Commercial health plans use practices that delay patient care and increase administrative costs, a recent Report Charged by the American Hospital Association.
The report lists several practices it says burden providers and compromise patient care. This includes prior authorization, the process of determining whether a payer will cover services; failure-first policies, in which patients try and fail certain treatments before insurance companies authorize more expensive treatments; white bagging, which prohibits providers from using their own drug stocks; and several others.
“Some commercial health insurers have implemented policies that add billions of dollars in unnecessary administrative costs to the health care system while compromising patient care,” the AHA said. “Commercial health plan abuse must be addressed to protect patients’ health and ensure critical decisions in patient care are made by medical professionals, not the insurance industry.”
Kristine Grow, senior vice president of communications for U.S. health insurance plans, counters that some of these practices are necessary to reduce patient costs. But the two topics that Grow’s report specifically disapproved of were prior authorization and white bagging, also known as specialty pharmacies.
Both organizations are advocacy groups, one for hospitals and one for health insurers.
prior authorization
The AHA claims that the use of prior authorization by health plans often creates dangerous delays in care, exhausts clinicians and increases administrative costs.
The report cites the 2021 American Medical Association polls A survey of more than 1,000 physicians found that 88% described the burden associated with prior authorization as high or extremely high, and physicians spent approximately two days per week completing prior authorization.
The survey found that 93 percent of physicians reported delays in care related to prior authorization, and 82 percent said the process resulted in patients abandoning treatment.
“Increased administrative burden creates unnecessary patient frustration and distress,” the AHA said in the report. “Patients are left in a state of uncertainty about their prospective care plans and face inconvenience as their physicians navigate complex prior authorization procedures. Necessary care is delayed.”
Grow said prior authorization exists to reduce costs for patients and consumers, while also preventing wasted money. She cited the 2019 JAMA study The study found that the estimated cost of waste in the U.S. health care system is between $760 billion and $935 billion, or about 25 percent of total health care spending. Potential savings through interventions such as prior authorization ranged from $191 billion to $286 billion, the report said.
In some cases, she claims, it can promote patient safety. For example, it can determine if a drug prescribed contradicts another drug prescribed by another doctor, she said.
“We need to focus on how to prevent waste?” Grow said. “How do we ensure patients receive the most effective and proven evidence-based care? How do we ensure that the care they receive is safe?”
That doesn’t mean the process doesn’t need to improve, Grow added. Providers and insurers need to work together to make prior authorization more efficient, and one way to do that is through an electronic process, she said.
2020 initiative AHIP, called the Rapid Prior Authorization Technology Highway, found that 71 percent of providers using electronic prior authorization for most or all patients reported that patients received care faster than those without electronic. The median time between submitting a request and receiving a health plan decision was more than three times faster than without electronic prior authorization, from 18.7 hours to 5.7 hours.
white bag
Insurers’ use of white bagging or specialty pharmacies compromises safety and delays care, the AHA reports. This practice requires in-network facilities and providers to acquire and administer specialty medications from specialty pharmacies affiliated with insurance companies.
“This practice effectively prohibits suppliers from using their own drug stocks to supply drugs used to treat patients in their facilities and prohibits them from overseeing procurement, storage and handling, which has important implications for safety and efficacy, ” AHA said.
This practice is often used for infusion or injection medications that need to be administered by a clinician in a hospital or clinic, and that require a third-party pharmacy to deliver the medication.
“White bagging compromises patient safety, adds enormous complexity to the healthcare system, and places a huge administrative burden on providers trying to administer these policies on behalf of patients,” the report said.
The AHA said white bagging poses several safety concerns, including delays in care when medications are not delivered on time, and preventing providers from verifying that a particular medication was properly administered when it was delivered. These drugs usually have temperature and handling requirements.
Sometimes, because of these complications, providers continue to use their own drug supplies. When this happens, the insurance company typically rejects the claim and the provider doesn’t receive any payment, the AHA said.
Grow counters that when administered in a clinical setting, patients typically pay not only the clinician for administering the drug, but also the hospital’s markup for the drug. Markups are the price a hospital sells a drug versus the amount the hospital spends on the item.
She cites a recent AHIP study The cost of 10 drugs was analyzed and found that the cost per treatment of drugs used in hospitals was, on average, $7,000 higher than drugs purchased through specialty pharmacies. Medications administered at a doctor’s office cost an average of $1,400 more.
“This is a proven solution that has been shown to reduce healthcare costs,” claims Grow. “It’s a way to safely ship these drugs. These specialty pharmacies must meet the additional safety requirements for specialty drugs that FDA drug manufacturers and state and federal laws and regulations require.”
While the pandemic has forced collaboration among many organizations that have so far not had any alignment in their goals, this report demonstrates the long-standing divide between providers and payers.
Photo: Claude Nakagawa, Getty Images
