UnitedHealth Execs Look to Build on Prior Authorization Push

April 17, 2023
The carrier’s leaders say the recently-acquired Change Healthcare business will play an important role in reducing friction.

UnitedHealth Group Inc.’s recent announcement that it plans to eliminate nearly 20 percent of prior authorizations starting this summer is just a first step, executives told analysts and investors last week.

Minnesota-based United said late last month it begin removing prior authorizations “for most Commercial, Medicare Advantage and Medicaid businesses” in the third quarter and follow that up early next year with a program exempting high-quality provider groups from most prior authorizations. Speaking after reporting first-quarter results, CEO Andrew Witty and members of his team said they are looking to have other technologies and integrations—particularly from their recent acquisition of Change Healthcare Inc.—build on that upcoming push.

“This is also an exciting area where UHC and OptumInsight can collaborate. A lot of technology opportunity to be leveraged here,” Witty said on an April 14 conference call. “As you think about the integration of the Change organization into OptumInsight, that gives us a new perspective in terms of how we can create network connectivity to take friction out as well.”

Brian Thompson, CEO of UnitedHealthcare, told analysts that the second-phase program being prepped for an early-2024 rollout could reduce the insurer’s prior authorization volumes by another 10 percent from current levels. The UnitedHealthcare team, he said, is evaluating more analytics tools available through United’s OptumInsight unit, which booked $4.5 billion in first-quarter sales (a year-over-year increase of 40 percent) and finished March with a record revenue backlog of $30.7 billion.

“This really robust process that we’ve started here over the last several months [has] demonstrated the importance of the authorizations that we do have in place, so [we’re] really encouraged by our surveillance capabilities,” Thompson said.

United’s work to remove some prior authorizations from the care system echoes initiatives by other large insurers. Aetna, which is owned by CVS Health Corp., has been focusing on automating many of its prior authorization processes and teamed with Stanson Health in 2017 on a project. At the time, Stanson officials pointed to a study that some provider groups’ various interactions with health plans added more than $80,000 in costs per physician each year.

UnitedHealth posted a first-quarter net profit of nearly $5.8 billion on total revenues of $91.9 billion. Those numbers were up 12 percent and 15 percent, respectively, from the same period a year ago. Contributing to the drop in margins were investments to integrate Change Healthcare’s operations; CFO John Rex told analysts those were about $100 million in the first three months of the year and will likely be a little larger in the current quarter.

Shares of United (Ticker: UNH) were changing hands around $503 on the afternoon of April 17. They’re down slightly over the past six months, trimming the company’s market capitalization to about $470 billion.

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