Prior authorization is a process used by insurance companies or health plans to confirm that certain medical services or procedures are necessary and appropriate before they are performed. This process helps ensure that patients receive appropriate care and that healthcare costs are managed effectively. While prior authorization can help prevent unnecessary medical treatments, it also comes with its own set of issues that can negatively impact providers and patients alike.
Compounding prior authorization challenges, requirements differ by payor and are constantly changing. Tests requiring prior authorization differ not only by payor, but by individual plan under each payor, and then by state. In addition, the prior authorization requirements per payor can change monthly, creating a cumbersome and time-consuming tracking process. These burdensome processes not only create material delays in patient care, but have significant impact for providers seeking payment on the services rendered.
According to the American Medical Association 2022 Prior Authorization Physician survey:
- 88% described the burden associated with obtaining prior authorization high or extremely high
- 35% have a staff who exclusively works on prior authorizations
- 31% report that prior authorization criteria is rarely evidence based
- 40% of a physician's, or their staff's, time per week (almost 2 days) is spent on prior authorizations
Addressing the prior authorization issues requires collaboration between insurance companies and healthcare providers. It has become evident to local and federal officials that a more streamlined and efficient process that allows for quality patient care while still controlling costs is critical.
Legislation and Payor Plans to Streamline Prior Authorization Process
New legislation is being introduced by health plans and at the national and state level to streamline prior authorization.
Gold Card Act of 2022 (HR 7955)
Exempts physicians from prior authorization requirements if 90% of the physicians’ requests were approved in the preceding 12 months. States that have introduced the Gold Card approach are Colorado, Indiana, Kentucky, Mississippi, New York, Texas, and West Virginia.
United Healthcare (UHC)
UHC announced plans to cut prior authorization usage by 20% starting in Q3 by eliminating prior authorization requirements for common procedures. To reduce the administrative burden, in early 2024 United Healthcare plans to launch the Gold Card Program which will reward providers who consistently practice evidence-based care, demonstrated by high approval levels on prior authorization requests.
Improving Seniors’ Timely Access to Care Act (H.R 3173)
Establishes an electronic prior authorization process that would streamline approvals and denials, and would also require Medicare Advantage plans to streamline and standardize prior authorization processes and improve the transparency of requirements.
While efforts to fix the issues are being implemented, prior authorizations remain a top challenge that providers must address. A medical provider’s prior authorization process is typically manual and time-consuming, diverting resources away from patient care and impacting revenue through increased denials or delays in payment.
A recent survey of 515 Medicare Advantage Contracts, representing 87% of enrollees, concluded that:
- 6% of all prior authorization requests, totaling over 2 million, were denied
- Denial rate ranged from 3% per to 12% per payor
- Only 11% percent of prior authorization denials were appealed
- The majority (82%) of appeals resulted in fully or partially overturning the initial prior authorization denial.
These issues are even more difficult for ancillary providers and remote patient monitoring device companies using traditional billing systems that have few or no automation tools. Hospital outreach programs and outpatient services are also very challenged by the lack of front-end data capture by enterprise and/or patient registration systems. Providers without direct patient contact are also deeply dependent on referring physician offices to provide the necessary information that either includes the prior authorization or provides the material information needed for the provider to acquire the prior authorization themselves.
Thus, streamlining the prior authorization workflow to better address the increased utilization of prior authorizations is pertinent to patient care and reimbursement. For many payors, the workflow must start at the physician’s office while other payors allow diagnostic providers to initiate. It is critical that diagnostic providers can support both scenarios.
Agile technologies supporting registration and revenue cycle management functions are critical in adopting efficient workflows to mitigate the burden prior authorization processes place on resources. Several steps which can be taken to optimize the prior authorization process include, but are not limited to:
1. Configure a data-driven billing process to reduce denials.
Implement front-end edits within your RCM workflow by payor, payor plan, and CPT code that ensure claims requiring prior authorization are submitted correctly according to payor requirements. Minimize and manage errors and back-end exception processing through intelligent workflow and automation of routine procedures.
2. Implement a prior authorization strategic appeals strategy.
It is impossible to eliminate all prior authorization denials. However, it is possible and practical to automate much of the prior authorization and appeals process without negatively impacting physician and patient engagement. Denials and appeals management workflow can be automated and is configurable with reason code-specific logic, payor-specific appeal forms, attachment of supporting documentation, and appeal letter generation. A revenue cycle management system with automation and AI capabilities, can improve efficiency, reduce cost, and optimize reimbursement related to appeals.
3. Utilize reporting analytics.
Extract data from the billing process and leverage business intelligence reporting to gain insights into prior authorization trends and the drivers behind the trends. Payor prior authorization requirements are continually changing; it is therefore important to continually monitor denials by reason and by payor through business intelligence reporting.
4. Partner with an experienced prior authorization vendor whose system can be integrated into your RCM system.
Prior authorization software that can be integrated into your RCM system should be able to determine if the test requires a prior authorization and initiate the prior authorization submission, including verification of all parameters of the prior authorization are valid. Partnering with a prior authorization vendor is an efficient way of both proactively and retroactively acquiring authorizations, with successful first-round prior authorization requests from XiFin’s vendors averaging 80%, and second round prior authorization requests averaging 98% success rates.
Prior authorizations drive medical service requirements in nearly all segments of the healthcare industry. The evidence, as stated above, overwhelmingly supports concerns regarding the immense burden prior authorization requirements place on providers and, subsequently, contributes to the delay of critical patient care. While there is a degree of optimism to see state and federal governments intervening in the overutilization of prior authorization requirements, it’s at implementation that we should watch with caution. The removal of prior authorization requirements does not promise payment for services. There is a likelihood these cases will still be denied, but rather as medical necessity or experimental or investigational.
Leveraging strong RCM technologies that can easily adapt to new payor trends and requirements and will reduce back-end burden by managing potential errors in the front-end processes, will greatly assist in automating a portion of this burdensome process. Stacking a robust reporting platform on top of a capable RCM technology further allows for sophisticated tracking of trends in denials to help decision makers better understand shifts from one denial type (prior authorization) to another (medical necessity). Sophisticated reporting helps diagnostic providers understand revenue bottlenecks and profitability by test, payor, and client, and is the aggregation of this type of information that ultimately drives investment strategies for growth, new test development, and long-term sustainability.
Check out these additional resources:
- Blog: How to Reduce Retro Authorizations to Improve Reimbursement
- XiFin’s prior authorization partners: Glidian and INFINX