Prior authorization (PA) based on evidence-based clinical protocols and payer requirements is a necessary step in care delivery. It’s designed to protect patients clinically and financially from unnecessary or even inappropriate care. As a provider organization, you know that PA can be a difficult and time-consuming process but it is critical to mitigate denials.
Rather than accepting PA as something that could potentially delay care and cause an initial hiccup in your revenue cycle, you can do something about it with the right approach and the right expertise. In fact, you should consider making PA a rich target in your ongoing efforts to reduce your administrative costs and streamline your clinical workflows.
Making PA a cost improvement priority makes sense, as evidenced in a report from the Workgroup for Electronic Data Interchange (WEDI). Based on a survey of 127 healthcare execs from provider, payer and vendor organizations, the report found that PA demands are growing, but users’ ability to keep up with those demands is not.
A provider organization can justify the investments in automation through obtaining both a reduction in labor and an improvement in denial rates with improved processes.
For example, 84 percent of the surveyed provider execs said the number of medical services for which plans require PA has increased1. Yet, at the same time, only 18 percent said they have the technical ability to know whether PA is required for a particular service without initiating a PA request1.
In addition, a recent Council for Affordable Quality Healthcare (CAQH) report, based on two billion medical claims submitted by 154 million health plan members, found out how costly manual PA is and how much money the industry could save in administrative expenses by automating the PA function.
Automating the PA process saves $9.04 per transaction,saving nearly 83% per PA
Each manually worked PA costs a provider an average of $10.92 in staff time per transaction2. That would drop to $1.88 if the PA process was automated. That’s a savings of $9.04, or nearly 83 percent, per PA. With 27 million manual PA transactions in 2019, that’s more than $244 million in savings for providers alone if each one of those had been automated last year2.
Further, if PA isn’t done efficiently, it could lead to a health plan denying a provider’s claim for payment. Appealing a denied claim is costly, especially when it results in a write-off. Provider organizations need to analyze the financial impact PA denials is costing the organization. Typically, a provider organization can justify the investments in automation through obtaining both a reduction in labor and an improvement in denial rates with improved processes.
What does that all mean for your hospital, health system or medical practice?
It tells us that the clinical, operational and financial challenges of PA are not going away anytime soon. Without taking action, you could be facing more delays in care, more staff time on paperwork and more costs.
The good news is there is something you can do about it. Automating PA with technology can avoid delays in treatment, shift more of your staff’s time to direct patient care activities and actually lower your operating costs. You should consider working with a strategic partner who can automate and optimize your PA processes, either internally or through a service agreement.