Skip to main content

Financial impact of prior authorization

Apr. 12, 2022, 8:00 AM

by Leigh MacMillan

Prior authorization (PA) — health insurer approval of a medical intervention prior to treatment — is increasingly common and imposes significant time burdens on medical practices. 

Brian Bingham, MD, and colleagues used time-driven activity-based costing, published compensation data and other factors to calculate the time and financial cost of each PA event, and the annual cost, for the VUMC Department of Radiation Oncology. 

The researchers found significant time and cost burdens of PA, with individual PA events ranging from 51-95 minutes and $28-$101. They calculated annual PA costs of nearly $500,000 for the department. 

Using national survey data, they estimated that annual treatment-related PA costs for all U.S. academic radiation oncology practices were more than $40 million. Treatments that were ultimately approved accounted for 94% of the PA events at VUMC and 84% nationally. 

Reporting in JCO Oncology Practice, the authors note that PA causes increased work hours, staffing and financial burdens, with questionable value added to patient care.

Other authors of the study included Sai Chennupati and Evan Osmundson, MD, PhD. Data for the national PA cost estimates came from the 2017 American Society for Radiation Oncology (ASTRO) Workforce Survey and the 2018 ASTRO Prior Authorization Survey.

Recent Stories from VUMC News and Communications Publications

Vanderbilt Medicine
VUMC Voice