Dermatology Practices Absorb Rising Prior Authorization Costs

Dermatology practices are spending a mean of 13 hours a week and filing roughly 39 prior authorization requests per physician annually just to get patients started on medications already prescribed, and still, 1 in 3 requests are denied outright, according to Jane M. Grant-Kels, MD, FAAD, professor and vice chair of the Department of Dermatology at UConn Health. That burden persists even as health plans report an 11% reduction in prior authorization volume since mid-2025 and are rolling out new standardization efforts aimed at speeding up the process.¹

The result, Grant-Kels said, is a system where physicians and patients absorb the cost of friction that both sides say they want to fix, but they disagree on how far current reforms actually go.

The Prior Authorization Burden in Dermatology

Roughly 40% of dermatology practices now employ staff dedicated exclusively to filing prior authorizations, Grant-Kels said. However, that investment doesn't guarantee timely approvals. When insurers use artificial intelligence (AI) to review requests, denial rates have risen up to 16-fold, she noted. The consequence is that a physician's prescription often acts as a preliminary request rather than a definitive treatment plan. Step therapy guidelines frequently require patients to fail on older or lower-cost medications before coverage for the initial prescription is granted

For a patient with extensive psoriasis, Grant-Kels said, as an example, that delay has real functional consequences: patients started promptly on the appropriate biologic return to work sooner and lose fewer days to disease flares, while delays tied to step therapy and prior authorization can prolong disability.

“It's the patients who pay the burden because they're the ones not getting the medications that they need,” she said. “And the offices are paying the burden because of the expense of filling out prior authorizations and dealing with all the rejections.”

Beyond prior authorization delays, inaccurate provider directory data for Medicaid hinders access, Grant-Kels said. Nationally, only a third to half of dermatologists participate in Medicaid in any given state, she noted, yet outdated directories in some states list more compliant dermatologists than actually practice in the state. She attributed this to poor directory maintenance rather than deliberate misrepresentation, but the effect is the same: patients calling or booking appointments at practices that ultimately don't accept their coverage.

State-Level Legislative Reform for Prior Authorization

Because Medicaid and prior authorization rules are frequently set at the state level, Grant-Kels said meaningful reform depends on dermatologists engaging with state medical societies rather than only national organizations. She pointed to a wave of state-level reforms enacted in 2025, including in Indiana, Iowa, Nebraska, Alaska, Montana, and Colorado, that streamlined prior authorization processes. In some cases, these state reforms mandated that a physician, not a non-clinical reviewer, adjudicate whether a request is approved.

At the federal level, a 2024 prior authorization rule attempted similar reforms, Grant-Kels said, but she argued that further action is still needed across industry, state, and federal levels to standardize forms, shorten decision timelines from weeks to hours or days, and create uniform electronic prior authorization standards.

Payer Reduction Commitments

Health plans point to their own data as evidence of movement. Participating insurers eliminated 11% of prior authorizations across covered markets since committing to reform in June 2025 in partnership with HHS and CMS, translating to 6.5 million fewer requests, according to a survey conducted by AHIP and the Blue Cross Blue Shield Association.¹

In Medicare Advantage plans, reductions exceeded 15%. Participating insurers also agreed to honor existing prior authorizations for 90 days when patients switch insurers to avoid care disruptions and to issue clearer, plain-language determination notices that include appeals guidance.²

In April 2026, a coalition of health plans announced a standardized electronic prior authorization framework for common procedures, including orthopedic surgeries and advanced imaging, spanning commercial, Medicare Advantage, and Medicaid managed care coverage.² The standardization does not alter individual plans' clinical coverage policies, and broader adoption is targeted for January 1, 2027, alongside commitments to real-time electronic responses for most routine requests.¹

Addressing RVUs and Long-Term Solutions

Grant-Kels noted that although insurers' use of AI has coincided with higher denial rates, the technology could also help streamline the process if paired with restrictions preventing automatic rejections and if dermatologists, rather than generalist reviewers, are the ones adjudicating specialty-specific requests.

She also linked the administrative burden to a separate reimbursement issue: work relative value units (RVUs). This metric determines physician payment, credit time, and documentation but not the cognitive workload behind a dermatologic diagnosis, such as ruling out malignancy mimics, correlating patient history, and interpreting dermoscopy findings. Because procedural dermatology carries substantially higher RVUs than general or pediatric dermatology, she argued that undervaluing this diagnostic work compounds the financial pressure created by prior authorization's administrative costs, together pushing practices toward specialties and geographies where both reimbursement and paperwork burdens are lower.

"It's a round robin and continual problem," Grant-Kels said of the interplay between reimbursement, prior authorization, and access to care.

References

1. Health plans reduce prior authorization, support continuity of care and enhanced consumer communications. AHIP. April 7, 2026. Accessed July 22, 2026. https://www.ahip.org/news/articles/health-plans-reduce-prior-authorization-support-continuity-of-care-and-enhanced-consumer-communications

2. Health plans take next step to streamline and simplify prior authorization for patients and providers. AHIP. April 24, 2026. Accessed July 22, 2026. https://www.ahip.org/news/articles/health-plans-take-next-step-to-streamline-and-simplify-prior-authorization-for-patients-and-providers