I get many calls from patients frustrated because their doctor has sent over an order for their MRI, CT, ultrasound, cardiac test, or other scan and we have to schedule it out several days to accommodate for the time it takes to obtain authorization from their insurance company. Understandably, patients want to know what “authorization” is for and why it takes so long. Hopefully this article helps patients to understand this sometimes cumbersome process.
Many health plans require a prior authorization (PA) for certain medical imaging, pharmaceuticals, surgeries or equipment. It is also a health plan cost-control process requiring providers to obtain approval before performing a service to qualify for payment. The process varies from insurers, but typically requires the ordering physician staff or healthcare facility to contact the insurer with information about the requested service and complete a series of questions online, via telephone or fax, ultimately allowing the insurer to determine the “medical necessity” of the ordered service. If the insurer deems the service or product to be medically necessary, they will provide an authorization (typically in the form of a number) that indicates the service will be covered under the terms of the patient’s health care plan.
The American Medical Association (AMA) reports that nearly 60% of physician practices wait at least one business day for authorization with 26% of them waiting about three business days for the approval/denial for the requested service. Of the 1,000 physicians surveyed, 72% of PAs are approved on the initial request and 7% of them are approved on appeal, also known as going “peer to peer.” This means that the ordering physician must personally speak to the medical director of the health plan. As you may imagine, this further delays the authorization process due to scheduling conflicts and the availability of the parties to speak with each other.
If the service is not authorized, the health plan will not have an obligation to process the claim under its terms and conditions and the cost of the service could become the responsibility of the patient. Most patients do not want to pay out of pocket for their service, so having the authorization is very important. Patients can always opt to have the service without the authorization, which can be risky if the cost of the service is not fully understood. In this case, most providers of the service will require the patient to sign a notice stating that they understand their insurance has not provided authorization for the ordered service and responsibility for full payment will become the responsibility of the patient.
Not only is this process frustrating for the patient, it can be time consuming and difficult for physician practices – significantly increasing the costs to the practice and overall operations. According to the AMA, approximately 75% of physician offices surveyed describe the burden associated with obtaining authorizations to be “high” to “extremely high” on their practice and 60% of those offices spend over 10 hours per week working through the required process.
New technology and evolving payment models may offer relief for providers and patients that are fed up with the current process. Healthcare advocacy groups have been highly vocal about the frustrations and are working toward industry-focused technology that supports more collaboration between insurers and providers, but this will take time – some say up to five more years.
My best advice to patients until this process is more advanced is to ask your doctor if the requested service requires PA and about how long that typically takes so your expectations for the required service are realistic.