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Study Quantifies High Costs of Prior Authorizations to a Single Dermatology Practice


March 31, 2021

Prior authorizations are costly to dermatology practices, with one institution dedicating 170 staff hours to prior authorizations, amounting to $5822.98 in costs, over a 30-day period. Researchers published their findings in JAMA Dermatology.  

“Based on the estimated 6000 visits per year for US dermatologists, a single dermatologist may receive approximately 420 prior authorization requests annually,” researchers wrote. “Costs likely vary substantially between institutions and practices, but our data suggest that even with an efficient, dedicated prior authorization group, costs are high.” 

The cross-sectional study focused on the University of Utah Department of Dermatology, which spans 11 clinical sites and includes two full-time and 8 part-time prior authorization staff. Staff itemized all prior authorization encounters in September 2016, allowing researchers to quantify the administrative and cost burden of prior authorizations. 

From a total 9512 patient encounters that month, 626 prior authorizations were generated, according to the study. In all, 169.7 hours were spent on prior authorizations, with a median cost of $6.72 per prior authorization.  

Prior authorizations for biologic medications were significantly more costly, garnering a median $15.80 each. The most expensive and time-consuming prior authorization over the study period, which was for the biologic omalizumab, took 148 minutes and had an administrative cost $79.92—106% of the Medicare reimbursement rate for the associated clinical visit. 

Prior authorizations were approved for 99.6% of procedures, 78.9% of biologics, and 58.2% of other medications, researchers reported. Some 21.7% of previously denied prior authorizations were approved upon appeal. 

“Our data should alert many stakeholders to the costly, time-consuming, and nonreimbursable nature of prior authorizations to dermatology practices,” researchers wrote. “In the short term, we need to encourage payers to simplify prior authorizations and reduce prior authorization burden, perhaps first by eliminating unnecessary prior authorizations and appeals.” 

Jolynn Tumolo

Reference:

Carlisle RP, Flint ND, Hopkins ZH, Eliason MJ, Duffin KC, Secrest AM. Administrative Burden and Costs of Prior Authorizations in a Dermatology Department [published online ahead of print, 2020 Aug 26]. JAMA Dermatol. 2020;156(10):1-5. doi:10.1001/jamadermatol.2020.1852

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