwork contributes to provider burnout. Over 400 physicians committed suicide last year. Provider burnout costs between $125 billion and $190 billion every year in healthcare costs (May 29, 2019 forbes, burnout is now an officially diagnosable condition Karlyn Borysenko).

Though touted as a cost saving measure, prior authorizations increase the healthcare costs by billions every year.