Prior auth is a self-inflicted wound; is there a way out?

A self-inflicted wound

In oncology, most medications and imaging are subject to prior authorization, particularly higher-cost items, and dealing with prior authorization typically requires an army of staff. As enrollment in commercial health plans or Medicare Advantage skyrockets, prior authorization will only become more prevalent in oncology.

Why is this happening?

The lazy answer to this question is because health insurance companies put profits over patients.

However, prior authorization is a symptom, not a disease. And that symptom is exploding cancer care costs. The causes of high costs are varied: Pharmaceutical companies and device manufacturers set ungodly prices for drugs; oncologists and other specialists are often reimbursed for volume of care, not quality; and hospitals and health systems charge incredible amounts for routine labs and imaging, amounts that are orders of magnitude higher than what these services actually cost.

There is no easy solution to fix the drivers of such costs. One approach to rein in drug costs would be to allow Medicare to negotiate drug prices and set site-neutral pricing.

Another would be to incentivize doctors or health systems to reduce the use of high-cost services. But physicians are often unaware of the costs of a given treatment to a system or patient, and practices reimbursed by volume of care typically have little incentive to curb overall spending.

We are then left with payers, the primary means of reimbursing care and, specifically, utilization management, such as prior authorization and restrictive formularies, as the major mechanism to reduce this spending.
 

Prior authorization is broken

Here’s the rub though: Although payers are incentivized to curb costs through prior authorization, the data that they have to adjudicate therapeutic appropriateness are often terrible.

Administrative claims contain no data on biomarkers or performance status and are notoriously bad at reflecting basic information, such as a patient’s stage of cancer. For instance, the positive predictive value of claims-based algorithms to identify stage IV breast cancer is well below 50%, meaning that a claims algorithm that classifies a patient as stage IV is wrong more often than right.

If payers had better data, they could be more selective in their prior-authorization requirements. In other words, if payers could reliably identify who has metastatic breast cancer, an aromatase inhibitor, a common, well-accepted adjuvant therapy in hormone-positive, late-stage breast cancer, wouldn’t need prior authorization. What we have now is an inefficient system that sets prior authorization as a guardrail for most oncology care and then forces doctors to submit all relevant information about a patient to justify their treatment choices.

Keeping up with oncology treatment advances is also a challenge and requires tremendous expertise. Many insurers delegate their prior-authorization responsibilities to medication management companies, such as Magellan Rx or New Century Health, who maintain proprietary treatment pathways.

These companies anchor their prior authorization requirements to common guidelines. That would be fine if guideline-producing bodies like the National Comprehensive Cancer Network provided more firm recommendations on high-value treatments.

The NCCN recommendations, however, are expert-driven more than evidence or value driven. Often, therapies with less evidence make it into recommended treatment guidelines, and in some cases, the NCCN will equally recommend five options for treating a certain cancer, even when there is an obvious lower-cost option.

The effect of this, however, is that payers may then cover these five options, despite a 40-fold price difference among them, but then lean on requiring prior authorization for everything rather than being selective. Broad rather than targeted use of prior authorization alongside well-known issue like uncertain time lines, huge numbers of forms, and nonexperts doing peer to peers make for a huge mess.