April 16

Healthcare Prior Authorization


What is a Healthcare Prior Authorization?

To answer the question about Healthcare Prior Authorizations we must first know what that is. A Healthcare Prior Authorization is a requirement from your health insurance company that your doctor obtain approval from your plan before it will cover the costs of specific medications, medical devices or procedures. In other words, a carrier can review how necessary a medication or procedure is in their opinion.

Typical services that require prior authorizations are MRIs, CT scans, PET scans, and durable medical equipment. To get a prior authorization a provider must request it and it can take between 1-30 days for the carrier to respond. If the request is denied, the member can appeal the decision.

Who is responsible for a Prior Authorization?

Health care providers usually initiate the prior authorization request from your insurance company for you. However, it is your responsibility to make sure that you have prior authorization before receiving certain health care procedures, services and prescriptions.

When do you need a Prior Authorization?

There are many reasons as to why a medication may require Healthcare Prior Authorization. The criteria where a prescription may need authorizing is if:

The brand name of a medication is available as a generic. For example, Drug A (cheaper) and Drug B (expensive) are both able to treat your condition. If the doctor prescribes Drug B, your health plan may want to know why Drug A won’t work just as well.

prior authorization
  • An expensive drug (as with psoriasis and rheumatoid arthritis medications)
  • Medication used for cosmetic reasons (such as hair growth)
  • Higher doses of medication than normal
  • Medication that treats non-life threatening conditions
  • Medication not usually covered by the insurance company, but is deemed medically necessary by the physician (who must also inform the insurance company that no other covered medications will be effective)
  • Drugs that are intended for certain age groups or conditions only
  • Drugs that have dangerous side effects

It varies based on carrier. Some can request a prior authorization for hospitalization, skilled nursing care, diagnostic tests, or durable medical equipment. Usually it is for more expensive services. More than 80% of MA plans in the US have them built into the plan.

Although prior authorization is designed to control costs, in practice this requires a lot of administrative time, phone calls, and recurring paperwork by both pharmacies and doctors as shown by the steps involved.

What is needed to obtain a Prior Authorization?

Healthcare Prior Authorization for prescription drugs is required when your insurance company asks your physician to get specific medications approved by the insurance company. Prior authorization must be provided before the insurance company will provide full (or any) coverage for those medications

In the meantime the situation is in limbo. The member may not be able to get the care they want because of the delay. Frustrations can build and conditions can worsen for the patient.

This is one of the reasons some Medicare eligible go with original Medicare and a supplement. As a rule, original Medicare does not require prior authorizations. That means supplement plans do not either. Medicare advantage plans (run by private companies) do have prior authorization rules built in.

As a rule, original Medicare does not require prior authorizations. That means supplement plans do not either. Medicare advantage plans (run by private companies) do have prior authorization rules built in.

Most of the time getting a prior authorization is not a big deal, but it could be. Nobody likes to think they could be in need of a procedure or device that could improve their situation only to have an insurance company deny them. Just know that it could happen. Educate your consumers. When someone is turning 65 and is in their open enrollment for a supplement you should tell them about prior authorizations. You should also explain this when moving someone from a supplement to a Medicare advantage plan. Be a pro. Educate and be fair to your clients.

Why do Prior Authorizations get denied?

Insurance companies can deny a request for Healthcare Prior Authorization for reasons such as: The doctor or pharmacist didn't complete the steps necessary. Filling the wrong paperwork or missing information such as service code or date of birth. 

If the carrier feels like the test or procedure is not what is the best course of treatment or standard procedures for the condition they can deny the request. They can also deny the request if they feel it is not warranted. Carriers can also deny because there may be a less expensive way to treat the condition.

Around 66% of prescriptions that get rejected at the pharmacy require prior authorization. When a PA requirement is imposed, only 29% of patients end up with the originally prescribed product—and 40% end up abandoning therapy altogether! Not only is this negative for pharmaceutical organizations, most importantly this causes frustration to patients who don’t get the medication that could best treat their condition, or who don’t get any therapy at all.

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