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

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 provider specialties affected, and differences in the scope of prior authorization policies between government-administered and privately administered insurance. Objective: To measure the extent of prior authorization requirements for medical services and to describe the services and provider specialties affected by them using novel data on private insurer coverage policies. Design, Setting, and Participants: We analyzed fee-for-service Medicare claims from 2017 for beneficiaries enrolled 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 rates of these services for 14 clinical categories and 27 provider specialties. Main Outcomes and Measures: Annual count per beneficiary and associated spending for 1,151 services requiring prior authorization by the Medicare Advantage insurer; likelihood of providing one or more such service per year, by provider specialty. Results: Among 6,497,534 fee-for-service Part B beneficiaries (mean age 72.1), 41% received at least one service per year that would have been subject to prior authorization under Medicare Advantage prior authorization requirements. There were 2.2 such services per beneficiary per year (SD, 8.9; 95% CI, 2.17‒2.18), corresponding to $1,661 in spending per beneficiary per year (SD, $8,900; 95% CI, 1,654‒1,668), or 25% of total annual Part B spending. Part B drugs constituted 58% of the associated spending, mostly accounted for by hematology/oncology drugs. Radiology was the largest source of non-drug spending (16%), followed by musculoskeletal services (9%). Physician specialties varied widely in rates of services that required prior authorization, with the highest rates among radiation oncologists (97%), cardiologists (93%), and radiologists (91%), and the lowest among pathologists (2%) and psychiatrists (4%). Conclusion 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.