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Wednesday, January 30, 2013

What's the cost of prior authorizations for practices?

When primary care providers have to take time out of their day to issue prior authorization for their patients' tests, medications and other clinical procedures, those minutes and hours add up financially.

A pair of new studies reported in this month's Journal of the American Board of Family Medicine looked at prior authorization activity at a dozen practices in the northeastern United States for a four-week period and determined an average annual loss of between $2,162 and $3,430 per full-time equivalent employee.

The annual per-physician losses for individual practices ranged from $926 to $6,067, although researchers said clerical staff handle most of the prior authorization duties.

Those averages are far below earlier estimated losses of up to $85,000 per physician, the researchers said, but they still show that the barrage of insurer requests has a significant effect on practice finances.

The previous and new loss averages "should be viewed as bookend estimates, with the true costs lying somewhere in between (especially when accounting for opportunity and efficiency costs)," the researchers wrote.

They added that the study didn't weigh those costs against any health care savings prior authorization activity gained those health care systems.

Worries about the effect of PA activity on physicians has led the American Medical Association to call for standardization of prior authorizations.

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