Body and Soul

The Absurdly Profitable Business of Prior Authorizations

Prior authorizations are a driving force in the burnout of physicians, denial of medical care, and the profitability of health insurance and pharmacy benefit plans. By one estimate, healthcare providers spend $35 billion every year on chasing down prior authorizations so that their patients can receive the care they need – whether that is a drug, a procedure, or simply a visit with a specialist who can treat a difficult health problem.

A new commentary video produced by Alexander Stockton for the New York Times call this “an absurd process that has infiltrated American healthcare.” It may be absurd, but it is also profitable. United Healthcare, for example, brought home $22 billion in profits last year while facing lawsuits for its automated denials of healthcare.

Human Impact

Ocean McIntyre, who needed surgery for a neurological problem with her eyesight, provides insight into the human impact of this administrative burden:

“It was like the insurance company telling me that my life didn’t matter.

“I finally got the authorization to see the neuro-ophthalmologist after 12 weeks. And he said, ‘we’re going to do this surgery, but it’s only to preserve the vision you have left. If we’d seen you earlier, that would have been a different story.’ Maybe I’d be able to see now. Maybe I’d have a different life.”

Administrative Burden

It doesn’t take too much deep thought to figure out that this process does a lot to explain why America spends so much on healthcare and gets so little health in return. Healthcare providers face a difficult choice. They can employ staff to do nothing but tangle with health insurance to secure coverage for the care a patient needs. Or they can leave the patient to fight it out on their own.

Either way, the patient with less wealth and resources loses out. A recent study by Ella Salter and colleagues found that prior authorizations for diabetes medicines can serve to widen health disparities. In their study, getting a prior authorization helped the odds for a good clinical outcome. But Hispanic and Latino patients were less likely to receive them.

The difficulty in securing prior authorizations for some of these same medicines to treat obesity is even greater.

Healthcare providers are spending billions to cope with this absurdity. Patients are suffering clinical harm because of it. Health insurers are keeping the profits and bearing no responsibility for the clinical harm they cause.

This is simply not right

Click here for the video documentary by the Times, here for the study by Salter et al, and here for an analysis of excess administrative burdens in health spending. For further perspective, click here.

Body and Soul, sculpture by Duk-Kyu Ryang at the LVM Insurance building in Münster, photograph by Dietmar Rabich, licensed under CC BY-SA 4.0

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March 15, 2024