In March of 2023, UnitedHealthcare announced that it would make a policy change that will require its patients and participating providers to seek prior authorization for certain surveillance and diagnostic colonoscopies used to detect cancer beginning June 1, 2023. The new policy would not apply to regular colonoscopy screenings, which is generally a recommended procedure to detect cancer in low-risk, healthy members beginning at age 45. It will, however, affect patients who are experiencing concerning symptoms or who are more predisposed to certain gastrointestinal cancers due to certain other diagnoses or genetics. This policy change has been met with intense pushback from physicians as it will introduce a new hurdle for patients that many providers say could cost lives.

The foundational theory behind prior authorization may be well founded, as the intent is to reduce the over prescription of healthcare and reduce unnecessary procedures/spending. However, the practicality and implementation of such programs can often lead to more bureaucracies, more administrative costs/red tape, and patient frustration that ends with the abandonment of seeking care. The new extra hurdle could even lead to offsetting costs and over utilization, as some providers may encourage certain patients to seek emergency care in the emergency department rather than waiting for prior authorization.

United has commented that the prior authorization process should be completed within two days of submission, but most providers believe that this timeline will be much longer in reality. Some providers believe that realistically the process from submission to denial/acceptance, appeal to the final decision could take weeks, if not months. In certain cases, the patient is roped into the process to help push the insurance company, which can lead to patient process fatigue and dissatisfaction.

The process can separate the provider, who is rendering the care to a patient, from the patient’s insurance company, who is making the ultimate decision on whether such procedures will or will not be covered. Physicians are forced to make their cases for such procedures with employees who often do not have medical backgrounds or with United employed physicians who do not have training in the specialty in which they are reviewing for procedures.

The same month United announced the new prior authorization policy for these procedures, the company issued a press release announcing a commitment to reducing prior authorizations by 20% across the board. In addition, the announcement was made during colorectal cancer awareness month, coming across as particularly tone deaf. When it comes to cancer, days can matter, and many physicians believe the new plan will lead to adverse patient outcomes.

One survey has suggested that more than one-third of physicians have reported that prior authorization had led to a serious adverse event, while nearly 90% reported that prior authorization had a significant impact on a patient’s clinical outcome.

Interestingly, before 2023, Medicare had a somewhat similar policy in place which was met with intense criticism that was subsequently reversed effective January 1, 2023. Medicare’s expanded coverage reduced the coverage limitation from 50 years of age to 45 years and includes coverage for screenings that are necessary after a covered stool-based colorectal screening returns a positive result. It is not yet clear, however, if United will make a similar reversal to its policy despite pushback or if prior authorization for their members is here to stay.

UnitedHealthcare is the nation’s largest insurance provider in terms of membership enrollment. So, the question left to ask is: Will United stand alone in this policy, or is this a concerning trend that other insurance providers will soon follow?

The new policy implementation could also have major financial implications for healthcare systems and private equity groups that have been investing in gastroenterology practices and surgery centers. Any buyer/investor will need to have a firm understanding of the group’s payor and procedure mix and the related impact of United’s policy change going forward.

A valuator will also need to further assess the potential risk of other commercial payors following United’s lead. It is reasonable to assume that this new policy change will put downward pressure on gastroenterology multiples, particularly in markets where United makes up a large portion of the payor mix.

If you want to have a better understanding of how this policy change could adversely affect your organization or practice, LBMC’s healthcare valuation and consulting team would be happy to examine your organization’s procedure and payor mix to help you gauge and quantify the current and future impacts.

Content provided by LBMC professional, Cody Taylor.

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