Insurers use prior-authorization to ensure medical necessity. Medical peer review can be initiated when a prior authorization request or a claim is denied.

1. Health Insurance & Prior
authorization Requirements: Its
Impact and Recommendations
Insurers use prior-authorization to
ensure medical necessity. Medical
peer review can be initiated when a
prior authorization request or a
claim is denied.
MOS Medical Record Reviews
8596 E. 101st Street, Suite H
Tulsa, OK 74133

2. www.mosmedicalrecordreview.com 918-221-7791
Prior authorization or PA in short, is the approval patients/providers need to obtain from
health insurers for certain kinds of medications, treatment procedures, or tests. Absence
of prior authorization is one of the major reasons for insurance denial. Sometimes prior
authorization requests may be denied for not meeting medical necessity. In such cases,
the provider who made the request would be notified verbally and then sent a letter of
denial. The requesting physician has the right to a peer to peer review with one of the
insurer’s medical directors, and this must be within three business days of the receipt of
the verbal notification. If this time limit is exceeded, the requesting physician will have
to appeal the denial. When a request for certain provided service is denied also, a
medical peer review can be initiated wherein the treating physician will have a peer-
to-peer conversation with a physician at the insurance company.
Why Prior-authorization Is Necessary
Prior authorization is in fact, a necessary process to help optimize patient outcomes,
reduce costs, and also reduce waste and errors as well as unnecessary use of
medications. Health insurers utilize this process to ensure that the care provided to
patients is appropriate and medically necessary. Usually, prior authorizations are
requested for treatments that are experimental, new, expensive or complicated and
those that have unknown/uncertain outcomes. They say this process helps protect
patients and control costs. Typically, the doctor’s office or hospital where the test,
treatment, or prescription was ordered is responsible for managing the paperwork that
would give insurers the clinical information they are looking for.
Providers Say Prior-authorization Has a Negative Impact
However, physicians, patients and patient support groups have been constantly raising
their voices against the PA process. An AMA (American Medical Association) survey of
around 1,000 practicing physicians regarding the effects of PA on patient care found that
more than 9 in 10 respondents considered PA to have a significant and somewhat
negative clinical impact. 91% of the surveyed group reported significant delays while
28% reported that the delays had led to a serious adverse event such as disability,
hospitalization, and even death for one of their patients. Insurers on the other hand,
defend the practice of prior authorization. In a joint statement submitted to the
Committee on Small Business, AHIP (America’s Health Insurance Plans) and BCBSA
(Blue Cross Blue Shield Association) emphasized the important role of prior
authorizations in care management. This process enforces best practices and guidelines
for care management, and helps physicians identify and avoid care techniques that could
harm patient outcomes, as for instance, designating prescriptions that may lead to

3. www.mosmedicalrecordreview.com 918-221-7791
opioid addiction. While acknowledging the fact that there are problems with the present
prior authorization system, the AHIP and BCBSA referred to their efforts to collaborate
with other industry players to establish practical solutions. They said they would focus on
working with healthcare providers to safeguard patient data and their physical as well as
financial conditions, and streamline processes so that patients have efficient and easy
access to care.
Useful Recommendations
Given the fact that both providers and patients are often frustrated with the prior
authorization requirements, constructive steps need to be taken to ease the process and
benefit from its real value. The Academy of Managed Care Pharmacy (AMCP) makes the
following recommendations that could address the prior authorization challenge.
• Collaborate and communicate clearly with the providers all through the PA
process
• Take advantage of health information technology solutions to minimize paperwork
and waste while improving the experience of both patients and treating
physicians
• Avoid broad or rigid PA requirements for drug therapies that are commonly used
as part of emergency care
• Provide advance notice of any formulary changes to patients and providers
• Allow for timely PA approval for medically necessary exceptions and for timely
handling of appeals of denials.
The AMCP highlights nine important PA concepts that would help promote prior
authorization best practices:
• Appropriate medication use, and patient safety
• Clinical decision making
• Automated decision support
• Evidence-based review criteria
• Emergency access
• Transparency and advance notice
• Emergency access
• Provider collaboration
• Cost-effectiveness and value
• Need for timeliness and avoiding disruptions in therapy

4. www.mosmedicalrecordreview.com 918-221-7791
Meanwhile, last year 6 major industry groups including the AMA and America’s Health
Insurance Plans agreed to adopt five steps that could help improve the prior
authorization process. These are:
• Reduce the number of prior authorizations required based on the performance of
physicians
• Increase communication and thereby reduce wait time
• Review medications and procedures that require authorization and regularly
evaluate which require prior authorization
• Protect the continuity of care for patients with ongoing treatments since this
would ensure they don’t face care gaps when coverage or prior authorization
requirements change
• Expedite the adoption of electronic standards for prior authorization.
Insurance attorneys and medical records services that assist them, provider
organizations and other entities involved know that prior authorization is indeed a
valuable tool. Its use can be optimized by making the processes more transparent and
streamlined. As a medical management tool, prior authorization would help ensure
patient safety, and reduce healthcare costs as well as administrative burden. Meanwhile,
patients have the responsibility to stay vigilant regarding the prior authorization
requirements for their care.