Prior Authorizations – A Holistic Approach for Health Plans and Administrators

The prior authorization – the process for gaining assurance that a medical procedure will be paid for by an administrator or insurance company before the service is delivered – is a major source of friction and dissatisfaction among all parties involved – providers, payers, and consumers. At a minimum, it creates administrative overhead, and at its worst, it can delay the delivery of care or even prevent care from being delivered at all.

CMS and many state regulators are promulgating new regulations that mandate automation and interoperability, transparency, and reduced turnaround times. Many of these are destined to take effect within the next two to three years.

At the same time, the healthcare industry continues to move into the world of value-based care and alternative payment models – the primary hallmark of which is provider organizations accepting delegated financial risk and the responsibility for managing the health of an attributed patient population. In order for these arrangements to work effectively, the delegated provider organization needs to function as an integrated system and adhering to an evidence-based standard and model of care. When this happens, the need for the traditional arms-length “Mother, may I?” prior authorization process largely goes away. (Note: The need for both proactive and retrospective oversight still exists, even in a highly functioning clinically integrated network or delivery system.)

In this context, our holistic approach to transforming the prior authorization process incorporates four interconnected strategies: ELIMINATE. AUTOMATE. INNOVATE. EDUCATE.

ELIMINATE

  • Stop “empty” requests in their tracks. In at least one case study, 30% of authorization requests were for procedures that do not require an authorization. By educating providers (see EDUCATE) and equipping them with easy-to-use tools that let them determine in advance if an authorization is needed, a significant percentage of the PA noise is eliminated. The best tools are imbedded in the provider’s EMR, so there is no extra step.
  • Reduce the number of procedures that require an auth. This should be informed by an analysis of claims data as well as prior auth data – to include auths that never resulted in a claim in the data set. This analysis can be used to modify prior auth policy across the board, or situationally – to employ a “gold card” policy for providers who have proven to be reliable practitioners of preferred referral and treatment protocols.
  • Accelerate the move to value-based payment arrangements and the delegation of risk and utilization management to capable provider organizations.

AUTOMATE

  • Get the auth into electronic form as early in the cycle as possible – ideally, originating within the provider’s EMR and communicated through a direct connection, a health information exchange, or a clearinghouse. This is good time to consider a clearinghouse consolidation strategy and to upgrade the enterprise EDI infrastructure.
  • Portals are the next best option, either your own or a commercial offering. If it is your own proprietary portal, be realistic about adoption rates. Unless you represent a significant percentage of their panel, providers generally do not want to bother with multiple payer portals.
  • If FAX is still the thing, get it into electronic format, using OCR technology, and integrated into your UM workflow system immediately. Nobody should be reviewing auth requests outside of the official system of record.
  • Once the auth is in your system, fully leverage the available tools to auto-approve, and for those that need human intervention, to prioritize them into the workflow – with a close eye on regulatory turnaround times and lag times when additional information is required.

INNOVATE

  • Continually analyze data to understand referral patterns, channel utilization (e.g., FAX, portal, EDI,) and utilization patterns by provider.
  • Define a preferred model of care and the ideal delivery components to support it and integrate into the care management/clinical operations strategy and into the provider network management and engagement strategy.
  • Supported with external data analytics that track referral patterns and network leakage, strengthen the network to include the highest-performing providers.
  • Accelerate the pace of value-based contractual arrangements that put the onus of utilization management on the providers.
  • Amp up the level of automation by proactively promoting.

EDUCATE

  • Routinely share information with scorecards and peer-comparison data with providers that point out opportunities to change practice and referral patterns.
  • Help members to be better consumers of healthcare by educating them about optimal pathways, where to seek care under what conditions, and what to expect.