With the high cost of healthcare services and treatments in the United States, it is essential to balance the coverage provided while still maintaining affordability. One way that insurance providers do this is by requiring prior authorization for certain medical procedures and treatments. In this post, we will explore why prior authorization is necessary and important from three different perspectives - those of the employer, employee, and the health insurance company.

Perspective 1: The Employer

Employers are usually the primary sponsor of health insurance benefits for their employees. From their perspective, prior authorization helps control costs while still providing a comprehensive benefits package. With expensive treatments and tests that can be medically unnecessary and prescribed more for financial gain rather than the health of the patient, prior authorization ensures that the medical care provided is medically necessary to avoid wasteful spending. Prior authorization, therefore, helps employers to manage their expenses by limiting unnecessary procedures and ensuring that qualified medical professionals are providing the right care.

Perspective 2: The Employee

For employees, prior authorization can cause confusion and frustration, and can be seen as an obstacle in receiving medical care when they need it.

However, understanding its significance reveals that it acts as a mechanism to streamline access to essential healthcare services. The process ensures that the proposed treatments are in line with evidence-based medical practices, enhancing the quality of care provided.

Moreover, prior authorization contributes to the financial well-being of employees by preventing unnecessary out-of-pocket expenses. By validating the medical necessity of certain procedures, employees can be confident that their health insurance coverage is optimized, leading to a more transparent and supportive healthcare journey.

Medical services and treatments recommended by their doctor may not always be covered by their health insurance plan, thereby leading to unexpected expenses. With prior authorization, employees can verify whether specific procedures or treatments will be covered beforehand, which can potentially save them from financial stress and an additional medical cost at a later date.

Perspective 3: The Health Insurance Company

Health insurance companies play a dual role as risk managers and healthcare facilitators. Prior authorization serves as a risk mitigation strategy, allowing insurers to assess the appropriateness of proposed treatments and procedures.

Prior authorization helps the insurance company determine whether specific procedures or treatments are medically necessary, which helps them avoid the rising cost of medical care, including unnecessary services. This can ultimately improve the quality of care and improve the insurance provider’s overall ROI.

Ultimately, prior authorization is a necessary part of the health insurance process, and all parties involved have a vested interest in ensuring that it is implemented correctly. Employers want to maintain comprehensive benefits packages without escalating costs. Employees want to ensure that they are getting the best possible care available with minimum cost. Health insurance providers want to make sure that the medical care provided is medically necessary.