Insurers shouldn’t make healthcare decisions: There’s a better way

All too often in America, patients discover they cannot obtain a prescribed medication or schedule a prescribed test because of two words: prior authorization. Doctors may recommend a treatment, but insurance companies often must approve the treatment in advance.

Prior authorization today is a far cry from its limited origins, when private insurers used it to scrutinize the necessity of hospital admissions. But what began in the 1960s as a relatively modest reform — for example, demonstrating why a patient must remain hospitalized — would soon take on a life of its own amid the growth of managed care and rise of preferred provider organizations.

The spread of “managed care” fueled prior authorization’s proliferation to new corners of American medicine — from prescription drugs to high-tech imaging to many surgeries and procedures. This managed care revolution produced the uniquely American experience of mostly private insurers supplanting physician judgments across a vast range of care through processes rife with red tape.

The original theory behind prior authorization was that doctors don’t always follow best practices for evidence-based, high-value care. After all, some researchers have estimated that an astonishing 25 percent of healthcare spending in the U.S. could reasonably be construed as “waste,” which includes administrative complexity and overutilization (that is, over-testing or overtreatment).

Political scientists have similarly called attention to the medical evidence problem in American healthcare delivery. This is especially salient in the fee-for-service setting, in which doctors’ compensation rises with an increase in tests and procedures.

But today, widespread and indiscriminate use of prior authorization has become a blanket barrier to care, even where there is no systemic evidence of........

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