An Inside Look at the Prior Authorization Process

By now most in the managed care industry have seen reports about a prior authorization (PA) request denial that reportedly took place without proper medical records review. CNN was the first to report on the case involving Aetna and Jay Ken Iinuma, MD, who served as medical director for the payer from 2012 to 2015. In a deposition that was part of a lawsuit brought by the patient whose coverage for treatment of a rare immune deficiency was denied, Dr Iinuma was asked if he ever looked at medical records. “No, I did not,” he said, adding that he relied on input from utilization management (UM) nurses.  He went on to say in the deposition that he was unclear about symptoms of the disorder, called common variable immune deficiency (CVID), or the implications of stopping treatment.

First Report Managed Care reached out to several experts to lend perspective to an issue that—at least as reported by the lay press—appears incriminating. They agreed that when taken at face value, Dr Iinuma’s testimony points to a breach of protocol, since denials must always include a review by the medical director of the relevant portion of a patient’s record. But they also agreed that the reporting on this case has been taken far out of context. Further, even if the all of the case’s facts as reported are true, the experts concurred it is an outlier that is not indicative of how the PA process typically unfolds. 

At this juncture, though, that may be beside the point, according to Melissa Andel, a health policy director at Applied Policy in Washington, DC. 

“It is now the responsibility of health plans to explain to the public why medical review is important, how coverage policies are made, and make it easy for the public to see what is required before something is covered—and why,” she said. 

Misinformed Perceptions

“The public perception of a health insurer denying care--which may in fact be unnecessary, low value, or potentially harmful—is a very strong image that may support misconceptions about the role of the insurer,” Barney Spivack, MD, the national medical director of Medicare case & condition management at OptumHealth, explained further.

At a glance, PA may seem to patients to be nothing more than a barrier to care, while providers often view it as a painful administrative burden. The Aetna case as reported in the lay press only reinforces those suspicions. 

“Viewing the ‘big, bad’ managed care organization as simply rubber-stamping denials without having any physician involved in the process is a popular but misinformed perception,” Dr Spivack said.

Ms Andel suggested taking a step back to gain perspective on why PA is necessary and beneficial. 

“First and foremost, there is an issue of safety—making sure that patients don’t receive inappropriate treatments,” she said. “PA also protects against fraud. Additionally, as treatments become more expensive, medical review is one way to balance the need for patient access with financial responsibility. A health plan may be more willing to cover an expensive new drug, for instance, if it knows that only patients who are likely to benefit will receive the treatment. Limited coverage is often better than no coverage, or premiums rising out of control.”

It is also important to keep in mind that PA is used in less than 10% of claims, noted Larry Hsu, MD, medical director for the Hawaii Medical Service Association in Honolulu. Furthermore, approval often comes without the request ever reaching the medical director’s or any other clinician’s purview. Non-clinicians are usually the first ones to look at a request, he explained. They or “any [other] member of the health plan—following procedures and policies—can approve the request.” The requests that can’t be approved by this first line of defense are the ones that require clinician involvement.

PA Best Practices

When viewing the PA process through this prism, what are the best practices to keep in mind when decisions require clinician involvement? What role do nurse recommendations play? When should specialists be brought into the loop? And how transparent do payers need to be about their processes? 

The exact process varies by organization, but the overall concepts and goals of PA should be similar. Approval or denial is guideline-driven. 

“Guidelines are developed by a highly sophisticated team of physicians, pharmacists, and other health care professionals,” offered David Marcus, director of employee benefits, National Railway Labor Conference, Washington, DC. They are the gateway to ensure medical necessity—and coverage. 

Dr Hsu pointed out that clinicians who review the PA request have fairly straightforward marching orders: Refer to the guidelines and the relevant portion of the patient’s medical record, and then decide whether to approve or send the request on to the medical director for review. “The PA process is weighted heavily to approve,” he said. 

The Aetna case has raised legitimate concerns about Dr Iinuma’s approach, but it is important to keep in mind that medical directors are not involved in all requests—even those that are passed up to clinicians. Medical directors get involved “when there is a denied request based on policy specifics or a need for physician input,” said Dr Spivack. Typically, a nurse or other clinician reviewing the request asks for clarification.  

UM Nurse Input is Important…

Daniel Sontupe, executive vice president and director of market access & payer marketing at The Bloc Value Builders in New York, likens it to an approach now common in clinical practice. 

“Treatment decisions in physician offices today are often made by non-physicians such as nurse practitioners and physician assistants. It is accepted practice,” he said. The same holds true with PA. “As long as [PA approvals] are being made by clinical professionals following clinical protocols, we need to accept that process and move forward. Not everything can be reviewed by a physician.” 

Gary Owens, MD, president of Gary Owens Associates, agrees. “UM nurses are well-trained and knowledgeable professionals who are skilled at collecting the appropriate information on a case. If, in their review, they believe the case meets criteria, they have the ability to approve the case. In the instances where UM nurses cannot approve a request, explains Mr Marcus, they typically summarize their findings and pass it on to the medical director, along with the relevant portion of the patient’s medical record. 

Although payers’ specific processes might vary to some degree once a request reaches the medical director’s purview, one thing is certain: “Only a medical director can deny a case,” said Dr Owens. He or she can request more information or have the UM nurse do so. A provider usually has 30 days to respond, after which time the medical director either adjudicates if the requested information is provided or closes it due to lack of information. 

There is only one instance where a medical director can deny a case without adequate information, explained Dr Owens. “If the requested service is not a covered benefit or has exceeded a benefit limit, then the issue is not one of medical necessity, but of contractual language enforcement. In such cases medical records are not needed to deny.”  

Physicians Must Review Records

In the Aetna case, the medical director testified that he did not look at the patient’s record, and that he relied on information supplied by UM nurses to deny the request. Our experts concur that while the latter is appropriate, it should never come at expense of the former. 

“The medical director should review the [UM nurse’s] summary and the submitted medical records and attached documentation,” said Dr Hsu. 

Added Dr Owens: “It is very appropriate for a nurse to recommend or state to the medical director that the case does not meet criteria, but the medical director must make an independent decision based on the record.” 

In response to Dr Iinuma’s testimony, Aetna clarified that he misunderstood the question about medical records to mean a review of the patient’s entire medical record. 

This raised some eyebrows among our experts, since common PA practice does not typically involve reviewing a patient’s complete record. Thus, it’s reasonable to question why Dr Iinuma would even think the questioner was asking about a comprehensive review. 

“It is not expected that the medical director would review every detail,” explained Dr Hsu. But an experienced medical director “knows what to look for.” He likened the process to what occurs in clinical practice, where a physician reviews the appropriate parts of the patient’s record before an office visit. “Likewise, medical directors need to review the pertinent and relevant information [within the record].”

Dr Iinuma subsequently provided a sworn statement stating that he “generally would have reviewed the portion of the patients’ medical record that was provided to Aetna by the patient or his providers that was relevant to my evaluation.” 

He went on to say in the statement that in this case--in which IV immunoglobulin infusion treatment was denied due to the patient’s blood work being out of date--“reviewing the submitted portions of the patient’s medical record would be pointless because the reason for the coverage decision is that the critical information was not, in fact, given to Aetna. I could not review what was not there.” 

However, this begs the question: Is it reasonable to expect that Dr Iinuma should have reviewed the patient record to confirm the absence of updated blood work and, if confirmed, requested more information, rather than denying coverage? 

When and How to Involve Specialists

Furthermore, what about getting input from specialists? Dr Iinuma’s sworn statement notes that he generally had access to specialists, but it does not specify if he called on any for this particular review. 

Dr Hsu indicated that obtaining specialty input is advisable in cases involving rare disorders such as CVID. “If the medical director is not familiar with the topic or has any questions about the request, he or she should research the issue. Reach out to a specialist, call the requesting physician to clarify, and/or send the case for a specialty review.” 

Ms Andel concurred. “It is unrealistic to expect one physician to be an expert on best practices for the treatment of every disease or condition. I would expect a health plan would consult with oncologists when establishing coverage policies for cancer treatments, and neurologists when establishing coverage policies for central nervous system disorders.” 

But she added this important caveat: “A medical policy should be written in such a manner that a clinician–even one without training in a specific specialty–could evaluate a patient’s medical record against the coverage criteria.”

Addressing the PR Backlash

As for how payers should address the public relations backlash caused by the Aetna case, our experts’ advice varied. Some said they believe that adhering to current protocols and dealing with individual offenders within an organization is appropriate. Others think more public transparency is in order. 

Dr Owens and Mr Marcus said that as long as the proper levers already in placed are pulled at the right time, more transparency is unnecessary. “The process is already highly regulated by NCQA, URAC and others,” noted Dr Owens. “Plans should and generally do audit [to ensure that] the process is being followed.  In [the Aetna] case, the medical director failed to meet the minimum standards of the job, and his egregious approach to case determination should have been discovered and corrected.   Somehow it slipped through the cracks.  But standards and appropriate processes are available.”  

“I do not see a need for payers to be more transparent,” agreed Mr Marcus. “They should communicate with their medical directors and review team to make sure that existing policies and procedures are followed.” 

Calls for Transparency

For others, however, more transparency is in order. “Some plans already do a decent job of this, but others bury the information deep on their websites or hide them behind member logins,” explained Ms Andel. “Anyone should easily be able to see what clinical requirements, if any, need to be met before something will be covered and why [such requirements are in place].”

Health plans need to explain that their process includes review of medical records,” added Dr Hsu. “Also, if the medical director is not an expert, that they do the research to understand the disease, and seek [input from] experts.” 

The bottom line, he said, is to convey that decisions are not made in a vacuum. He agreed with Ms Andel that being more forthcoming in website communication is advisable. 

Dr Spivack said it is important to convey that decisions are made based on medical evidence and standards of care. Also, “it should be clear that medical directors receive no incentive based on denials, and that their income is not based on meeting certain targets for denials.” 

Meanwhile, F. Randy Vogenberg, PhD, RPh, principal of the Institute for Integrated Healthcare in Greenville, SC, notes that the Aetna case—even if it is an outlier—“illustrates the continued lack of transparency around what really happens inside health plans. Whether PAs are really needed, impact cost trends, or improve care remains to be proven in a fully transparent way.” He said the situation is similar to questions raised about pharmacy benefits managers. 

“What is the value versus the cost of their service? Clear transparency and understandable disclosures would eliminate problems going forward,” he said.    

Mr Sontupe agrees that more transparency and patient-friendly language is in order, but he notes that patients have a responsibility, as well. He used the particulars of the Aetna case to illustrate. 

“If you need a blood test prior to a prescription, does a physician need to tell you that? Can’t a nurse handle that?  And if the patient knows the blood test is required and refuses to get one, who is really responsible for the PA rejection," Mr Sontupe concluded.