On October 1, United Healthcare decided to eliminate prior authorization requirements for nearly 1,700 treatments. According to Mike Smith, health insurance expert and president-emeritus of The Brokerage Inc., he explains why insurers are moving away from these requirements and how this shift could impact consumers, employers and brokers.
Smith’s responses are lightly edited for clarity and brevity; the responses preserve his meaning.
Q: Why are insurers reducing prior authorization requirements now?
Mike Smith: Insurance companies have really taken a PR hit because they’re perceived as “the denial department.” Someone may be approved for three weeks at a skilled nursing facility coverage, then be told, “We’ll only approve two weeks.” Complaints to Medicare can hurt insurers’ star ratings, and lower ratings can reduce reimbursement. Kicking someone out of a skilled nursing facility is also a very emotionally charged decision.
Insurers have figured out it may not be a good idea to be so chintzy and kick people out early. They can work with people, help them get healthier and back on their feet, and support their independence. It’s better to be perceived as supporting members’ health and wellness than cutting care. That can improve satisfaction, help the company’s bottom line and encourage people to enroll.
Q: Is this happening beyond UnitedHealthcare?
Mike Smith: All the major Medicare Advantage companies have woken up to the idea that denying claims and making negative headlines isn’t good for business. Cigna, Aetna, SCAN Health Plan and other companies in California and across the country are trying to have a more positive image and look like they’re doing the right thing.
Q: How could easier access to care help insurers stand out?
Mike Smith: If you compare plans, they all have robust benefits. But if you can’t access them, you have a problem. All the major companies offer some form of dental benefit, but if you can’t find a dentist to use it, you don’t really have that benefit.
Provider networks are pulling back, and PPO plan cancellations are causing last-minute decisions and panic. This is a very personal, emotionally charged line of insurance. If people can’t access their benefits when they need them, that creates a PR problem. People talk, and negative comments about a plan can encourage others to disenroll.
Q: How are rising costs affecting employers and their health benefits?
Mike Smith: Group health insurance rates are increasing by 10 percent, 15 percent and 20 percent, continuing a trend from the last couple of years. Employers have to look at their bottom line and decide whether they can keep offering health insurance. That can make it tough to give raises.
Many employees don’t understand the cost of health insurance. When I show them it costs $1,000 or $1,200 per person per month, they start to see the benefits on paper. Some employers are dropping their health plans and going to Individual Coverage Health Reimbursement Arrangements, or ICHRA, now called “choice arrangements.” An employer can reimburse someone for part of the cost of buying their own insurance.
Q: Could fewer prior authorizations lead to higher costs?
Mike Smith: If insurers deny more claims, that can help them increase profits. But if they keep doing it, people may see them as a company not worth doing business with. If we have beautiful benefits but can’t access them, why keep paying for them?
Plans that are easier to do business with may pay out more claims, putting pressure on profits. AI may help identify more efficient treatment. If a high-value network provider has better experience in a particular area, AI could help identify that option. The goal is to provide more efficient care, keep patients healthier and avoid hospitalizations or other expensive care.
Q: What should members keep in mind?
Mike Smith: Insured people also have to take personal responsibility for their health and learn how to use their insurance. Many plans offer wellness benefits and incentives to help people get and stay healthy.
At the end of the day, it’s a partnership between the insured, the insurance company and providers. If one of those three legs doesn’t play its role, claims can remain high, leading to more prior authorization issues. People have to play a role too, whether that’s maintaining their medication or getting regular wellness checkups.
