Prior authorization is here to stay. Insurance companies are increasing Prior Authorization (PA) requirements for medical services and prescription drugs. As a result, the PA administrative load is getting heavier for healthcare providers.
This article considers various alternatives healthcare groups can take to alleviate the increasing burden of Prior Authorization management.
Prior Authorization’s Promise
Payers initiated Prior Authorization years ago to optimize patient outcomes by ensuring they receive the appropriate services, procedures, and medication while reducing waste and medical costs.
The idea behind PA was to ensure that doctors’ requests are medically necessary and whether a cheaper generic drug can be used instead of a specifically prescribed medication.
Prior Authorization’s Reality
It’s not clear whether the hoped-for cost saving is occurring. For example, one study looked at the records of over 4,000 patients with Type 2 diabetes who were prescribed medications requiring prior authorizations. Researchers found that those patients who were denied the medications had higher medical costs during the following year than those who weren’t denied their prescribed drugs.
When prior auths aren’t done in a timely manner, it creates a cascade of bad events. Patient care can be delayed by several days or longer. Even worse, patients often abandon treatment when PA is not granted quickly.
Ultimately, prior auth bottlenecks lead to lower revenue for providers and the healthcare group.
Administrative Costs and Burdens
Since their inception, managing prior authorizations has put significant strain on healthcare providers and their administrative staff.
The primary problem with prior authorizations is that when they’re denied, people must get involved to resolve the issues. This process involves billing staff waiting on hold to speak with insurance representatives.
Often, doctors need to participate in the prior authorization process with peer-to-peer reviews. This, of course, takes precious time away from them treating patients.
Prior Authorization’s Financial Impact
According to a 2021 American Medical Association (AMA) survey, physicians complete an average of 41 prior authorizations per week. This translates into an administrative burden that consumes nearly two business days of physician and staff time.
A study published in the September 15, 2010, issue of Clinical Infectious Diseases found that the cost for each Prior Authorization was $41.60 when considering personnel costs and the opportunity cost of physicians losing time to treat patients.
So, if a doctor averages 40 prior auths a week, that works out to about 2,000 in at year. Multiplying that by $42.00 works out to an administrative cost of over $80,000 per year per physician.
Finally, another study by Health Affairs concluded prior authorization ultimately costs the health care system more than it saves.
Steps to Bolster your Prior Authorization Processes
Hire more staff.
The quickest and most obvious solution to address a Prior Authorization backlog is to hire more staff. However, finding knowledgeable revenue staff is increasingly difficult in today’s tight labor market.
Most often, groups must train new staff on the intricacies of Prior Authorization. This takes time. PA jobs are primarily manual and can be frustrating. As a result, the turnover rate is high.
Even if your organization can afford to hire additional administrative staff to work on prior authorizations, this strategy is not a viable long-term solution.
Health information exchanges
Another avenue healthcare providers can use to reduce the prior authorization burden is to consider using electronic health exchanges. These enable providers and payers to exchange data bidirectionally, even some PA inquiries.
Simple Automated Prior Authorization Solutions
An increasing number of medical practices and health systems have implemented some kind of automated prior authorization solution. The goal is to automate each step of the PA process. Simpler automated prior authorization solutions can only handle PAs for relatively straightforward procedures. These simple cases account for only about half of prior authorization cases.
Automated Prior Authorization with AI and Machine Learning
Some medical groups are moving to automated prior authorization solutions that employ Artificial Intelligence (AI) and Machine Learning (ML).
Contrary to marketing claims, fully automated prior authorization has not yet arrived. The reality is that a fully automated prior authorization solution does not exist. However, they are getting better. Below are some features you should look for when deciding which solution to choose.
Compatibility with Existing EHR and Practice Management Systems
An automated prior authorization solution must integrate with your existing EHR or practice management system. The goal should be for your team to have a single integrated platform to manage all prior auth needs.
That works to eliminate errors and information gaps. This leads to decreased denials, redundant tasks, non-reimbursable services, and increased collected revenue.
Prior Authorization Analytics Engine
An automated prior authorization solution should feature an Analytics Engine that automatically determines if a prior authorization is needed. The more knowledge and experience the vendor has working with prior authorizations, the better the analytics engine will be.
Adding your team’s knowledge and experience to the analytics engine is also crucial. That will further enhance an analytics engine’s effectiveness.
Alerts and Notifications
Receiving alerts and notifications about actions needed for pending prior authorization is another critical feature of an automated prior authorization system. Updates on all payer communications are vital to improving an organization’s processes.
Advanced Analytics & Reporting
Many vendors provide data. But your vendor should provide advanced analytics and reporting that gives you actionable insights into ways to improve your prior authorization performance. An enhanced PA process will start a cascade of positive events for your group. You will have fewer denied claims, and providers will perform fewer non-reimbursable services. This will all lead to an improved bottom line.
Augment your Prior Authorization team
Finding staff members skilled in coding and prior authorizations is challenging in today’s tight labor market. Unskilled coding staff can cost an organization significant revenue with coding errors.
Furthermore, training staff takes skilled revenue people away from their duties. This situation leads to bottlenecks in PA processes.
Why not augment your staff with PA experts to work on your most challenging prior authorizations?
This will free up staff to work on revenue-generating tasks rather than revenue-draining ones.
The goal of any healthcare organization should be to leave no prior authorization behind. Supplementing your billing staff with a company with experienced coding and prior authorization experts can help achieve this goal.