The Frustration of Prior Authorization and What It Means For Burnout

Most medical students understand that a good chuck of their day as practicing physicians will involve clicking through electronic health records and completing paperwork. But I do not think it is ever made clear how often we will interact with insurance companies. Of course, this will vary by specialty, but everyone entering medical practice should have a basic understanding of prior authorization.

I recently saw an Instagram post from Dr. Austin Chaing about the frustrations of prior authorization — a process wherein medical care will only be paid for if it has been pre-approved by the insurance company. There are a number of reasons insurance companies require preauthorization, including age, medical necessity, and availability of a generic. If a prior authorization is denied, a healthcare provider may file an appeal based on their assessment of the patient and the recommended treatment or medication.

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Makin’ Money: How Residents Are Paid

So you’re in medical school. And eventually you’ll be a resident. And then you’ll have to start paying back all those loans–the median debt level for medical school graduates is close to $200,000. But while you might make anywhere from $200,000 to more than $500,000 once you’re out of residency, your average salary while completing residency will be in the neighborhood of $51,000.

How is that salary determined? And why, if adjusted for inflation, has residency compensation not increased in four decades? The number of residency positions [and by extension residency salaries] is constrained by the 1997 Balanced Budget Act (BBA) which sets the level of Medicare financing for training residents at teaching hospitals. If the number of allopathic or osteopathic residents at a teaching hospital exceeds the cap set by the BBA, teaching hospitals will not receive additional funding, which come from two sources: Medicare indirect medical education (IME) and direct graduate medical education (DGME) reimbursement. Between IME and DGME payments, Medicare finances 90%–around $10 billion–of the funds teaching hospitals use to train and pay residents. A report from the Government Accountability Office (GAO) found that the two types of reimbursement are not equal–$3 billion are DGME payments and $7 billion are IME payments.

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