Under pressure to squeeze out costs, some of the U.S.’s biggest health insurers are quietly erecting more hurdles for patients seeking medical care.
The companies are in many cases reaching back to the 1990s and boosting the use of techniques that antagonized patients and doctors alike.
Today’s approaches are tweaked, but may feel familiar to many: Insurers are rolling out plans with more restricted choices of doctors and hospitals, and weighing new requirements for referrals before patients can see specialists.
UnitedHealth Group Inc., Cigna Corp. and others are increasingly requiring doctors to get prior authorization before patients can get certain care such as spinal surgeries.
Earlier versions of these practices were closely identified with the managed-care era of the 90s. They later receded in many parts of the country, as employers switched away from restrictive health-maintenance organizations, and insurers backed off some limits.
Health insurers say today’s versions of 1990s strategies are very different, and use new technology to focus closely on improving care as well as reining in expenses.
UnitedHealth, for one, said it is using prior authorization “surgically” to counter “extreme variations in quality and cost.” But doctors aren’t sure how much things have changed.
“There seems to be a return we’re hearing about to some of the old practices that have been very frustrating to physicians,” said Jeremy A. Lazarus, president of the American Medical Association.
In its 2012 analysis of medical billing claims, the AMA saw a 23% increase in the share that included an insurer pre-authorization review, to 4.7%. For certain types of procedures, the percentage is far higher, according to athenahealth Inc., which provides electronic health records. Still, the company said, only 4.9% of all the prior authorization requests it processed were denied in 2011.
Erica Swegler, a family physician in Keller, Texas, said the growing number of prior authorizations she has to secure for treatments such as high-tech imaging scans “costs me a tremendous amount of time.” The approvals typically take 48 to 72 hours, and sometimes longer if she needs to have a phone conversation with an insurer, she said. “It’s a huge headache.”
Insurers are responding to pressure from employers to tamp down costs and address evidence of disparities in quality. In recent years, employers have shifted a growing share of the expense of coverage onto workers, and companies are betting employees will accept trade-offs they rejected 15 years ago in order to prevent premiums from jumping even faster.
“This is back to the future,” said Eric Grossman, a senior partner at Mercer, a consulting unit of Marsh & McLennan Cos. Employers are interested in “rigorous, aggressive medical management,” including prior authorization, as well as limited networks of health-care providers, he said.Some insurers have promised savings of 3% to 5% from narrow-network plans, he said, and reductions of more than 10% if other restrictions are added, including even fewer choices of medical providers, strong pre-authorization, and requirements for patients to get a referral to access specialty care.
Managed-care limits “did slow the growth of costs in the 1990s,” said David Cutler, a Harvard University economist. But after consumers and doctors revolted, “managed care got neutered.” According to the nonpartisan Kaiser Family Foundation, private health spending flattened in the 1990s, adjusted for inflation, and decreased in one year, 1994, before surging back toward the end of the decade. The foundation’s analysts attribute the dip largely to managed-care practices.
Some managed-care practices associated with the 1990s are becoming more prominent again, but insurers say things are different this time around.
In a move widely seen as a symbolic end of the era, UnitedHealth in 1999 said it would stop second-guessing doctors’ decisions before treatment, and adopted a “care coordination” process that wasn’t supposed to require formal preclearance.
But this spring, UnitedHealth’s insurance arm, the nation’s biggest, told employers that over the next 18 months, care coordination will generally be replaced by a new “prior authorization” process, according to company documents prepared for clients.
For certain services and tests, including joint replacements and spine surgeries, the documents said, “services determined to be not medically necessary” beforehand wouldn’t be covered.
The shift discussed in the documents is aimed at moving to a common standard, and some plans acquired after 1999 were already using forms of prior authorization, a UnitedHealth official said. Insurers also said they are working with doctor groups to smooth the process.
Other insurers are expanding prior authorization in some areas, which they say are targeted narrowly based on patterns of pricey care that doesn’t always match medical guidelines.
WellPoint Inc. is developing a program for certain cancer drugs and this fall will start one for tests that diagnose sleep-related conditions. Aetna Inc. said it generally expects to use the process “more in the future, not less.”
Cigna started requiring prior authorization for certain back surgeries last year, and is considering procedures in radiation oncology and cardiology.
“It’s very low friction, it’s clinical quality, and we lower costs,” said Alan Muney, chief medical officer at Cigna, which he said has also in the past eliminated the requirements in some areas.
Patient Care, a health-advocacy firm based in Milwaukee, has seen an uptick in patients like Sandi Kane, a community education director in Shawano, Wis., who says her doctor’s office submitted a request for a machine to help treat her sleep apnea in mid-June, and it’s been tied up in red tape since then. The administrator of her employer’s insurance wanted more documentation for why she needed the pricier model, and she still hasn’t gotten an approval, she said.
“There are just so many steps that need to be taken,” Ms. Kane said, and she feels caught in the middle between the recommendation of her doctor’s office and her plan’s rules. Alliance Benefit Group Medical Services Ltd., which administers Ms. Kane’s coverage under the Auxiant brand name, said it declined to comment on “individual plan participant matters.”
Insurers have been experimenting with smaller provider networks for years, and are now rapidly ramping up, though they continue to simultaneously sell typical broad preferred-provider organization plans. The narrower plans can have closed structures that work like the classic HMOs. But they also have “tiered” designs, with patients facing bigger out-of-pocket charges if they go to providers that aren’t in the top category, then even-larger bills if they go completely out of network.
Plans that include fewer medical providers are seen as likely to appeal to people shopping for their own budget-conscious coverage starting in 2014, since consumers may only need to lock in access to their own favored doctors or hospitals, rather than the broadest variety.
Insurers can reduce costs with narrow networks because they can exclude the priciest doctors and hospitals. Also, they can wring rate concessions from medical providers that fear losing patients.
WellPoint is “rolling out a number of narrow and tiered networks” across its markets, said Ken Goulet, executive vice president. These networks involve around 30% to 70% of the company’s full list of providers, he said. They will be available in six of WellPoint’s 14 states by the end of this year, and are aimed at all of them by January 2014, the company said.
Aetna has long had tiers for specialists, and last year added a new version for hospitals, with the smaller group generally representing 50% to 60% of the insurer’s full network. This year it started creating even skinnier—and cheaper—options that generally include just 30% to 40% of Aetna’s specialists and hospitals, said Carl King, the company’s head of national networks and contracting services. Those will be available in more than 20 markets by the end of next year.
Another 1990s twist, forcing patients to get sign-offs from primary-care doctors before seeing specialists, also may see a comeback. UnitedHealth last year introduced in four states a plan design called “Navigate” that has such a requirement, and the company is expanding it to 16 states this year and more in 2013; the company said it helps build the doctor-patient relationship to “emphasize quality care and more efficient use of care.”
WellPoint’s Mr. Goulet said his company, which is starting to pay primary-care doctors more to help coordinate care, is also considering more plans with such rules; it already has them in some older HMOs.
Insurers said current versions of old approaches are driven by better information, which helps them focus on improving care, not just saving money. The doctors and hospitals in the narrow networks are selected based on quality measures as well as cost, they say, while data help them ensure they use prior authorization only where it is needed.
“Technology is fundamentally different from what it was in the 1990s,” said John Wilson, vice president of analytics at UnitedHealth Group’s OptumInsight unit.
Write to Anna Wilde Mathews at firstname.lastname@example.org
A version of this article appeared August 1, 2012, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Medical Care Time Warp.