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

Key Points

Question

How common and expensive are medical services that can require prior authorization?

Findings

This cross-sectional study examined medical services paid for by government-administered Medicare Part B, which lacks prior authorization requirements, for approximately 6.5 million beneficiaries; 2.2 services per beneficiary per year would have been subject to prior authorization under the coverage rules of a large Medicare Advantage insurer, and these services accounted for 25% of annual Part B spending.

Meaning

In Medicare, the scope of prior authorization policies differs considerably between government-administered insurance and privately administered insurance.

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.

Abstract

This cross-sectional study measures the extent of prior authorization requirements for medical services and describes the services and clinician specialties affected by them using novel data on private insurer coverage policies