A prior authorization requirement, also known as a pre-authorization or pre-certification, is a clause in the health insurance policy that says the patient must get permission from their health insurance company before they receive certain health care services which includes specialized laboratory testing.

The primary goal of these programs is to ensure health care providers within a particular state only use labs within a carrier’s “choice network” when ordering certain outpatient lab services for members of that network. Under these rules, the use of out-of-network labs is not permitted. While overall medical costs were rising at 4% to 5% annually, spending for outpatient clinical lab services was climbing by 8% to 10% annually. Rapid growth in the utilization and expense of molecular tests has caught the attention of the managed care companies who pay the bills.

The Physician’s Responsibility

The physician who is ordering the test is the responsible party for obtaining prior authorization through a patient’s insurance for a test. If the test is not pre-authorized, the patient can be stuck paying out of pocket for the test, which can range from hundreds to thousands of dollars. Prior authorization services are available for a variety of tests. Some of the common laboratory tests that are frequently ordered include BCR/ABL1, BRCA1, and BRCA2. The difficult aspect of this is that each payer has different requirements and processes, so it is important to become familiar with all of the plan’s guidelines. Ordering providers can complete the pre authorization process online.

Software programs that automate this pre-authorization immediately integrate the new requirements into your system. For example, Aetna uses EviCore as their administrator and United HealthCare uses Beacon. This automated process allows providers’ to receive a quick determination of the cost of the test. In addition, ProPath gives additional protection if the pre-authorization is not completed. For example, the patient’s test may not be performed and the provider’s office will be contacted to ensure they receive pre-authorization documents. This type of pre-authorization is becoming more and more prevalent to protect revenue. As of now, genetic and molecular testing are the only two that require pre-authorization.

Is Pre-authorization the Correct Solution?

Many physicians are claiming these programs ignore the negative consequences they have created for doctors and quality of care. In addition, there has not been much data released from these insurance companies to see if this is helping their goal of providing high quality healthcare at a lower cost. These programs could just create more avenues for carriers to deny claims for your services if you do not meet the requirements. In contrast, when health plans pay these bills, they do so without knowing the specific laboratory test performed and with no ability to manage clinical appropriateness. Therefore, this can be a solution and allow evidence-based policies to be produced. Until we get more data to we cannot say whether pre-authorization is making a significant impact within our healthcare sector.

A survey of payers around the country shows that they are employing a spectrum of strategies to make sure that MDxs are ordered for the right patients and that these tests actually do make a difference in patient management. Competitive pressures for health plans in the emerging health care marketplace, the concurrent advance of personalized medicine, health care consumerism, the push for provider accountability, demographic trends, the new Patient Protection and Affordable Care Act, and ever more limited resources make the status quo in healthcare increasingly unsustainable. Since scientific advancement and the importance of genetic testing is becoming more and more important to preventative and primary care it is important to implement a solution to maintaining expert health care at a low cost.