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Like the flip of a switch, the COVID-19 pandemic changed the practice of medicine in America. 

Buried between the shortages of personal protective equipment, tests, intensive care unit beds, and ventilators, and the stresses of assuring safety of staff and patients, converting to telehealth, and responding to intense financial pressures, is a small issue that may have important implications post-COVID-19.  As is the case in most emergencies, health plans suspended prior authorization to avoid unintended delays in care during this time of severe stress to the health care system. Given the current interruption in elective procedures, this suspension has gone largely unnoticed.   

As hospitals and physicians begin to figure out safe ways to resume elective procedures, health plans will likely reinstitute prior authorization and providers will be back in the position of including this process in their workflow.  What has been clear for a long time is that most doctors view it as a hassle and expense that offers little or no value to their patients. Physician satisfaction surveys about health plans typically report prior authorization as their second biggest complaint after reimbursement.  Many even argue that it can actually cause harm.  In fact, a 2018 American Medical Association survey revealed that 92% of physicians believe that prior authorization, “..delays patient access to necessary care.” 

As providers attempt to reimagine their practice post COVID-19, many are looking more seriously at value-based contracts as a way to diversify from their historic dependency on fee-for-service revenue.  If that’s the case, it may be time to take a fresh look at the potential benefit of prior authorization. With the right health plan partner, there are a variety of ways it can evolve to help drive success.  

One of the easiest ways to manage cost trend in the early years of risk arrangements is to allow health plans to increase prior authorization.  Expansion of programs in areas such as radiology, pharmacy, and inpatient stays can create an early financial upside for providers while they work to build infrastructure around population management. As health plans experience this acceptance of prior authorization, they may even be willing to use a portion of anticipated savings to fund that infrastructure.

As value-based contracts align incentives for doctors and health plans to be more efficient, health plans have a greater motivation to invest in programs that target outliers and exempt others from clinical review.  Likewise, providers have an incentive to grant electronic medical record access to a health plan nurse or pharmacist to gather clinical information for prior authorization, thus reducing their own administrative burden.

Most of these programs are focused on avoiding high cost services when there is a lower cost alternative that may be equally efficacious for the patient. With that in mind, it is worth noting that, in general, health plans are not allowed to direct patients to a specific provider within their network. While providers can’t force the patient’s hand either, they do have substantial influence on their choices. If health plans begin to share price (and quality) data with providers, they could recommend to patients the most cost-effective way to meet their particular needs.  

Another potential approach is to actually integrate with health plans for prior authorization. Specialists within a contracted group can become “medical directors” for the health plan and do prior authorization reviews for their attributed patients. This gives those physicians influence over health plan medical policy even as they build skills to self-manage utilization; ultimately replacing health plan programs altogether.

As providers begin to share risk with health plans, it is increasingly important to look for opportunities to build synergies focused on improving quality and reducing waste. In this “brave new world” of value-based contracts, those who successfully blur the lines between payers and providers will likely lead the journey toward a sustainable, healthier future.

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Dr Lustick

Dr. Martin Lustick

Senior Vice President, NextGen Advisors

Dr. Martin Lustick is a principal and senior vice president with NextGen Healthcare focused on supporting provider organizations in their successful transition from volume to value-based care.

Dr. Lustick earned a BA in History from Cornell and an MD from Columbia. After completing his pediatric residency at Children’s Hospital National Medical Center in Washington, DC, he was in clinical practice for 17 years with Kaiser Permanente of the Mid-Atlantic States. While there, Dr. Lustick held various management and leadership roles, including chief operating officer for the 800-physician medical group. He oversaw development of their hospitalist program, population health capability, and open access delivery model.

Dr. Lustick then served as chief medical officer for ThompsonHealth—a small health system in Canandaigua, NY—where he provided clinical oversight for hospital, SNF, nursing home, IT, and out-patient physician practices.

In 2005, Dr. Lustick assumed the role of SVP & CMO for Excellus BCBS which covers 1.6 million lives comprised of Medicare, Commercial, and Medicaid. In his 13+ year tenure there he led a variety of strategic initiatives, including a patient-centered medical home program which served as the foundation for the plan’s value-based payment strategy. He also led the implementation of an automated authorization program for care management services, development of a clinical quality improvement strategy, and creation of innovative programs in management of low back pain, screening and prevention, opioid addiction, and chronic disease management.

Dr. Lustick has also been very active in the community, serving on boards and committees confronting issues such as: healthcare capacity planning, Health Information Exchange, mental health, substance use disorders, social determinants of health, and childhood obesity.