Administrative Burden and Costs of Prior Authorizations in a Dermatology Department

Insurance companies use prior authorizations (PAs) to address inappropriate prescribing or unnecessary variations in care, most often for expensive medications. Prior authorizations negatively affect patient care and add costs and administrative burden to dermatology offices.

To quantify the administrative burden and costs of dermatology PAs.

The University of Utah Department of Dermatology employs 2 full-time and 8 part-time PA staff. In this cross-sectional study at a large academic department spanning 11 clinical locations, these staff itemized all PA-related encounters over a 30-day period in September 2016. Staff salary and benefits were publicly available. Data were analyzed between December 2018 and August 2019.

Proportion of visits requiring PAs, median administrative time to finalize a PA (either approval or denial after appeal), and median cost per PA type.

In September 2016, 626 PAs were generated from 9512 patient encounters. Staff spent 169.7 hours directly handling PAs, costing a median of $6.72 per PA. Biologic PAs cost a median of $15.80 each and took as long as 31 business days to complete. The costliest PA equaled 106% of the associated visit's Medicare reimbursement rate. Approval rates were 99.6% for procedures, 78.9% for biologics, and 58.2% for other medications. After appeal, 5 of 23 (21.7%) previously denied PAs were subsequently approved.

Prior authorizations are costly to dermatology practices and their value appears limited for some requests. Fewer unnecessary PAs and appeals might increase practice efficiency and improve patient outcomes.