ADVERTISEMENT
Study Estimates Treatment-Related Prior Authorization Costs for Radiation Oncology Practices Nationwide
An analysis of internal processes by physicians in a radiation oncology practice at Vanderbilt University Medical Center determined that the time and cost burdens of treatment-related prior authorizations for such practices are substantial and escalate considerably when discussion among peers is required (JCO Oncol Practice 2022; doi:10.1200/OP.21.00644). Moreover, using national data in addition to their departmental analysis, the Vanderbilt researchers further estimated that annual prior-authorization costs for radiation oncology practices based in academic medical centers throughout the United States are >$40 million.
From their analysis of departmental processes, the researchers found that all treatment-related prior authorization events were associated with considerable time and cost burdens. These burdens ranged from 51 to 95 minutes and from $28 to $100. However, discussion among peers increased the minimum time associated with burdens substantially; when such discussion was needed, the time burden ranged from 92 to 95 minutes, and the cost burden ranged from $75 to $101.
To arrive at these estimates, the researchers developed time-driven activity-based costing-based process maps for the treatment-related prior authorization events that occurred in their practice. They then used published compensation data, internal workhour estimates, and supervisory requirements to calculate the cost of each prior authorization event as well as the annual costs for all treatment-related prior authorizations in their department.
Using these methods, the researchers estimated these annual departmental costs to be nearly half a million dollars ($491,989). Moreover, they found that prior authorizations for approved treatments accounted for the bulk of these costs ($463,027, or 94%).
Next, the researchers estimated annual prior-authorization costs for academic medical centers throughout the United States and found that these costs were $40,125,848. They based this national cost estimate on data from the 2017 American Society for Radiation Oncology Workforce Survey and the 2018 American Society for Radiation Oncology Prior Authorization Survey. Prior authorizations for approved treatments accounted for $34,632,620, or 86% of these national costs.
Although the substantial time burden imposed on radiation oncology practices by prior authorization requirements has been well recognized, little was known about the related cost burden, which prompted the team to develop these cost estimates.
“These burdens are significant and translate into massive organizational costs,” wrote Brian Bingham, MD, Department of Radiation Oncology, Vanderbilt University Medical Center, Nashville, TN, and colleagues. “Our national estimates highlight the tremendous cost of [prior authorization] for academic radiation oncology practices, with the majority of costs related to approved treatments.”
From the results of their analysis, the researchers also concluded that time-driven activity-based costing can be used successfully to estimate the cost burden of prior authorization events.
