What is the 'pre-approval' business in American health insurance that is so profitable that it leads to the denial of insurance coverage for tests and treatments?

In the United States, even if a doctor deems a test or treatment necessary, insurance companies may refuse to pay for it if they deem it 'not medically necessary.' In a joint investigative article published on October 23, 2024, ProPublica and The Capitol Forum reported, based on internal documents, company data, and interviews with former employees, doctors, medical industry experts, regulators, and insurance company executives, how external companies that review claims on behalf of insurance companies determine whether or not a test or treatment is covered by insurance.

“Not Medically Necessary”: Inside the Company Helping America's Biggest Health Insurers Deny Coverage for Care — ProPublica
https://www.propublica.org/article/evicore-health-insurance-denials-cigna-unitedhealthcare-aetna-prior-authorizations

'Not Medically Necessary': Inside the Company Helping America's Biggest Health Insurers Deny Coverage for Care - The Capitol Forum
https://thecapitolforum.com/not-medically-necessary/

According to a joint investigation, U.S. insurance companies sometimes outsource the 'pre-approval' process to determine whether MRI scans, cancer treatments, and cardiac examinations will be covered by insurance. Pre-approval is a system where insurance companies decide whether a medical procedure will be covered by insurance before a doctor performs the examination or treatment. While insurance companies explain that 'pre-approval aims to prevent unnecessary treatments and overbilling,' it has been reported that insurance coverage for treatments deemed necessary by doctors may be denied.

EviCore , a subsidiary of Cigna, has a significant presence in this field. EviCore works with major insurance companies such as UnitedHealthcare , Aetna , and Blue Cross Blue Shield , and handles the assessments of approximately 100 million people, or roughly one in three insurance policyholders.

The joint investigation points out that companies like EviCore are selling healthcare cost reductions to insurance companies, describing this scheme as a 'business that profits from refusals.' EviCore was reportedly selling insurance companies a 3:1 return on investment, claiming that 'paying EviCore $1 will reduce healthcare and other expenses by $3,' and some EviCore sales representatives were even boasting at sales meetings that 'healthcare refusals have increased by 15%.'

According to a former EviCore employee, EviCore has not only contracts with insurance companies to conduct assessments for a fixed fee, but also contracts called 'risk contracts.' In these contracts, for example, if an insurance company pays $10 million (approximately 1.57 billion yen) per year for MRI scans, EviCore can reduce the expenditure to less than that amount, and either EviCore will keep the savings or share them with the insurance company.

On the other hand, EviCore refutes these views. A spokesperson for its parent company, Cigna, on behalf of EviCore explained that EviCore uses evidence-based criteria to ensure that patients receive the care they need and avoid unnecessary medical services, and asserted that 'the most common reason for rejection of pre-approval applications is that physicians do not provide the necessary information.'

The joint investigation focuses heavily on the AI-assisted algorithm known internally at EviCore as 'the dial.' This algorithm evaluates pre-approval applications based on data entered by doctors' clinics and automatically approves them if deemed appropriate. Conversely, if a rejection is deemed necessary, it doesn't automatically reject the application but instead determines that 'human review is required,' and sends it for review by nurses and doctors within EviCore.

According to five former EviCore employees, EviCore was able to adjust its algorithm's thresholds to send applications with approval likelihood scores below a certain percentage to human review. For example, setting the system to send applications with less than a 95% chance of approval to human review would result in a higher number of reviews than setting it to only send applications with less than a 75% chance of approval. The joint investigative article points out that 'such adjustments could affect the number of rejections.'

The review of EviCore has drawn criticism from medical organizations and former employees. Medical organizations such as the American College of Cardiology , the Society for Vascular Surgery , and the American Society for Radiation Oncology (ASTRO) have told EviCore and regulatory authorities that 'EviCore's guidelines are flawed and could hinder the provision of appropriate care.'

Furthermore, a 2023 study evaluated EviCore's approved guidelines for spinal imaging for severe lower limb pain, and two out of five evaluators determined that they 'do not recommend using the guidelines.'

Furthermore, a 2018 audit document from the Centers for Medicare and Medicaid Services, obtained by ProPublica through a freedom of information request, states that EviCore was involved in inappropriate denials of treatment to 30 patients because it had not kept its cancer-related guidelines up to date.

Former EviCore physician Gail Miller testified that her superiors required her to make decisions on at least 15 cases per hour, or one every four minutes, and that she often had to review requests that were outside her area of expertise.