The Smart Approach to Prior Authorizations

Updated on May 28, 2020

By David Shelton and Gordon Jaye

Of all the challenges hospitals face in 2020, prior authorizations (PAs) are at or near the top of the list for many. The 2019 Council for Affordable Quality Healthcare (CAQH) Index shows PAs, which grew 27 percent from 2016 to 2018, are the most costly and time-consuming transactions to conduct manually. About a third of providers in an American Medical Association (AMA) survey said payers reject 20 percent of first-time PA requests for medical services, adding more steps to an already cumbersome process. Especially troubling is the negative affect on patient outcomes. More than 90 percent of physicians in an AMA survey said PAs delay patient care and sometimes lead patients to abandon treatment altogether.     

Healthcare system complexity and strict, constantly changing payer rules have made obtaining PAs a significant burden for providers and staff. They must first determine if the payer requires authorization, which 70 percent of physicians in a 2018 AMA survey said is somewhat or extremely difficult. Staff must then submit the authorization request to the payer and check and recheck approval status. The overwhelming majority of requests involve phone calls, faxes, emails, accessing payer portals and other non-automated tasks. CAQH research shows when done manually, each PA costs an average of $10.92 and averages 21 minutes to complete.    

Why prior authorization is so unwieldy

PA objectives to control costs and ensure appropriate care are valid, but handling them manually is unsustainable for many providers. Common hurdles include: 

  • Multiple entities: Patient access staff typically initiate PAs, but the process can involve physicians, nurses and revenue cycle management (RCM) and patient financial services teams. Staff must also navigate payers’ utilization management departments or third-party medical benefit management (MBM) companies who conduct clinical reviews.  
  • Inordinate time demands: The 2017 AMA Prior Authorization Physician Survey showed physicians and staffs spend more than 14 hours completing 29.1 PAs on average each week. 
  • Payer inconsistencies: Coverage criteria vary by payer and change frequently, which mean staff can’t rely on past experience or internal knowledge when handling PAs. 
  • Inefficient workflows: Many hospitals use electronic health records (EHRs) for clinical data and a separate system to bill insurers. Because the two don’t usually communicate, staff members must rekey EHR clinical data to request PAs or fax supporting documentation to payers. This opens the door to human error and misinterpretation of clinical information. 
  • Payer control: PAs encourage physicians to exhaust all other remedies before prescribing high-cost services. Some physicians believe this gives payers too much control over patient care. 

The solution to most of these issues is automation, but many hospitals lack the technology, time and expertise to implement electronic processes. As a result, the 2019 CAQH Index shows only about 13 percent of PAs are fully electronic. 

How providers can alleviate PA pain  

Providers, payers, federal agencies and solutions vendors have tried for years to automate PAs. Progress has been slowed by inconsistent code use, lack of uniform clinical documentation, varying state mandates and other barriers, but viable solutions are emerging. 

PA management technology tools standardize and streamline PA activities. The most efficient and accurate solutions use comprehensive payer rules engines that store and continually update national, regional and state payer data. They also incorporate unwritten rules gathered from hospital staff who handle PAs and know from experience how to work with certain payers. Sophisticated tools can harness this information, learn from past outcomes and adapt workflows based on insights. They enable staff to identify plan-specific PA requirements in real time and schedule patient services with confidence the claim will be approved. 

The best PA management tools guide users through each payer’s submission process, automatically check and recheck PA request status, alert users if additional information is needed and immediately report approvals and denials. Many require minimal training and are compatible with all electronic medical records (EMRs). The most advanced are prepopulated with authorization status using HL7 standards to eliminate data entry and integrate easily into existing pre-access models and hospital information systems (HISs). Some solutions offer an optional onsite advisor to fully integrate and optimize tools.      

The rewards of prior authorization management

Reducing the PA burden is good for everyone. CAQH research shows fully electronic PAs take just four minutes, a nearly 80 percent improvement over manual processes. A highly productive PA department can increase operational efficiencies 65 percent or more, reduce costs by up to 75 percent and cut denials in half. These metrics boost revenue recovery and support President Trump’s direction to reduce unnecessary administrative burden so providers can focus on patients.

Patient satisfaction is another tangible benefit. When patients’ care is delayed or they receive a surprise bill, they often blame providers, not payers. Obtaining PAs quickly eliminates delays and allows staff to accurately communicate patients’ financial responsibilities.  

Positive steps forward

Streamlining the PA process is essential to efficient, cost-effective, timely healthcare under any circumstances, and the COVID-19 pandemic only reinforced the need. Many insurers waived PAs for diagnostic tests and covered services during the crisis to ease patients’ financial concerns, give providers administrative relief and free up hospital beds by moving patients to post-acute care more quickly. 

Whether these changes are permanent or temporary, they cast light on the urgent need to bring prior authorization into the age of technology to benefit providers, payers and patients. 

David Shelton is CEO and Gordon Jaye is VP Hospital Operations for PatientMatters.

The Editorial Team at Healthcare Business Today is made up of skilled healthcare writers and experts, led by our managing editor, Daniel Casciato, who has over 25 years of experience in healthcare writing. Since 1998, we have produced compelling and informative content for numerous publications, establishing ourselves as a trusted resource for health and wellness information. We offer readers access to fresh health, medicine, science, and technology developments and the latest in patient news, emphasizing how these developments affect our lives.