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The news Jennifer G. and her husband got from her medical team was devastating.

If you had come to us a month sooner, they said, we would have used chemotherapy to treat your cancer. But because of the delay, we have to amputate your leg, your hip, and your pelvis.

The delay they referred to wasn’t due to any negligence on the part of the 46-year-old mother or the doctor treating her. Instead, the 38-day delay was caused by her insurance company, which had denied her orthopedist’s request for an MRI of Jennifer’s hip, deeming it “not medically necessary.”

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Jennifer (not her real name) had initially sought care for pain in her leg and hip some three months before, and had completed a doctor-prescribed course of six weeks of physical therapy. But the pain continued. Her insurance company — and its utilization review contractor, the company it relied onto assess medical necessity — deemed the MRI “not medically necessary” until Jennifer had completed six weeks of physical therapy and over-the-counter painkillers.

In the process of trying to secure authorization for the MRI, the orthopedist pointed out that not only had Jennifer already completed the required course of physical therapy, but that the insurance company had even paid for it.

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The insurance company’s response to Jennifer’s doctor was “You need to appeal the denial.”

Although the doctor immediately filed an appeal, trivial demands and bureaucratic delays ate up 38 days before the insurer reversed its denial. And in those 38 days, according to both Jennifer’s treating doctors and a consulting expert witness, a fast-growing cancer had spread, making those massive amputations necessary. (I know these details because my law firm represents Jennifer’s estate in a lawsuit against the insurer and its utilization review company.)

Two years after that 38-day delay in her diagnosis and treatment, Jennifer, maimed and in pain, died.

Just months before Jennifer’s ordeal, the same utilization review company denied a New Hampshire woman an MRI. While she thankfully did not die, her delay resulted in her having to use a wheelchair for the rest of her life.

Rather than being the exception, denials and delays by insurance companies are often the norm. The American Medical Association has been surveying doctors about prior authorization reviews for several years. Their impact is not good: 83% of doctors report that prior authorization requirements harm the continuity of care and 86% report that the problem has gotten worse over the last five years.

The rationale for insurers requiring prior authorization and engaging in utilization reviews seems legitimate — at least at first glance — because there is waste and fraud in the health care system. With some $3.8 trillion dollars, almost 18% of the nation’s gross domestic product, being spent on health care each year, the temptation for wrong-doers is substantial. Insurance industry and law enforcement estimates of health care fraud range between 3% and 10% of that $3.5 trillion — at the high end, that’s about $350 billion annually.

The administrative cost of rooting out this waste and fraud is even higher than the fraud itself. The Center for American Progress estimates that billing and insurance-related costs to be $496 billion annually, and the National Academy of Medicine estimated that these costs are twice as high as they need to be. Doctors estimate that they and staff members spend two full business days a week dealing with prior authorization bureaucracy.

For insurers, the administrative hoops they demand doctors jump through make perfect sense — at least economically. Doctors report that 20% of patients always or often abandon the treatment their doctors have recommended while awaiting authorization; and another 55% sometimes do. When patients don’t get the prescribed test or treatment, that saves the insurer money.

Sometimes there is no real harm: conditions resolve themselves, pain abates, and patients recover. But all too often there are serious complications: 24% of doctors report that delays in prior authorization have led to serious adverse events for patients in their care; and fully 16% report that such delays have led to a patient’s hospitalization.

Tellingly, insurance companies have provided scant evidence that their utilization reviews and demands for prior authorization have actually helped root out fraud or waste. The industry’s trade group, brilliantly named the National Health Care Anti-Fraud Association, does a capable job of recounting the hypothetical estimates of fraud and citing appalling stories of crooked providers illegally reaping millions from scams.

Insurers’ rationale for prior authorization is simple: It bolsters the bottom line. Tellingly, it is a reversal of their longtime practice of “pay-and-chase.” Once upon a time, insurers would pay medical claims up front and then use their investigators to attempt to recover payments believed made in error or as the result of fraud. By shifting the burden to doctors and patients, payments to providers are reduced and delayed.

Yet the old pay-and-chase is precisely the procedure that should be followed — with a well-proven twist. Insurers should not have carte blanche to require prior authorization for routine procedures or medications, but they should be able to reap substantial awards when they do uncover fraud. The nearly 160-year-old False Claims Act (also known as Lincoln’s Law) assesses treble damages against fraudsters and gives incentives to whistleblowers to share in such recoveries. Significantly, this arrangement results in the federal government recovering more than $2.6 billion annually just from health care scams. Congress should extend the formula to all health care fraud, not just federally-funded procedures.

The current system of prior authorization harms too many patients, erodes the doctor-patient relationship, and uncovers too little fraud, while bolstering an insurer’s bottom line. It is time to flip the model in favor of patients such as Jennifer G.

Steve Cohen is an attorney at Pollock Cohen LLP in New York, which represents the estate of Jennifer G. in a lawsuit against her insurer and its utilization review company.

  • We pay very high taxes yet does not even have free education and free Healthcare.

    Someone I know in Germany was complaining that they pay 40% tax. Unless you have many deductions and kids, most of up will end up close to 45% if you add SSN and Medicare tax yet we get less benefits that people in Germany do.

    It is about time someone does a very details breakdown of where our taxes are going.

    It is probably about time to have a debate about spending the tax money where it should spend. By 2030, the national debt will double the GDP. By that time most of the tax money will go to paying interest on the national debt.

  • IMO it is a disgrace that the paying patient need auth. THE ILLEGAL’S GET THE AUTH AND THEY HAVE NO WAITING PERIOD AND GET WHAT THE DOCTOR ORDERED. Why is there such discrimination for the paying patients??? I think a law should be passed that the paying patient gets the auth and has no waiting period like the illegals.

  • On the good side, my wife’s individual Massachusetts Health Connector policy insurer always OK’d everything my wife’s care team had asked, and did it in minutes. By law, she has aged into Medicare, which has absolute coverage rules. Medicare just turns stuff down. Our Medicare Supplement insurer (same company that had the Health Connector policy) can’t pay for what Medicare (as primary insurer) arbitrarily denies. I’m thinking about working with a few others caught in this mess to create a company that can legally buy group insurance to bypass Medicare. What I think of the one-size-fits-all, government-monopoly Medicare for All crowd is unprintable.

  • Re Steve Cohens article: Sacramento and No Calif became the managed care Capital after PERS (second largest group health plan) attempted to contain costs in 1980! With capitation the pay and chase model is obsolete. Medical errors are a huge part of costs as it limited access. It is an imperfect system and as seen w the pandemic, not improving in coordination and providing equal access across the population. The HMO delivery is mature in Sac as is public health in Canada. We need to get real about the bio ethics and resource allocation. We won’t be going back to the major medical days of paying claims! $100 deductible then was a months housing cost and Drs decided when it was time to let go and people accepted their opinion.
    Healthcare Privatization has its costs for sure and NO INSURANCE company expected to be insuring America. We all believed a national plan was on its way.

  • I know all too well the hell patients go through while dealing with prior authorizations. I have been living with 14 extruded discs from an accident 3 years ago. The pain medication I was on was no longer working and I was living in constant level 9 pain. My doctor prescribed me a continual release pain patch and I fought with my insurer for nearly 2 months to pay for the medication they said was covered by my plan. They kept claiming my doctor didnt fill out the form correctly and instead of caIling my doctor and getting the information needed they would ignore the request. I finally gave up and had to pay for the prescription myself by putting it on my husbands credit card. Of course I can no longer work and without an income we need all the help we can get from our insurance. Insurance companies do not care about the patients they cover, they only care about getting out of paying for as much as they can. Prior authorizations need to go away, too many people are suffering for too long. Thank you for publishing this, this is an issue that needs to come center stage so we can change it.

  • State medical boards should be able to hold insurance companies accountable too. If a doctor could be sued for malpractice by not ordering an MRI, an insurance company denying care should also bear the liability for malpractice, especially if they deem it “not medically necessary” if that isn’t practicing medicine, what is?

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