CHAPTER 2
Mitigating the Impact of Prior Authorizations
CHAPTER 2
Mitigating the Impact of Prior Authorizations
Prior authorization is considered by many to be one of the most significant examples of costly administrative waste—and the most time-consuming of all administrative transactions—in the U.S. healthcare system.
The Administrative Burden of Prior Authorizations
- 20 minutes is the average time providers spend on a manual prior authorization.1
- 66 million prior authorizations were conducted manually in 2022.2
- 5% of prior authorizations (2.2 million) were fully or partially denied in 2019, prior to the COVID-19 pandemic.3
- 2 million Medicare Advantage prior authorizations were denied in 2021, or 6% of the 35 million requests.4
While the CMS has released the Advancing Interoperability and Improving Prior Authorization, the proposed rule still sits in the hands of the White House Office of Management and Budget (OMB).5
The Impact of Poorly Managed Prior Authorizations on Patients
While payers insist that prior authorizations are a critical factor in containing costs and preventing unnecessary procedures, many providers feel otherwise, saying they are a significant barrier in the timely delivery of care.
94%
say they cause care delays
25%
say they’ve led to a patient’s hospitalization
80%
say they can lead to treatment abandonment
33%
say they have caused a serious adverse event
19%
say they’ve caused a life-threatening event or required intervention to prevent permanent damage
9%
say they’ve led to a patient’s disability, permanent damage, congenital anomaly, birth defect, or death
In a survey by the American Medical Association, 88% of providers describe the burden from prior authorizations as “high” or “extremely high.7
Four Opportunities to Streamline Prior Authorizations
While providers wait patiently for the CMS to advance its new legislation aimed at simplifying prior authorizations and reducing related denials, there are four proven methods providers can implement to begin streamlining prior authorizations today.
Technologies such as AI (artificial intelligence), machine learning, and RPA (robotic process automation) can be used to automate many manual, error-prone, time-consuming revenue cycle processes. Doing so can significantly reduce errors that lead to preventable denials while also reducing the number of staff needed to rework denied prior authorizations on the back end. For patients, it means getting the care they need without having to wait weeks or months. For providers, it can mean improved outcomes, better patient satisfaction scores, and increased revenue potential.
Providers can achieve significant benefit by standardizing and automating prior authorization processes.8 Not only can they potentially save providers millions each year, but they can also reduce the workload on already burdened staff. Where available, electronic prior authorizations should be integrated into standard EHR workflows. Once a provider has received a prior authorization approval, that documentation should be used when submitting the claim. The same process should be used across all payers.
Maintaining highly skilled revenue cycle teams is more challenging than ever due to ongoing staffing shortages, and rigorous training for current and new staff should be a requirement. Performance goals and incentives such as bonuses or paid time off can be effective in achieving a high-performing team while reducing turnover. Providers should also make sure each team member understands the impact they have on the organization’s bottom line.
Insurance coverage can be confusing for patients, especially information around the prior authorization process. While prior authorizations are out of the provider’s control once they’ve been submitted to the payer, it is still critical that providers proactively communicate with the patients about the status, including an explanation of the process. Providers should be up front about how long it could take in order to set expectations, reduce frustration, and help protect the patient experience.
By implementing automation, standardizing processes, enhancing staff education, and improving patient communications, providers can alleviate the administrative burdens and better navigate the complexities of prior authorizations. These efforts not only streamline operations but also foster a healthcare environment where patient care is not hindered by procedural obstacles.
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References
- https://www.caqh.org/sites/default/files/2022-caqh-index-report%20FINAL%20SPREAD%20VERSION.pdf
- https://www.caqh.org/sites/default/files/2022-caqh-index-report%20FINAL%20SPREAD%20VERSION.pdf
- https://www.kff.org/policy-watch/new-oig-report-examines-prior-authorization-denials-in-medicaid-mcos/
- https://fortune.com/well/2023/04/24/changes-coming-to-medicare-advantage-prior-authorization-rules/
- https://www.mcknightshomecare.com/cms-advances-cost-saving-fix-for-prior-authorization-interoperability-problems/
- https://www.ama-assn.org/system/files/prior-authorization-survey.pdf
- https://www.ama-assn.org/system/files/prior-authorization-survey.pdf
- https://www.ama-assn.org/practice-management/sustainability/prior-authorization-practice-resources