It’s time to rethink prior authorization in healthcare

By Veronica Osetinsky

While drug pricing may seem like a catchy political issue in an election year, the current political gridlock removes any opportunity for true comprehensive reforms. Costs continue to rise, and patients continue to struggle to access care they can afford. 

To that point, Congress and the Biden administration, along with lawmakers in dozens of states, are reining in the use of prior authorization, a process requiring patients to obtain approval from their insurance company before receiving medical care prescribed by a healthcare provider.   

This burdensome process can complicate an already difficult medical decision and delay patients’ access to care. Unfortunately, it’s a symptom of a deeper problem in our healthcare system. With the proliferation of prior authorization, step therapy, and other insurance barriers, delays in care are all too common.  

Prior authorization is a form of utilization management health plans employ under the guise of cost control. Patients must get approval from their insurance company before they can access certain services, procedures, or medicines. In essence, insurance representatives – with perhaps no medical training or expertise – second guess a doctor’s opinion and interfere in a patient’s treatment plan. 

The use of prior authorization has exploded in recent years. According to the Kaiser Family Foundation, health plans participating in the Medicare Advantage program processed over 35 million prior authorization claims in 2021. Over two million of those claims were fully or partially denied. An overwhelming majority of appeals were later partially or fully overturned, but just 11% of denials were appealed.  

What has been billed as a “necessary cost-cutting exercise” has the opposite effect. Research has found prior authorization is associated with a 12% increase in the cost of care. Another study published in the Journal of the American Medical Association found prior authorization responsible for a 30% increase in the time it takes to receive care. Higher costs and delays in care are a burden for both patients and providers and, in some cases, can be life-threatening. 

This struggle is all too familiar for my family. My dad is a 15-year cancer survivor who relies on both regular treatments and scans to keep his cancer in check. He spends hours talking with his provider and insurance company whenever he needs to refill a prescription or receive another scan. One or both have been denied many times. Instead of focusing on healing, my parents must spend their time navigating insurance bureaucracy that often prioritizes misguided attempts at saving costs over saving lives. 

Approximately 90 bills have been introduced across 29 states to limit prior authorization. Under new federal rules finalized by the Biden administration, insurers have up to seven days to respond to a standard prior authorization request and up to 72 hours for expedited requests. Insurers must also publicly report data on the use of prior authorization and provide specific reasons for denying claims. 

These changes will make a positive difference for some consumers. The downside? They’re limited to insurers participating in a few government programs and exclude over 150 million individuals with employer-provided insurance. They also leave untouched other insurance restrictions that place costs before care, like step therapy and limits on mental health treatment. Fortunately, further disruptive changes are coming from within the industry.
 

Sidecar Health, of which I am a proud co-founder and COO, has an approach to coverage that doesn’t require prior authorization. Our health plan removes obstacles to care by offering full price transparency, so people receive the care they need when needed. We provide the means for patients to pay for care, without imposing restrictions on providers and prescription medicines or limiting access based on where someone lives or whether another provider has referred them.  

When the company first began, we were told an insurance model that didn’t rely on narrow provider networks, restrictive drug formularies, and utilization management tactics wouldn’t work. But our data and experience show that consumers want more control and flexibility, which leads to lower costs and better care. Employers enrolled in Sidecar Health are saving an average of 20% on premiums versus their traditional insurance plans. In Ohio, renewal rates saw a modest 4% increase compared to an industry average of more than 10%. 

Other disruptors in the industry include Mark Cuban’s Cost Plus Drug Company, which is cutting out middlemen in the drug supply chain who can delay or deny access to low-cost treatments, providing more than two million members with transparent prices and access to safe, affordable medicines. MDsave allows individuals to search online for a medical procedure, find local providers, and compare prices. By paying upfront and being better-informed consumers, individuals can save money and see the provider they choose at a convenient time.  

More attention from policymakers and more innovation from within the healthcare industry can help make prior authorization and other costly delays in care a thing of the past. I strongly believe there are better ways to deliver healthcare coverage.  

Veronica Osetinsky is the Chief Operating Officer & co-founder of Sidecar Health, overseeing the day-to-day operations of the company and its team. 

ABOUT SIDECAR HEALTH 

Sidecar Health is on a mission to make quality healthcare affordable and accessible to everyone in the US. We believe in a world where you have the freedom to choose any provider, and pricing is understandable and clear. So, we’ve rewired health insurance with a modern, intuitive and tech-forward approach that removes obstacles to excellent care and empowers you with the information you need to make smart decisions about your care. Sidecar Health group insurance plans deliver industry leading major medical coverage for mid-size and large employers in Ohio and Georgia. We insure members in 32 states and growing. For more information visit sidecarhealth.com.