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6 Prior-authorization Terms for Physicians to Know

authorization TermsPrior authorization is a cost-control process that health plans use to restrict patient access to medical treatments, drugs and services. Under this, it is mandatory for physicians to obtain approval from the health plan before providing the prescribed treatment, medical service or test in order to be qualified for payment. Other terms for prior authorization are pre-authorization, pre-certification –- in a healthcare or health insurance context, these terms may also refer to specific processes. “Pre-certification” is also used to signify the process whereby a hospital notifies a health insurance company of a patient’s inpatient admission. Another term for this is “pre-admission authorization.” Health insurers review the medical records of the patient for whom the treatment is requested to determine the validity of the request. Typically, they utilize the service of a medical review company to ease the review process and ensure accuracy. Insurance providers require prior authorization to determine medical necessity and also to check other aspects such as age, the availability of a generic alternative, and drug interactions.

Though practicing physicians say that prior authorization (PA) has a significant or rather negative clinical impact, and created high administrative burden, insurers laud the benefits of this process. According to them, PA ensures cost savings to consumers by preventing unnecessary procedures, and also by preventing the prescribing of expensive brand name drugs when appropriate generic alternatives are available. Moreover, a prior authorization for a new prescription can help prevent dangerous drug interactions.

Given the significance of the prior authorization process, here are some related terms that every physician should know.

  • Utilization management (UM): The National Institute of Medicine defines UM as “a set of techniques used by or on behalf of purchasers of healthcare benefits to manage healthcare costs by influencing patient care decision-making through case-by-case assessments of the appropriateness of care prior to its provision.” UM is meant to review the medical necessity, reasonableness, and appropriateness of medical services proposed or provided to patients. This process aims to improve the quality of healthcare services and patient outcomes. It comprises 3 types:
    • Prospective review: This is the prior authorization or pre-certification process conducted at the onset of a treatment or service. The review is performed before the service is provided so as to eliminate or minimize medically unnecessary services.
    • Concurrent review: This review is performed in the course of treatment or episode of care. The review may be carried out at different intervals and may cover case management activities such as coordination of care, care transitioning, and discharge planning.
    • Retrospective review: This is conducted after the service has been provided. It evaluates the aptness of the procedure, setting and timing in keeping with specified criteria.
  • Step therapy: Also called fail-first requirement, this policy requires that patients first try and fail lower-cost drugs, tests, or other treatments before moving on to more expensive options.
  • Medical necessity: Insurers may have their own definition of medical necessity and this may prove challenging to physicians. Any prescribed treatment, service, or medication should be medically necessary for the patient’s improvement. According to the AMA, medically appropriate treatment should be based on clinical guidelines formulated by the appropriate national medical specialty society and be consistent irrespective of the patient’s insurer. There should be a standard definition for medical necessity so that all payers in a state would be following the same rules and everyone is clear on what those rules are.
  • ePA or standard pharmacy electronic prior authorization: This automates PA by integrating the process with the physician’s electronic prescribing workflow. This will make the prior authorization process faster, more efficient, and consistent across insurers. While the standard ePA process integrated into the EHR ensures streamlined performance, electronic PA options offered by health plans are often cumbersome. These may require disruption in the workflow to exit the EHR, log into the insurer’s unique website, and re-enter patient and clinical data into the system.
  • Insurance peer review or peer-to-peer review: Here an ordering physician discusses the need for a drug or procedure with another physician who works for the insurer, to obtain a PA approval or appeal a PA that was previously denied. The process would be helpful if properly carried out, since the physician gets the opportunity to speak with another clinician. The AMA recommends that peer-to-peer review should be available at any point after an adverse PA decision. The peer to whom the physician speaks must be a doctor practicing in the same specialty and subspecialty as the ordering physician.
  • Gold carding:In this process, an insurer eliminates or relaxes prior authorization requirements for physicians who consistently order or prescribe treatments and drugs based on evidence-based guidelines, or have high approval rates from PA requirements. A physician whose PA requests are approved at a 90% rate will find it easy to receive the “gold card” from insurers – in other words, such a physician’s patients would get quick access to the care they need and towards which they have been paying their premiums. However, such programs are not prevailing in healthcare today.

A medical peer review company assisting lawyers and health insurers would be aware of a consensus statement that was released last year by the AMA and national associations representing both insurers and providers. This statement encourages programs such as gold carding to lower the overall number of PAs by applying these requirements selectively.

 

     

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