Healthcare spending in the U.S. has reached what many consider to be unsustainable levels. While spending in other developed nations averaged 8.8% of GDP in 2019, it was nearly double that in the U.S. at 16.8%.1 One of the most significant contributors to this spending is administrative waste, which accounts for up to 30% of our total healthcare spending.2
30% of total healthcare spending in the U.S. is administrative waste.2
The prior authorization process is one of the most significant examples of administrative waste. According to the 2021 CAQH Index report, prior authorizations are “one of the most costly and time-consuming transactions to conduct.”3 While payers insist that prior authorization processes are essential for containing costs, providers and patients bear the brunt of the burden. In a survey by the American Medical Association, 88% of providers describe the burden from prior authorizations as “high” or “extremely high,” and 93% say prior authorizations cause delays in care.4
Providers surveyed about prior authorizations:4
88% describe the burden from prior authorizations as “high” or “extremely high”
93% say prior authorizations cause delays in care
The good news is that the CMS recently released a proposed new rule, Advancing Interoperability and Improving Prior Authorization, to expedite the time it takes for certain payers to process prior authorizations.5 The rule would include a new “Electronic Prior Authorization measure for eligible hospitals and critical access hospitals under the Medicare Promoting Interoperability Program and for Merit-based Incentive Payment System (MIPS) eligible clinicians under the Promoting Interoperability performance category.”6
Action from the CMS is promising, but we all know how long it can take for new legislation to pass, especially healthcare legislation. In the meantime, here are four steps providers can take to simplify prior authorizations so they become less of a burden.
Automate the Revenue Cycle
According to the HFMA, providers could save millions of dollars each year by automating revenue cycle processes.7 Technologies such as AI (artificial intelligence), ML (machine learning), and RPA (robotic process automation) can reduce errors, especially in processes like eligibility verification, prior authorizations and claims processing. This, in turn, can significantly reduce denied claims. Research shows that more than 12.4% of all denials are due to issues with authorization and precertification alone.8
12.4% of all denials are due to issues with authorization and precertification alone.8
Automating revenue cycle operations enables providers to conduct more prior authorizations in less time while reducing the need to rework denied claims on the back end. This helps alleviate the burden on staff who often have to spend hours on the phone with payers each day to gather information. For patients, it means getting the care they need without having to wait weeks or months. For providers, it means better outcomes, improved patient satisfaction scores and increased revenue potential.
The average provider completes 41 prior authorizations each week, with each averaging two days.9 For hospitals, that number varies based on size, services provided and other factors, but the burden is just as significant—and costly. According to the 2021 CAQH Index report, 43 million prior authorizations are conducted yearly, with each manual prior authorization costing $14.49.10
43 million prior authorizations are conducted yearly, with each manual prior authorization costing $14.49.10
The AMA believes providers could greatly benefit by standardizing and automating prior authorization processes and by using electronic prior authorization.11 Not only could this save providers millions each year, but it could also reduce the workload on already burdened staff. The AMA suggests that, where available, electronic prior authorizations should be integrated into the regular EHR workflows. Once a provider has received approval (such as an authorization number), that documentation should be used when submitting the claim. The same process should be used across all payers.
Train and Mentor Staff
The quality of a provider’s revenue cycle performance is directly correlated with the quality of its revenue cycle staff. Yet, maintaining a highly qualified revenue cycle team is more challenging than ever as providers continue to struggle with staffing shortages. When experienced employees leave, the Great Resignation has made it more difficult to find qualified replacements. The move to remote work during the pandemic has opened up a larger job market, especially for highly qualified revenue cycle staff. And it’s made recruiting and hiring more competitive with higher salaries and bigger sign-on bonuses.12
First and foremost, providers need to make certain that their revenue cycle staff understands the impact their work has on the bottom line. Expanded and ongoing training for current and new staff should be a requirement, especially now. For example, coding staff should be required to maintain certification and providers should help them do so. Performance goals and incentives such as bonuses or paid time off can be effective in achieving a high-performing team while reducing turnover.
Improve Patient Communication
Patients often are confused about their healthcare coverage. Prior authorizations are no exception. Once a prior authorization request is sent to a payer, it’s out of the provider’s hands. They have no control over how long it might take for approval or even if the request will be approved. It can take weeks or months to hear back, all the while patients are waiting and growing more frustrated. Not hearing for days on end can make patients question whether the provider is doing enough to advocate on their behalf to the payer.
Providers need to position themselves as advocates for the patient throughout the process.
The best thing providers can do is proactively communicate with patients about the status of the prior authorization, which should include an explanation of the process. It is critical to keep them informed by letting them know when the prior authorization was submitted and what is being done to expedite the process. Providers should let their patients know that they understand their frustration and are doing everything possible. Providers need to position themselves as advocates for the patient throughout the process.
The Journey Forward
More than eighty percent of providers say prior authorizations have led patients to abandon their treatment.13 Thirty-four percent say a prior authorization has led to a “serious adverse event” for a patient, and 8% say a prior authorization has led to disability, permanent bodily damage, congenital anomaly, birth defect or death.
There is a general understanding in the industry that the prior authorization process needs to be fixed, but it’s not going to happen anytime soon. Until new legislation becomes law, providers need to do all they can to automate prior authorizations, standardize processes, maintain a highly qualified staff and improve patient communications. Their patients—and their bottom line—are depending on it.