When health plans delay and deny, they must say why

Prior authorization is a complex and often frustrating process that physicians face on a regular basis. Of particular concern is the lack of information included in denial letters, according to an AMA Council on Medical Service report adopted at the 2024 AMA Annual Meeting in Chicago.

“One of the biggest issues with prior authorization is the opaque and extensive denial process. Not only is this a frustrating process for the patient looking to access treatment, but it is also exasperating for physicians who are attempting to support their patients,” says the report.

That is because appropriate information to understand or appeal the denial itself is not included. For example, patients and physicians may simply be informed that a medication has not been granted prior authorization. Beyond that, no justification as to why the denial took place or an alternative treatment option is provided.

“Health-insurer denials must not be a mystery to patients and physicians,” said AMA Trustee Marilyn J. Heine, MD. “Without clear information from an insurer on how a denial was determined, patients and physicians are often left to the frustrating guesswork of finding a treatment covered by a health plan, resulting in delayed and disrupted care. Transparency in coverage policies needs to be a core value, an essential principle to help patients and physicians make informed choices in a more efficient health care system.”

The AMA is fixing prior authorization by challenging insurance companies to eliminate care delays, patient harms and practice hassles.

To address confusion that can arise from prior authorization denial letters, the AMA House of Delegates adopted policy to work with payers and interested parties to ensure that prior authorization denial letters include the following:

• A detailed explanation of the denial reason.
• A copy of or publicly accessible link to any plan policy or coverage rules cited or used as part of the denial.
• What rationale or additional documentation the plan needs to approve the original prescription and alternative options to the denied medication.

Physicians lack information at the point of prescribing about what medications require prior authorization. This is where real-time benefit tools can help. These tools allow physicians to access detailed information about the coverage of a medication before the prescription is written. This can reduce the number of denial letters, increase the information accessible to physicians and allow doctors to focus on patient care instead of appeals.

Delegates also modified existing policy that calls on the AMA to:

• Continue to support efforts to implement a real-time benefit tool (RTBT) standard that meets the needs of all physicians and other prescribers, using any EHR and prescribing on behalf of any insured patient.
• Support efforts to ensure that provider-facing and patient-facing RTBT systems align.
• Advocate that all payers be required to implement and keep up to date an RTBT standard tool that integrates with all EHR vendors, and that any changes toward this integration be accomplished with minimal disruption to EHR usability and cost to physicians and hospitals.
• Advocate that RTBT systems provide a justification for why prior authorization is required and include approved and covered alternative prescription medications.
• Develop and disseminate educational materials that will empower physicians to be prepared to optimally utilize RTBT and other health information technology tools that can be used to enhance communications between physicians and pharmacists to reduce the incidence of prescription abandonment.
• Advocate that payers honor coverage information that is based on a RTBT at the time of prescribing and that prior authorization approvals should be valid for the duration of the prescribed and ordered treatment.
• Continue to advocate for the accuracy and reliability of data provided by RTBTs and for vendor neutrality to ensure that it is supportive to physician efforts.

The AMA has achieved recent wins on prior authorization and other critical areas (PDF) for physicians.

In separate action, delegates adopted policy that aims to increase legal accountability of insurers when delay or denial of prior authorization leads to patient harm. This builds on the AMA’s work to fix prior authorization, including efforts to make these pivotal changes.

Prior authorization is used by insurers and other payers as a health care utilization management tool to deny payment for covered benefits when they deem the benefit clinically unnecessary. The problem is that prior authorization requirements are rapidly increasing each year. That leads to a rise in administrative duties for physicians and their teams. It also contributes to delayed care for patients.  

And due to those prior authorization requirements, the vast majority of physicians report experiencing high administrative burdens and say prior authorizations delay access to necessary care for their patients, according to the most recent AMA prior authorization physician survey data (PDF). 

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“The data strongly suggests that insurers are denying justified health care,” says a resolution introduced by the Ohio State Medical Association. Despite the evidence of inappropriate prior authorization denials by insurers, there is “no consensus on how to hold insurers liable for denials that result in preventable injury to patients,” says the resolution.

Meanwhile, nearly 90 prior authorization reform bills have been proposed in various state legislatures, some of which draw on the AMA’s model legislation (PDF).

“Waiting on a health plan to authorize necessary medical treatment is too often a hazard to patient health,” said Dr. Heine. “To protect patient-centered care, the AMA will work to support legal consequences for insurers that harm patients by imposing obstacles and burdens that interfere with medically necessary care.”

To address this, the House of Delegates directed the AMA to advocate “increased legal accountability of insurers and other payers when delay or denial of prior authorization leads to patient harm, including but not limited to the prohibition of mandatory predispute arbitration regarding prior authorization determinations and limitation on class-action clauses in beneficiary contracts.”

The AMA Litigation Center filed an amicus brief in an ultimately unsuccessful legal effort to hold a third-party administrator accountable for its role in delaying the cancer care of a patient named Kathleen Valentini. Explore how cancer killed Valentini, but prior authorization shared the blame.

The average physician practice completes over 40 prior authorizations per physician per week, and doctors and their staff spend nearly two business days a week completing such authorizations. That’s why the AMA is challenging insurance companies to eliminate care delays, patient harms and practice hassles. Learn more about why the AMA fights to fix prior authorization.

Read about the other highlights from the 2024 AMA Annual Meeting.