Providers are no strangers to the burden of prior authorization, a process requiring physicians to submit detailed paperwork to insurers for approval before administering treatments. Insurers claim this process helps prevent unnecessary medical interventions, saving the healthcare system from wasteful spending. However, many providers argue that prior authorization has morphed into a frustrating and often obstructive hurdle, particularly with patients under Medicare Advantage (MA) plans. This evolving battle has significant implications for providers, patients, and the future of healthcare delivery.
The Surge in Denials: An Industry Shift
In recent years, denials of prior authorization requests have seen a marked increase, especially for patients covered by Medicare Advantage. A 54-page Senate report released by the Permanent Subcommittee on Investigations pointed out an intentional strategy by insurers to deny authorizations for expensive post-acute care services, targeting services such as skilled nursing facility stays and long-term acute-care hospitals.
The numbers are staggering. For example, between 2019 and 2022, UnitedHealthcare’s denial rate for post-acute services surged from 8.7% to 22.7%. This sharp rise coincides with the company's use of nH Predict, an algorithmic tool designed to manage claims denials. While insurers may argue that the use of artificial intelligence (AI) in these decisions promotes efficiency and cost savings, many providers are raising red flags about its accuracy and fairness.
Similarly, CVS introduced its own Post-Acute Analytics tool in 2021, which sought to cut costs related to skilled nursing facilities. The results were beyond what CVS projected, with an anticipated savings of $77.3 million within the first three years, compared to an initial estimate of $10 million to $15 million. But these cost-cutting measures came at the expense of patient care, often delaying or denying necessary services.
How Insurers Benefit—But at What Cost?
The Senate report sheds light on a troubling aspect of prior authorization: insurers appear to be leveraging these denials to boost profits. For insurers, cutting down on expensive post-acute services represents an opportunity to save substantial amounts of money. However, for providers and patients, these denials can mean delayed care, longer hospital stays, or even compromised outcomes.
Humana, for example, increased its denial rate for long-term acute-care hospitals by 54% between 2020 and 2022, following training sessions focused on how to evaluate and justify prior authorization denials. These sessions allegedly equipped staff with methods to push back on providers, further exacerbating the strain on healthcare professionals attempting to secure necessary care for their patients.
The Role of AI in Prior Authorization
The rapid adoption of AI-driven tools like nH Predict and Post-Acute Analytics raises concerns about the future of prior authorization. While these technologies promise efficiency and cost savings, they also pose risks. Algorithms, by nature, rely on pre-programmed criteria that may not fully account for the complexities of individual cases. As a result, patients who need critical care could be unjustly denied services based on a computer’s judgment, not a medical professional’s expertise.
Providers have expressed frustration over the rigid reliance on AI tools in claims adjudication. The 2023 lawsuit against UnitedHealth, for example, claims the company knowingly used a flawed algorithm in its decision-making process, leading to widespread denials for medically necessary care. UnitedHealth denies the allegations, but the case highlights the growing tension between insurers, technology, and healthcare providers.
The Provider’s Dilemma: Denied Claims and Patient Appeals
For providers, the denial of prior authorization requests means navigating a cumbersome and time-consuming appeals process. Research has shown that over 80% of Medicare Advantage prior authorization denials that are appealed are ultimately overturned in the patient’s favor. This statistic underscores the high rate of erroneous denials, suggesting that many patients are initially denied access to care they are entitled to receive.
However, despite the high success rate of appeals, very few patients or providers go through the process. The appeals system is complex, lengthy, and often requires a significant amount of documentation and persistence. This further highlights the burden placed on healthcare professionals, who must balance administrative tasks with patient care. The reality is that many patients simply accept the denial and forego the necessary treatment, resulting in worse health outcomes and increased stress on providers trying to manage care.
Legislative Attention: What Lies Ahead
The growing concerns about prior authorization practices have not gone unnoticed. Legislators are increasingly calling for oversight and regulation, particularly around the use of AI in claims decisions. The Senate subcommittee has urged the Centers for Medicare & Medicaid Services (CMS) to conduct targeted audits of insurers’ prior authorization data. They also suggested expanding regulations to ensure that human decision-makers aren’t overruled by algorithms when it comes to final claims decisions.
In a 2023 Senate hearing, Sen. Richard Blumenthal, chair of the Permanent Subcommittee on Investigations, issued a warning to insurers: “If you deny lifesaving coverage to seniors, we’re watching, we will expose you, we will demand better, we will pass legislation if necessary, but action will be forthcoming.” This statement signals that the era of unchecked prior authorization denials may soon face stricter scrutiny.
What Providers Can Do
While legislative action may bring changes in the future, providers today are left with the difficult task of navigating prior authorization denials. Here are a few strategies healthcare providers can employ:
Stay Persistent with Appeals: Given the high success rate of appeals, it is essential for providers to challenge denials. Keeping detailed records and following up on denials can make a significant difference.
Educate Patients: Encourage patients to appeal denials and explain the importance of persistence in getting the care they deserve. Many patients are unaware of their rights or the likelihood of winning an appeal.
Document Thoroughly: Ensure that all documentation supporting the medical necessity of a service is submitted with the prior authorization request. This can reduce the chances of an initial denial.
Collaborate with Insurers: Building strong relationships with payer representatives can sometimes streamline the prior authorization process and facilitate better communication.
