Payment Trends

Why Health Plans Are Easing Preauthorization

April 11, 2017 12:01 pm

BlueCross BlueShield of Western New York reduced the number of required preauthorizations to support value-based contracts that incentivize evidence-based care protocols and avoid wasteful, inappropriate care.

BlueCross BlueShield of Western New York (BCBSWNY), a health plan serving eight counties, eliminated preauthorization requirements for more than 200 services, effective Feb. 1. The services will be covered in accordance with a member’s specific benefit plan, without requiring the physician’s office to seek approval in advance.

By eliminating preauthorization for a range of services—from wheelchairs to genetic tests—the health plan seeks to ease physicians’ administrative burden, says Thomas Schenk, MD, senior vice president and chief medical officer. This is just the first small step of a big initiative.

“We are dipping a toe in the water, but my hope is that we find out that the temperature is correct and we are able to proceed from there,” he says.

The health plan rolled back the preauthorization requirement for services that, based on its internal data analysis, usually received approval. In the first round, the beneficiaries are primary care providers, home health, and durable medical equipment providers, but Schenk expects specialty care and pharmacy will also see relief in the years ahead.

The focus on preauthorization comes as BCBSWNY seeks to develop collaborative working relationships with providers and to support value-based contracts that incentivize providers to use evidence-based care protocols and avoid wasteful, inappropriate care.

“This is a start for us, but there’s a long way to go before everything is aligned correctly so that we don’t have to have these checks and balances,” Schenk says.

Physician Perspective

In a survey conducted last December, the American Medical Association found that 75 percent of responding physicians describe the burden associated with preauthorization as either high or extremely high.

The web-based survey used a sample of 1,000 practicing physicians that provide at least 20 hours of patient care per week; 40 percent were primary care physicians and 60 percent were specialists. Survey findings show why physicians consider preauthorization so burdensome:

  • On average, respondents estimated that they or their staff complete nearly 37 preauthorization requests each week for a single physician.
  • More than 16 hours are spent each week processing an individual physician’s preauthorization requests.
  • Respondents said 79 percent of requests are eventually approved; of those, 72 percent are approved on first request and 7 percent are approved on appeal.
  • Approximately 90 percent of preauthorization requests delay access to necessary care, according to respondents.
  • More than one-third of physicians have staff members who work exclusively on preauthorization requests.

Earlier this year, the American Medical Association, the American Hospital Association, the Medical Group Management Association, and 14 other organizations banded together to call for preauthorization reform.

Saying that preauthorization can pose a barrier to patient-centered care, the coalition identified 21 principles that should be used to improve preauthorization programs. The principles are grouped into five categories:

  • Clinical validity
  • Continuity of care
  • Transparency and fairness
  • Timely access and administrative efficiency
  • Alternatives and exemptions

Health Plan Perspective

When Schenk was a practicing pediatrician, he saw preauthorization policies as an administrative barrier designed to slow down care. However, when he joined BCBSWNY as chief medical officer three years ago, his perspective changed.

“I think preauthorization is largely a quality process,” he says. “As new technology, new procedures, and new medications are emerging all the time—at an even faster rate than in the past—preauthorization is used largely to look at whether something is being used correctly—for the correct patient with the correct timing—to ensure quality care for that member.” 

Of course, providers are equally concerned with quality. But, over the years, many patients and physicians have come to believe in the “more is better” approach to diagnosing and treating medical conditions, so “high quality” is sometimes associated with overuse of medical resources. The fee-for-service payment system reinforces that idea because it financially rewards providers and their organizations for the volume of services rendered.

“Historically, we, as plans, felt like we had to ensure quality because, if we weren’t there to do that, the incentive was always to do more procedures and more services because that’s what was driving revenue for hospitals and physicians,” Schenck says.

But as the pay-for-value movement takes hold, Schenk says health plans’ roles as gatekeepers need to change. He cites two reasons:

Physician satisfaction. Health plans and provider organizations need to work together to achieve the Triple Aim—better health outcomes, improved patient experience, lower costs—and both sides need to figure out how to collaborate. Like most insurers, BCBSWNY conducts annual physician satisfaction surveys, and preauthorization policies always show up as a top reason for dissatisfaction. “What we haven’t historically done is say, ‘How can we improve those survey results going forward next year?’” Schenk says. “The answer is to address some of these steps that we view as necessary, but physicians view as burdensome.”

The pay-for-value movement. Increasingly, health plans are introducing value-based contracts that financially incentivize providers to deliver care with quality and efficiency in mind.

“We have begun to see at least the initiation of a big change in the way incentives are aligned for medicine,” he says. “So that gives us the ability to say: Do we really need to put the preauthorization there?”

Barriers to Change

Although value-based contracts are expected to gain traction in the years ahead, preauthorization is not going to go away quickly or completely. Culturally, health plan leaders—those in disease management and case management, as well as the finance side of the organizations—see themselves as stewards of medical policies and preauthorization is one of their important tools.

Schenk is a champion for reducing the burden of preauthorization, but he does not suggest that BCBSWNY will eliminate it entirely, never add new preauthorization requirements in the future, or reverse the changes it made earlier this year. It will take a long time to fully understand how utilization is affected by the elimination of preauthorization. Health plan executives suspect that, merely requiring physicians to seek approval, introduces a “sentinel effect” that reduces overuse.

“For every denial that you have, you can just imagine that many requests never came to you for approval because the physician knew it was going to be denied,” Schenk says.

Will removing preauthorization for those 221 services prompt a significant increase in their utilization? BCBSWNY will monitor utilization to find out.

Meanwhile, although value-based contracts should financially incentivize providers to make high-value decisions, those contracts are still very new. It will take time for health plans to understand whether the incentives are sufficiently aligned to eliminate preauthorization as a way to control inappropriate utilization.

Approaching Health Plans

Schenk, who was managing partner for a pediatric practice before he joined BCBSWNY, encourages physicians to develop their own proposal for reducing the administrative burden associated with preauthorization and present it to their health plans.

“The pleasant surprise for me in transitioning to this role was coming to understand how open health plans are, in general, to the input of the physician community,” he says.

Approaching an insurer with a complaint but without a proposed solution is likely to be frustrating. “When the health plan is left to come up with a solution, it generally does not fit well into the workflow or processes of the provider group,” he says. “So, in our community, I have been saying to the provider groups, ‘You know the work you do and how you do it. Think about how you would solve this problem in a way that makes your life easier, bring the proposal to us, and we’ll listen to that.’”

Working Together

As health plans and providers seek to work together collaboratively, changes in preauthorization policies may be a fruitful opportunity to explore. Provider organizations may want to consider approaching health plans with their own proposal for mitigating the burden of preauthorization as part of their discussions about value-based contracts.

Lola Butcher is a freelance writer and editor based in Missouri.

Interviewed for this article:

Thomas Schenk, MD, is senior vice president and chief medical officer, BlueCross BlueShield of Western New York, Buffalo, N.Y.

Discussion Starters

Forum members: What do you think? Please share your thoughts in the comments section below.

1.      Have health plans in your market started reducing preauthorization requirements?

2.      Have you approached health plans with a proposal to reduce the preauthorization burden?


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