Prior Authorization Costs Radiation Oncology Clinics Over $40 Million a Year

The time required to secure prior authorization approvals for radiation therapy treatments equates to a financial impact of more than $40 million annually for academic medical centers, according to a new study presented October 25 at the American Society for Radiation Oncology (ASTRO) Annual Meeting in Chicago.

Prior authorization is a cost-control process used by health insurance companies to determine whether they will cover prescribed medical procedures or medications. Doctors typically must secure insurer approval before proceeding with their patient's recommended treatment.

"Prior authorization, while well-intentioned, has become an overwhelming burden for clinics and providers. Our study shows that there is a substantial amount of time spent to secure cancer treatment approvals from insurance companies, which translates into added costs for medical centers," said Brian S. Bingham, MD, chief radiation oncology resident at Vanderbilt University Medical Center in Nashville and lead author of the study.

Research has demonstrated that prior authorization obstacles are widespread throughout the U.S. health care system. Ninety-four percent of physicians in an American Medical Association (AMA) survey reported that the process led to patient treatment delays, and surveys from ASTRO, AMA and other groups found that requirements and delays increased over the past several years. Pre-approval requirements are particularly pervasive in radiation oncology; a May 2021 study published in JAMA Health Forum found that radiation oncologists face the highest prior authorization burden of any medical specialty.

While surveys from ASTRO and other groups estimated time spent by medical practices on prior authorization, the study from Dr. Bingham's team is the first to analyze the financial impact of this time within radiation oncology. To do so, they combined compensation data with work-hour estimates to calculate the cost of physician and staff time spent on the process. They found that compensation costs for treatment-related prior authorization totaled an estimated $40,125,848 for academic radiation oncology practices nationally.

"The sheer magnitude of the cost was surprising," said Dr. Bingham. "We expected that prior authorization was expensive, but the degree of expense was eye-opening, especially given how often we go through this time-intensive process without significant changes to what we've prescribed." A previous national survey of radiation oncologists led by ASTRO found that 86% of approval requests were ultimately approved.

"At our institution, the vast majority of the cost doesn't result in any change in the prescribed treatments, which are ultimately determined to be medically necessary. Instead, a patient's treatment risks becoming delayed and more expensive because of the process," said Dr. Bingham.

To arrive at the national estimate, the team first looked at employee time and related costs within their institution. Researchers compiled a flow chart of employees involved in a prior authorization request and how much time each person spent on different process steps, such as completing paperwork, making phone calls or participating in peer-to-peer reviews.

Seemingly simple steps like scheduling peer-to-peer reviews constituted the bulk of this time costs, said Dr. Bingham. "Anytime someone had to get on the phone, costs rose dramatically—almost a fourfold increase," he said. "It took more time to coordinate a peer-to-peer discussion than it did to have the actual peer-to-peer discussion."

Annually, their department spent nearly $500,000 in employee time to obtain prior authorization for radiation therapy treatments. The average compensation cost per request ranged from $27.51 for treatments that were initially approved (63% of all requests) to $100.55 when the insurance company required a peer-to-peer discussion (74% of initially denied requests at Vanderbilt's hospital-based clinic and 20% of those at satellite clinics).

"Clinics are forced to absorb these costs into their overhead, and that's time and money being taken away from other ways that we can help patients," said Dr. Bingham. "That made us take a step back and ask, 'what we can change?'"

At the institutional level, Dr. Bingham said practices can examine their own process maps for prior authorization management to look for potential inefficiencies and find ways to increase communication between the employees involved in securing approvals. He also encouraged support for the Improving Seniors' Timely Access to Care Act of 2021, which was introduced last week in the U.S. Senate and in May in the House.

"Something must be done to decrease this burden," he said. "Physician and staff time are finite resources, and they're being spent in ways that I don't think anyone views as beneficial to patients or productive for medical teams."

Abstract 136, American Society for Radiation Oncology (ASTRO) 2021 Annual Meeting

Time Driven Activity Based Costing as a Method for Estimating the Practice-Level and National Cost Burden of Treatment-Related Prior Authorization for Academic Radiation Oncology Practices

B. S. Bingham1, S. Chennupati2, and E. C. Osmundson1; 1Department of Radiation Oncology, Vanderbilt University Medical Center, Nashville, TN, 2Vanderbilt University School of Medicine, Nashville, TN

Purpose/Objective(s): Prior authorization (PA) imposes a significant time burden on radiation oncology practices. To date, the financial impact of this process has not been characterized. Here we use time driven activity-based costing (TDABC) to assess the time and cost burden of individual treatment-related PA events on academic radiation oncology practices. We then estimate annual costs to an academic medical center as well as academic practices nationally.

Materials/Methods: We performed internal analyses to generate TDABC process maps for treatment-related PA events at a hospital-based clinic and regional satellite clinics for an academic medical center. Using published compensation data, internal work-hour estimates, and supervisory requirements we calculated the cost of each PA event. Based upon event frequency and average personnel requirements, annual departmental PA costs were then estimated. Using response data from the 2018 American Society for Radiation Oncology (ASTRO) Prior Authorization Survey, we then estimated annual costs for all academic medical centers nationally.

Results: We successfully created TDABC process maps for all treatment-related PA events for an academic medical center. There were significant time and cost burdens for all events (range: 51-95 minutes, $28-$101), with significant increases when peer-to-peer discussion was required (range: 92-95 minutes, $75-$101). Per episode, Financial Clearance Specialist requirements were relatively fixed (range: 48-54 minutes, $21-$23) but Attending Physician requirements were variable (range: 2-28 minutes, $6-$71). Annual treatment-related PA departmental costs were estimated to be $491,989 with subsequently approved treatments accounting for the vast majority (94%; $463,027). Annual treatment-related PA costs were estimated at $40,125,848 for all academic practices nationally with subsequently approved treatments accounting for the vast majority (86%; $34,632,620). Results summarized in Table 1.

Conclusion: TDABC can be used to calculate the time and cost burden of PA events. These burdens are significant and translate into massive organizational costs on an annual basis. Our national estimates highlight the tremendous cost of PA to academic radiation oncology practices, with the majority of costs related to approved treatments.