This post is the fifth in a series on the state of managed care by Kevin Thilborger. Check out the first post here.

The last few years have seen a massive expansion of the use of care avoidance and payment avoidance policies by payors – denials, appeal denials, white bagging, brown bagging, and most expansively, prior authorizations (PA). The PA process may have been designed to help the process of accessing care, but it has morphed into something much bigger.

In February 2023, researchers from the health policy think tank Kaiser Family Foundation (KFF)  estimated that there were 35 million prior authorization requests in 2021, the most recent year for which data was available. Of those 35 million requests:

• 2 million were denied
• Only 11% of the denials were appealed
• 82% of appeals resulted in an overturned denial

A rough estimate would suggest that there are as many as 1.5 million improperly denied Medicare Advantage prior authorizations in a given year.

The problem on the commercial side of insurance is even worse. And what does all this process and paperwork and waiting yield?

Nate Kaufman, my close friend and one of the smartest industry strategists I’ve ever met, has compiled very revealing data on the subject.

• 79% of physicians surveyed in 2022 said patients faced delayed access to necessary care “sometimes or often.” And more than half that number rated it “often.”
• 78% of physicians in the same survey said patients abandoned treatment recommended by their physician as a result of PA.

In our own data, one academic medical center wins 98.5% of the time upon second-level appeal!  This means that the payor is almost always wrong spending our premium or taxpayer money to employ utilization management nurses and physician to be wrong!

This is a scandal of epic proportions. Prior authorizations are the most obvious example of modern health insurance companies interfering in the doctor-patient relationship and the clinical judgement of physicians. Providers must consider how to protect patients (and their own economic stability) from the onerous and harmful prior authorization policies — we need to consider novel contract language protections and other protections for our organizations and the people we serve. And providers must take collective action to drive regulatory and legislative protections against predatory payor policies such as PA.

Unlock Health is here to help providers set managed care strategy and negotiate contracts in the complex world of payor-provider relations. Our full-service managed care consulting group helps providers set their managed care strategy, negotiate contracts, and handle all the contract modeling, analytics, and contract performance. And when negotiations are difficult or contentious, we pioneered the use of strategic marketing communication campaigns to protect providers’ brands and create pressure on payors for fair and reasonable settlements of contract negotiations. Email Kevin Thilborger, our chief managed care and revenue strategy officer, at  [email protected].

Like what you’re reading? Check out the next post in this series on the state of managed care here.