How Big is the Prior Authorization Burden and What is Being Done?

Healthcare providers want to get the right care to the patient as quickly as possible, and health plans want to ensure treatment choices are appropriate, legitimate, and cost-conscious. Yet, prior authorizations and claims denials are complicated and can delay critical care. In fact, the AMA reported that 940:1,000 providers saw delays in care due to prior authorizations (PA) and eight in ten said their patient abandoned treatment while waiting. Add to that an increase in claims denials where the AHA reports 89 percent of hospitals and health systems have seen an increase in denials and 51 percent calling this increase significant. Their research indicates that claims denials and reimbursement delays stemmed from prior authorization issues. What is the problem and what is being done to streamline the PA process and expedite authorized care?


Prior Authorization Burden Increasing

Across the continuum of care, providers are expending significant resources to address prior authorizations. Many have varying submission processes to conform to each health plan’s unique policies and documentation requests. That AHA report cited one 17-hospital system that spends $11M annually just to comply with health plan prior authorization requests. Another provider – a 355-bed psychiatric facility – maintains 24 full-time staff to manage authorizations. The AMA survey revealed that 86 percent of participating physicians thought the prior authorization burden was high or extremely high, noting that their offices spend an average of two business days a week managing PA requests.


Prior Authorization Delays Can Lead to Serious Adverse Events

Thirty percent of the physicians surveyed by AMA stated that prior authorization had led to serious adverse events for their patients. Twenty-one percent said a PA delay resulted in a hospitalization; 18 percent said a PA delay led to a life-threatening event or that they intervene to prevent permanent impairment or damage; and nine percent pointed to patient disability, permanent bodily damage, congenital anomaly or birth defect, or death resulting from PA issues or delays.

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Claims Denials Increasing

Claims denials and downcoding are the untoward effect of PA issues. AHA research found that 89 percent of hospitals and health systems saw an increase in denials over the past three years with 51 percent saying the increase was significant. Prior authorization issues was noted as the main issue connected to those claim denials and reimbursement delays.

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What are States & the Federal Government is Doing to Streamline Prior Authorizations?

Recently, Texas became the first state to exempt physicians from prior authorizations when they meet insurer benchmarks. Passed in June and taking effect September 2021, the law exempts physicians from having to obtain prior authorization if 90 percent of their treatments over the previous six months met medical necessity criteria. Called a “gold card,” this exception provides automatic approval of treatment authorizations.

This law’s goal is reducing the prior authorization burden that 87 percent of Texas physicians reported had drastically increased since 2015. A Texas Medical Association survey in 2020 uncovered that 48 percent of Texas physicians had hired staff to focus on processing requests for prior authorization.


What Can Technology Do to Streamline Prior Authorizations?

According to the AMA, providers need greater support in the prior authorization process. They seek health plans to respond to prior authorizations 24/7 and communicate denials fully and completely in writing rather than providing a verbal reason.

Payer and provider organizations are leveraging interoperability, automation, and other technologies to address the need for treatment proof and approvals.

One example is a collaboration between Epic and Humana in 2019 when they integrated Humana’s benefits check tool, IntelligentRx, into Epic’s e-prescribing workflows with the goal of enabling value-based care advancements.  Next, they will automate prior authorizations at Ochsner Health where physicians won’t need to switch screens to order procedures that require a PA. Humana data, including past due preventative services, medication adherence patterns, and chronic disease management intel will be integral to Epic workflows.

Automation technologies range from Robotic Process Automation (RPA) for more routine, rules-based tasks, and Intelligent Document Processing (IDP) where RPA combines with artificial intelligence to extract, read, interpret, understand, and process various types of increasingly complex information. Intelligent Automation (IA), combining artificial intelligence capabilities like machine learning, Natural Language Processing, and cognitive computing, is being tapped to improve efficiency, cut costs, free staff for higher-value activities while enhancing physician-provider satisfaction and patient care.

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While the 2021 proposed CMS rule would have allowed certain payers, providers, and patients to have electronic access to pending and active prior authorization (PA) decisions, the rule was published late in the last administration with inadequate commenting time. It was published in January and taken down in April. However, as physician-provider groups see decreased revenue from claims denials and PA delays impact their patient care and business operations, there will continue to be an appetite for solutions on the payer and provider sides to streamline workflows, provide appropriate member care, and address patient needs timely.

How Could We Reduce the Physician, Operations, and Financial Burdens of Prior Authorizations and Claim Denials for Your Organization?

While technology can play a significant role as a solution to PA and claims challenges, areas like physician digital experience, operational process improvement and optimization, and data integration and interoperability provide a holistic approach to solving problems at the root level. Our team of healthcare operations and technology experts works with technologists, LSS black belts, business agility practitioners, and human centered designers to reveal areas for improvement and create an executable plan to resolution.

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