Value-Based Payment Can Reduce Need for Preauthorizations

When providers are incentivized to provide high-value care, health plans can remove some preauthorization restrictions.

In February 2017, BlueCross BlueShield of Western New York (BCBSWNY) launched an effort to reduce providers’ administrative burden by eliminating preauthorization requirements for more than 200 medical protocols.

In the second phase of the initiative, the health plan eliminated preauthorization for approximately 100 procedures that had been deemed “experimental” or “investigational” but typically were approved if a provider appealed. These are mostly surgical procedures, some diagnostic tests, and a few health-monitoring devices.

And in the third phase, which started in August 2018, preauthorization was removed for various types of durable medical equipment, prosthetics, and some more surgical procedures.

All told, the health plan has removed preauthorization restrictions on more than 500 medications, services, and procedures, says Thomas Schenk, MD, its senior vice president and chief medical officer.

He used the phased approach to see if utilization would spike when restrictions were removed. So far, it has not, prompting his confidence that the health plan is on the right track. 

The relaxed rules may have prompted some changes in utilization. For example, after prior authorization was removed for home care services following a hospitalization, the health plan saw an uptick in the use of post-discharge home care and a corresponding decrease in skilled nursing facility utilization. “We’d love as much care in homes as possible so that’s a good thing,” Schenk says.  

Another benefit to the health plan: an opportunity to refocus its internal resources to improve the care of its members. “As we are able to reduce the amount of work that goes into prior authorization internally at the plan, we can shift some of those resources to case management and disease management, which is a more positive approach to drive better care,” he says.

Preauthorization Relief in Context

Prior authorization requirements have long frustrated provider organizations; a 2016 American Medical Association survey found that 75 percent of responding physicians rated their preauthorization burden as high or extremely high.

One of BCBSWNY’s goals was to improve satisfaction among physicians in its networks, and Schenk was happy to see that, at year-end 2017, the health plan’s physician survey showed an 8 percent increase in favorability over the previous year. But he doesn’t think the changes to prior authorization, in and of themselves, explain why satisfaction scores improved.

“We did so much more hands-on communication in 2017 that we came across as a plan being much more transparent than we historically had been,” he said. “I would say that was what really was responsible for that improved satisfaction.”

The extra communication was needed because BCBSWNY launched a new payment system for its primary care providers. Through Best Practice, as the payment approach is called, providers receive a risk-adjusted monthly capitation payment for each assigned patient and fee-for-service payments for certain preventive services such as annual physicals and immunizations.

The Best Practice system incentivizes providers to be judicious in their use of therapies, procedures, and services, considering whether they are truly necessary to provide high-quality care. The payment model rewards providers for efficient management of patient care rather than a high volume of services.

That allows the health plan to relax its prior authorization requirements. “If you’re able to change the reimbursement methodology so that volume doesn’t drive revenue, you can start to remove some of the (preauthorization) burden that we historically have used to assure that our members are getting quality care and not unnecessary care,” Schenk says.

Which Services Do Not Need Preauthorization?

BCBSWNY uses three steps to identify drugs, services, and procedures that no longer need preauthorization.

Review historical patterns. Staff members review the plan’s preauthorization data to identify items that are, in a majority of cases, approved after an initial denial and appeal.

Examine what other health plans are doing. A tool available from the Blue Cross Blue Shield Association allows BCBSWNY to review medical policies at plans around the country as well as in its local region. “When you start seeing multiple insurance companies loosen their policy around a specific thing, even if new data hasn’t been published, that suggests it is trending to become standard of care,” Schenk says. “That isn’t a decider for us, but it shows where we are relative to others.”

Seek input from the health plan’s Technology Assessment Committee. That committee focuses on new therapies and technologies that do not yet have a track record but that providers want for their patients.

Looking forward, Schenk expects BCBSWNY to expand the number of items that no longer require preauthorization relief as the health plan expands its value-based payment models, but prior authorization will never go away completely. He cites the example of CAR T-cell therapy, a new type of immunotherapy for cancer that is generating a lot of excitement among providers and patients alike. It has received Food and Drug Administration approval only for patients with certain types of cancer who have already completed two other unsuccessful treatments, but clinical trials are investigating its potential for a wide range of other uses. “We are definitely going to want to make sure that our members meet the criteria for those therapies,” Schenk says.

Focusing on the Big Picture

As it moves to value-based payments for primary care providers, BCBSWNY finds it does not need some of the prior authorization requirements used in the past. The new payment system incentivizes providers to make high-value choices that optimize patient outcomes while avoiding unnecessary costs.

Lola Butcher is a freelance writer and editor based in Missouri.  

Interviewed for this article:

Thomas Schenk, MD, is senior vice president and chief medical officer, BlueCross BlueShield of Western New York, Buffalo, N.Y.