Pre-Approval Plan Proposed for Medicare Advantage Insurers

Medicare Advantage (MA) insurers that impose prior authorization requirements on doctors in accountable care organizations (ACOs) should have to get them pre-approved by CMS, Sen. Sheldon Whitehouse (D-R.I.) said Wednesday.

"There is no logic to prior authorization," Whitehouse, chairman of the Senate Budget Committee, said at a committee hearing on alleviating administrative burdens in healthcare. "So I propose the companies in Medicare get prior authorization from CMS before they're allowed to impose prior authorization on doctors who are practicing in successful accountable care organizations" that have a proven track record of providing efficient patient care. "No prior authorization without prior authorization."

"Billing and insurance-related costs still total nearly $200 billion a year," he said. "The lack of standardization has been one major pain point. Different insurers apply different processes and rules to different providers, creating a web of confusion, driving up costs, and making doctors sometimes spend more time on administration than on providing actual care."

Whitehouse referred to a 2022 report on health worker burnout from the HHS Surgeon General, which "specifically called on insurers to -- and I'm quoting him here -- reduce requirements for prior authorizations, streamline paperwork requirements, and develop simplified common billing forms. And when the Surgeon General is focusing on administration, you know it's long past time," he said.

He noted he is developing legislation that would -- in addition to lifting prior authorization requirements from ACOs -- require CMS to identify the worst prior authorization practices and set standards for prior authorization that would apply to all MA plans.

Hearing witness David Cutler, PhD, professor of applied economics at Harvard University in Boston, agreed, urging the use of more nationwide standards for prior authorization and other healthcare transactions, similar to the way grocery stores implemented standardized UPC codes for all items, and banks standardized requirements for electronic transactions.

"In retail, with the UPC codes, the standardization was done by supermarkets," he said. "In banking, where we transfer upwards of $50 trillion a year at very low expense, the standardization was done by the Federal Reserve. [But] nobody has done it yet in healthcare ... The federal government is the only organization that will be able to do this."

The federal government should also step in to guide the use of artificial intelligence (AI) to simplify healthcare administration, he suggested. Although health insurers are already thinking about how to use AI, they're thinking about using it only internally.

"They're not thinking about the ecosystem and the providers and the payers," Cutler said. "Providers would like to use AI technology, but they don't know how. Providing guidance and leadership now could help the federal government save tremendous amounts of funds and improve the quality of healthcare at the same time."

But not everyone agreed with that approach. "EMR [electronic medical records] may allow clinicians to access their medical records remotely, but that has transformed into an environment where it's expected that physicians be constantly attached to their computer," said hearing witness Anthony DiGiorgio, DO, an assistant professor of neurological surgery at the University of California San Francisco. "This is due to CMS ... regulations like the 'appropriate use' criteria, which just add meaningless clicks to our workflow. All of this relegates the physician to an order entry clerk completing cumbersome tasks in the EMR [that] can be performed by a medical assistant."

"The answer to these burdens is not more top-down regulation," DiGiorgio said. "Ultimately, it's time to give the market a chance to drive meaningful change in healthcare delivery, allowing frontline physicians to focus on what matters most: providing quality care to patients without the suffocating weight of unnecessary administrative burdens."

Committee member Sen. Ron Johnson (R-Wisc.) concurred. "We've taken free-market competition out of healthcare," he said. "Why aren't we talking about high-deductible insurance plans that cover the catastrophic events, and then bring consumers back into the process? Isn't that the real solution?"

He said that some doctors in Wisconsin "are just dropping out of the system, not taking Medicare and Medicaid patients, and just literally charging cash ... It's $55 for a half-hour visit, and the doctors love it."

Noah Benedict, president and CEO of Rhode Island Primary Care Physicians in Cranston, discussed the results of a provider survey at his 168-physician practice. In all, "73% reported an average wait time before a prior authorization to be at least 2 days, and of the 73%, 38% of providers reported an average wait time for a prior authorization to be at least 3 to 5 days," he said.

In addition, "31% of providers report that for patients whose treatment requires prior authorization, the process often leads to patients abandoning their recommended course of treatment," he noted, while "62% of providers report that prior authorizations have a significant negative impact on those patients [requiring one], potentially leading to compromised health outcomes, and 97% of our providers describe the burden associated with prior authorizations as 'high' or 'extremely high.'"

In terms of the cost to the practice, "each provider requires 0.2 FTE [full-time equivalent] support daily, or 8 hours a week, to manage prior authorizations," he added. "That equates to over $12,000 per year per provider, and roughly $2.1 million to support the administrative lift."

He concluded that "while there isn't a single solution to address this intricate problem, one approach is to consider a greater proliferation of value-based payment models," because "value-based care correlates the amount healthcare providers earn for their services to the outcomes they deliver for their patients, as compared to fee-for-service, which rewards volume."

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