Prior Authorization in Healthcare: A Primer

Guest post by Saqib Ayaz, co-founder, Workflow Management & Optimization.

Saqib Ayaz
Saqib Ayaz

Have you ever faced the dilemma when you visited a hospital or a pharmacy and have been told that the impending treatment or even the prescription will need a prior authorization?

Prior authorization has been a topic of debate in the healthcare industry for quite some time and it is important to understand the process in detail to be able to take the informed decision when required.

What is Prior Authorization in the healthcare sector?

Healthcare industry, in general, is quite complex in nature with a large number of standard rules and procedures to be followed. The concept of prior authorization or pre-authorization as it is commonly called is generally used during the payment from the insurance partner.

Prior authorization in the medical industry is an intermediary step mandated by the insurance partner that requires an approval from the insurance company in order to take a decision on whether they will/will not reimburse the cost of a certain treatment/prescription/medicine. To put in simple words, healthcare prior authorization is a health plan cost-control process that requires obtaining approval before performing a service to qualify for payment.

Important points regarding prior authorization

Prior authorization predicament

Like any other process, there are pros and cons of the prior authorization process as well. While the process brings a certain accountability and cost containment for the players; fighting over prior authorizations costs several hours in lost productivity and an incredible amount lost in revenues as well, thus putting everyone in a difficult position.

The American Medical Association (AMA) along with the other stakeholders from the healthcare industry believes that prior authorization is actually a burdensome process that hinders the productivity and also timely access to treatment. The process puts a barrier for the patients in immediate need of the medical care by delaying the start of the necessary treatment/medical assistance required by the patient that can significantly impact the health outcomes.

The Current Reality

A recent survey conducted by the American Medical Association (AMA) reveals certain shocking findings:

What are the disadvantages of the Prior Authorization process?

The Road Ahead

Considering the inefficiency of the process of prior authorization and the various hurdles the patients seeking medical care faces, the American Medical Association (AMA) along with a group of experts from other medical and healthcare organizations came together in an effort to reform the inefficient prior authorization requirements imposed on the patients during the medical tests, devices, drugs, prescription and etc.

Purpose of the AMA and other medical organization coalition

The main purpose of the coalition represented by the hospitals, patients, medical group, pharmacists and physicians, is to make the process of pre-authorization simpler, faster and smoother.

The joint forum believes that the requirement of the pre-approval by insurers in the form of pre-authorization before patients can get the prescribed drugs or treatments can not only delay or interrupt medical services, but also poses the risk of medical complications due to delays in the process.

The group is propagating an industry-wide reassessment of the prior authorization process to align with a newly created set of 21 principles. The main concepts which will form the foundation of these principles are:

Tips to make the prior authorization process more efficient

AMA in consultation with other medical fraternity experts suggested several ways to make the process of prior authorization more efficient to lessen its impact on the patient care. Some of these suggestions are discussed below:

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