Preauthorization vs. Retroactive Audits for Patient Safety

"If you're telling the truth, hit 1; if not,
hit 2.  If you're not sure, please wait on
the line....."

If the Disease Management Care Blog accepted the common wisdom about commercial health insurance, it'd believe that the businessis is an evil empire controlled by pirates who 1) use weenie print to fool unwitting patients and 2) rely on opaque decision-making to deny coverage for life-saving treatments.

Once again, the DMCB eschews common wisdom:

The reason why insurers have used small fonts in their coverage documents has been because their state regulators likewise use small font in their rule making and require full word-for-word disclosure to the beneficiaries. Think of lawyers run amok and you'll understand the main reason for the arcane language.

The good news is that new regulations promise easy-to-understand "labeling." The DMCB thinks that's a step in the right direction, but that doesn't mean that a lack of preciseness won't lead to misinterpretation and wrong assumptions. Time will tell.

As for the opaque decision-making, check out (for example) Aetna's and Humana's open-access coverage documents. Yet, despite a high level of on-line transparency, critics may point out that commercial insurers will still require a hassle-laden preauthorization process.

That may be true, but the DMCB says who can blame them? There is literature here here and here that point out that physicians will readily resort to deception get a proposed treatment covered.

To really make the point, check out this just published Health Affairs article. Using a validated survey on a representative sample of physicians (obtained from the AMA's masterfile, which contains all practicing docs, not just AMA members), about 10% of the respondents indicated that, in the past year, they had lied to a patient. A whopping 50% admitted telling a patient that their prognosis was better than warranted.

Egads. This is not only driving medical costs, it's increasing variation and exposing patients to unnecessary and potentially dangerous treatments.

Keep in mind that the fee-for-service Medicare program does not engage in "preauthorization" that can lead to a refusal to pay for a treatment.  Rather, Medicare generally pays all claims and then relies on retroactive audits to "claw back"any improper payments.

While that has shielded the Medicare program from being lumped in with all the allegedly evil commercial insurers, the DMCB asks two rhetorical questions about the few bad apples who are hurting the profession:

Which would you rather have for you, your parent or your child: an insurer that scrutinizes a proposed treatment ahead of time and doesn't necessarily take the doc's word for it, or an insurer that lets things happen and uses hindsight after the damage is done?

And last but not least, how will the new payment mechanisms, like bundling and shared savings, reduce the likelihood of bad behavior?