Measuring the Scope of Prior Authorization Policies: Applying Private Insurer Rules to Medicare Part B

Abstract

Importance: Health insurers use prior authorization to evaluate the medical necessity of planned medical services. Data challenges have precluded measuring the frequency with which medical services can require prior authorization, the spending on these services, the types of services and clinician specialties affected, and differences in the scope of prior authorization policies between government-administered and privately administered insurance.

Objectives: To measure the extent of prior authorization requirements for medical services and to describe the services and clinician specialties affected by them using novel data on private insurer coverage policies.

Design setting and participants: Fee-for-service Medicare claims from 2017 were analyzed for beneficiaries in Medicare Part B, which lacks prior authorization. We measured the use of services that would have been subject to prior authorization according to the coverage rules of a large Medicare Advantage insurer and calculated the associated spending. We report the rates of these services for 14 clinical categories and 27 clinician specialties.

Main outcomes and measures: Annual count per beneficiary and associated spending for 1151 services requiring prior authorization by the Medicare Advantage insurer; likelihood of providing 1 or more such service per year, by clinician specialty.

Results: Of 6 497 534 beneficiaries (mean [SD] age, 72.1 [12.1] years), 41% received at least 1 service per year that would have been subject to prior authorization under Medicare Advantage prior authorization requirements. The mean (SD) number of services per beneficiary per year was 2.2 (8.9) (95% CI, 2.17-2.18), corresponding to a mean (SD) of $1661 ($8900) in spending per beneficiary per year (95% CI, $1654-$1668), or 25% of total annual Part B spending. Part B drugs constituted 58% of the associated spending, mostly accounted for by hematology or oncology drugs. Radiology was the largest source of nondrug spending (16%), followed by musculoskeletal services (9%). Physician specialties varied widely in rates of services that required prior authorization, with highest rates among radiation oncologists (97%), cardiologists (93%), and radiologists (91%) and lowest rates among pathologists (2%) and psychiatrists (4%).

Conclusions and relevance: In this cross-sectional study, a large portion of fee-for-service Medicare Part B spending would have been subject to prior authorization under private insurance coverage policies. Prior authorization requirements for Part B drugs have been an important source of difference in coverage policy between government-administered and privately administered Medicare.

Figure 1.. Annual Incidence (A) and Spending (B) for Prior Authorization Services

Prior authorization services include all services covered by fee-for-service Medicare Part B that would have been subject to prior authorization in Medicare Advantage. Count refers to the number of unique incidences of service provision. Error bars indicate 95% CIs.

Figure 2.. Shares of Incidence and Spending for Prior Authorization Services, by Service Type

Count refers to the number of unique incidences of service provision. See the eAppendix in the Supplement for all service category assignments. “Other services” consists of nondrug services contributing to less than 0.05% of prior authorization spending, including nondrug services in dermatology, gastroenterology, hematology or oncology, laboratory medicine, obstetrics or gynecology, ophthalmology, pulmonology, and urology. Error bars indicate 95% CIs. DME indicates durable medical equipment.

Figure 3.. Clinician Annual Risk of Prior Authorization, by Specialty

General practice includes clinicians in family practice, internal medicine, and hospital medicine. Error bars indicate 95% CIs.