If there’s one thing healthcare providers can agree on, it’s that prior authorization management is a heavy administrative burden and only growing heavier. Decades ago, it was created to ensure care standards continuity, improve safety and regulate costs but has become an unwieldy process filled with manual tasks and roadblocks that dilute the original intent.
Prior authorization typically requires staff to follow a laborious workflow that can be difficult to track to completion. Multiple data entries, payer rule discrepancies, inconsistent payer documentation requirements and changing government mandates hamper these processes. Prior authorizations can take an inordinate amount of time, which decreases productivity, wastes resources, can lead to treatment delays and may adversely affect patient outcomes.
While the need to streamline prior authorization has been evident for years, the financial devastation caused by COVID-19 has motivated providers to reexamine it—and the entire revenue cycle—for improvement opportunities.
Prior authorization and the pandemic
The American Hospital Association estimates the pandemic cost U.S. hospitals and health systems $202.6 billion in lost revenue (PDF) from March through June of this year. This, added to a predicted $120.5 billion shortfall from July through December 2020, brings total losses for the period to nearly $325 billion. More than 30 hospitals in the U.S. have already entered bankruptcy this year.
Though the U.S. Department of Health and Human Services has about $30 billion left of its $175 billion in relief funds to distribute to healthcare providers, these grants don’t begin to cover lost revenue and higher expenses resulting from the pandemic. Some hospitals are offsetting the financial damage by furloughing and laying off employees, reducing executive salaries, putting capital projects on hold and suspending dividends until the outlook brightens.
As providers scrutinize the revenue cycle to fill revenue gaps, prior authorization management looks particularly promising. Studies and actual implementations show automation can transform an outdated approach into an efficient, cost-effective process that boosts productivity, reduces denials and increases collections.
The Council for Affordable Quality Healthcare (CAQH), which studies healthcare administration spending, says prior authorization is the costliest and most time-consuming transaction for providers to conduct manually. Moving to a fully electronic process holds the greatest per-transaction savings opportunities, both in dollars and time. Fully electronic prior authorizations take just four minutes on average to complete, versus 21 minutes to complete manually, a nearly 80% improvement. A highly productive prior authorization department can significantly increase operational efficiencies, reduce costs and slash denials.
Components of a comprehensive solution
There are three critical steps to prior authorization: 1) determining the need, 2) submitting the request and 3) checking approval or denial status. Prior authorization solutions should encompass technology, workflows and training to ensure all steps are completed quickly and efficiently.
Technology is at the core of reducing complexity in healthcare administration, but adoption of an electronic standard for prior authorization has been slow. Solutions that address barriers such as inconsistencies in data content allowed, varying state laws mandating manual intervention and lack of infrastructure supporting clinical documentation exchange can help ease providers’ burdens, improve productivity and accelerate patient care.
At a minimum, prior authorization technology should be compatible with all electronic medical records systems. They should have prior authorization status prepopulated to Health Level 7 (HL7), a set of international standards for transferring clinical and administrative data between providers’ various software applications. This helps reduce duplicate data entry and flag accounts that might need additional clinical information or peer-to-peer review. Technology should be easy to implement in 90 days or less and work well with existing pre-access workflows.
A comprehensive payer rules engine that updates and stores national, regional and state payer rules is imperative. The engine should also incorporate unwritten rules gathered from hospital staff, learn from past outcomes and adapt workflows based on insights to identify plan-specific authorization requirements in real time. Another valuable capability is using bots to submit authorization requests and automatically check and recheck prior authorization request statuses. The solution should alert staff when authorization is approved or denied, or when payers need additional information.
The best prior authorization management solutions go beyond technology to incorporate straightforward workflows that standardize activities. Advanced solutions can create custom work lists for each user, allowing providers to give authorization task access to specific user roles, service areas and locations. For the highest efficiency, a single access point should allow cross-functional staff to seamlessly manage patient account-level communications and navigate assigned work lists. Ideally, staff can check codes for prior authorization requirements inside and outside patient access processes, including orders, scheduling and preregistration. Workflows should also recognize when human intervention is needed and alert staff to pick up the process where automation leaves off.
While the whole point of automating prior authorization is to simplify processes, staff still need to be trained on new technology and workflows. Comprehensive solutions include training and educational tools to speed adoption and productivity; some also offer optional, expert prior authorization advisers and best practice playbooks to optimize system capabilities and staff productivity.
How prior authorization management will progress
The road to prior authorization automation has been long and tedious. A CAQH report published in 2019 said only 12% of prior authorization transactions (PDF) in the U.S. were conducted using HIPAA standard 5010X217 278 Request and Response, a federally mandated standard for prior authorization and referrals. Staying the course, however, could produce significant results. CAQH projects further technology adoption and advances can reduce the prior authorization burden, estimated to contribute as much as $25 billion to annual healthcare costs (PDF) in the U.S.
There are signs of forward progress. Legislation to rein in practices that can negatively affect patient health has been introduced, and numerous industry initiatives to improve processes, establish standards and close technology gaps are underway. Key to maintaining positive momentum are technology enhancements that engage all payers through expanded data transaction standards such as those for eligibility verification. As examples, in May 2019, CAHQ released the Prior Authorization (278) Request / Response Data Content Rule and the Prior Authorization Web Portal Rule as part of a road map to an end-to-end automated workflow (PDF) for prior authorization management.
Streamlined, uniform prior authorization management will undoubtedly benefit providers, payers, and patients. Hospitals and health systems that transition to fully electronic transactions can expect to experience higher efficiencies, lower costs, reduced denials, and, ultimately, increased revenue.
David Shelton is the CEO for PatientMatters. He has served in senior healthcare management for more than 15 years, with experience in operations, technology development and manufacturing. His expertise includes delivering business growth, streamlining operational management and generating profitability for PatientMatters and its healthcare clients.