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Administrative Burden and Costs of Prior Authorizations in a Dermatology Department

Educational Objective
To understand the friction created by prior authorization requirements
1 Credit CME
Key Points

Question  How common and costly are prior authorizations (PAs) in 1 dermatology practice?

Findings  In this cross-sectional study at a large academic department spanning 11 clinical locations in Utah, PAs were found to impose a substantial burden, with median administrative costs per PA of $6.72 overall, and $15.80 for biologics. Most PA appeals were subsequently approved.

Meaning  Reforms to the PA system might increase practice efficiencies, decrease administrative costs, and improve patient outcomes.

Abstract

Importance  Insurance companies use prior authorizations (PAs) to address inappropriate prescribing or unnecessary variations in care, most often for expensive medications. Prior authorizations negatively affect patient care and add costs and administrative burden to dermatology offices.

Objective  To quantify the administrative burden and costs of dermatology PAs.

Design, Setting, and Participants  The University of Utah Department of Dermatology employs 2 full-time and 8 part-time PA staff. In this cross-sectional study at a large academic department spanning 11 clinical locations, these staff itemized all PA-related encounters over a 30-day period in September 2016. Staff salary and benefits were publicly available. Data were analyzed between December 2018 and August 2019.

Main Outcomes and Measures  Proportion of visits requiring PAs, median administrative time to finalize a PA (either approval or denial after appeal), and median cost per PA type.

Results  In September 2016, 626 PAs were generated from 9512 patient encounters. Staff spent 169.7 hours directly handling PAs, costing a median of $6.72 per PA. Biologic PAs cost a median of $15.80 each and took as long as 31 business days to complete. The costliest PA equaled 106% of the associated visit’s Medicare reimbursement rate. Approval rates were 99.6% for procedures, 78.9% for biologics, and 58.2% for other medications. After appeal, 5 of 23 (21.7%) previously denied PAs were subsequently approved.

Conclusions and Relevance  Prior authorizations are costly to dermatology practices and their value appears limited for some requests. Fewer unnecessary PAs and appeals might increase practice efficiency and improve patient outcomes.

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CME Disclosure Statement: Unless noted, all individuals in control of content reported no relevant financial relationships. If applicable, all relevant financial relationships have been mitigated.

Article Information

Accepted for Publication: May 1, 2020.

Corresponding Author: Aaron M. Secrest, MD, PhD, Department of Dermatology, University of Utah, 30 N 1900 E, 4A330, Salt Lake City, UT 84132 (aaron.secrest@hsc.utah.edu).

Published Online: August 26, 2020. doi:10.1001/jamadermatol.2020.1852

Author Contributions: Drs Hopkins and Secrest had full access to all the study data and take responsibility for the integrity of the data and the accuracy of the data analysis.

Concept and design: Carlisle, Hopkins, Eliason, Secrest.

Acquisition, analysis, or interpretation of data: Carlisle, Flint, Duffin, Secrest.

Drafting of the manuscript: Carlisle, Flint, Hopkins, Secrest.

Critical revision of the manuscript for important intellectual content: Carlisle, Hopkins, Eliason, Duffin, Secrest.

Statistical analysis: Carlisle, Flint.Administrative, technical, or material support: Carlisle, Secrest.

Supervision: Secrest.

Conflict of Interest Disclosures: Dr Duffin reported grants and personal fees from Pfizer, personal fees from Amgen, grants and personal fees from AbbVie, personal fees from Janssen, grants and personal fees from Boehringer Ingerheim, grants and personal fees from Celgene, grants and personal fees from UCB, grants and personal fees from Eli Lilly, grants and personal fees from Novartis, grants from Regeneron, grants and personal fees from Sienna, and grants from Stiefel outside the submitted work. Dr Secrest receives support from a Dermatology Foundation Public Health Career Development Award as well as research grant support from the American Skin Association, National Eczema Association, and National Psoriasis Foundation. No other disclosures were reported.

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