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    The prior authorization predicament

    Fighting with payers over prior authorizations costs millions of hours in lost productivity, but there are ways to improve your chances of winning the battle

    Prior authorizations are not just a frustrating impediment to providing patients with quality care. To physicians, they represent hundreds of millions of hours of lost productivity and billions of dollars in revenues with little benefit
    to patients.

    Doctors face numerous frustrations in caring for patients, but few are as infuriating—or expensive—as prior authorizations. 

    Consider their impact on productivity. A 2010 American Medical Association survey found that physicians spend an average of 20 hours per week (a number that some doctors say is too low) on prior authorization activities. With approximately 835,000 physicians practicing in the nation, that represents 868.4 million hours given over annually to this administrative task—not counting the time spent by other staff members.

    As for the dollar cost, physicians spend an annual average of nearly $83,000 interacting with insurance plans, according to a 2011 study published in Health Affairs. That means the total cost to physicians for prior authorizations is around $69 billion annually.

    Holding down costs

    What are we getting for all that time and money? For the vast majority of providers, and many industry medical industry observers, the answer is “very little.” They say payers—commercial insurance companies, Medicare, Medicaid, and pharmacy benefit managers (PBMs)—use prior authorizations as a way to hold down costs, and that the short-term focus on the bottom line often results in far higher costs later on, in the form of patients requiring hospitalization and/or emergency department treatment. 


    To payers, however, prior authorizations are more about efficacy and ensuring patient safety. 

    “My goal is to act as the patient’s advocate, to get them whatever type of drug or whatever level of care they need,” says Damon Raskin, MD, an internist in Pacific Palisades, California, and medical director of a drug and alcohol rehabilitation center in nearby Malibu. “And the goal of insurance companies is to maximize profits for their shareholders. And those things are oftentimes opposed.”


    NEXT: Is the prior authorization problem getting worse?


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