Healthcare Products

Healthcare is broken. Electronic prior authorization might be the first step in fixing it.

Posted September 13, 2021
By Jessica Bonham-Werling

Payers, providers, regulators, and patients rarely agree, but they are united in their disdain for prior authorization. It might, quite literally, be the worst. 

In 2018, providers and payers released a consensus statement that called for improvements, and in 2019, the ONC leader had some choice words.

Prior authorization “is a non-computerized kabuki of payment” that “needs to get rethought.”

Don Rucker, former ONC Director

But, fear not. There is a solution that can improve experiences, cut costs, and lead to better outcomes.

What is prior authorization?

Many of us have experienced a prior authorization (PA) process – when a doctor requests approval from a health insurance company before providing a medical service or treatment. Approval indicates the insurer will pay when they get the bill. When it works well, patients may not even realize it happened, but it is often problematic.

It’s expensive. The average manual PA transaction costs about $13. That may not seem like much until you consider the 63 million fully manual medical PA transactions in 2020. Manual transactions are about 34% of the total PAs processed, and another 45% are partially electronic. Just 21% are fully electronic.  According to the 2020 CAQH index, PA is the single largest expense for the healthcare industry with a total price tag estimated at about $767 million annually.

It’s slow. CAQH estimates it takes about 13 minutes for a provider to process a manual PA request (via a fax machine!), but this does not include preparation, follow-up, or time spent on arbitration in the event of a denial. In a 2020 AMA survey of physicians, 94% of providers reported that PA processes have delayed the delivery of care. Delays can result in life-threatening events, hospitalization, and/or death. Approvals can take 1-14 days, denials can take 1 day to many months.

Manual Prior Authorization requires that both providers and payers complete multiple administrative steps.

With something that is costing everyone too much and taking too long, you may ask, what is the point? Despite its bad rap, PA is actually quite well-intended. It is meant to ensure recommended treatments are safe and evidence-based, while also preventing healthcare overuse (and overspending). Think of it as another pair of expert eyes to look at a doctor’s recommendation, the larger picture of your health situation, and confirm the treatment makes sense before proceeding. A 2017 Government Accountability Report estimated that PA saved CMS nearly $2 billion between 2012 and 2017 on a series of demonstration projects in just 7 states. 

Prior authorization is like a microcosm for the healthcare industry – well intended, but unnecessarily complex and indisputably broken. It is seen as messy and hard because it necessitates bringing both clinical and administrative data together to form insights and make decisions. The good news is that while it might be messy and hard, we can fix it! And, when we do, CAHQ estimates we can save $417 million every year, give providers time back, improve patient experiences, and probably save a fair share of lives. If we can fix this, we will be one giant step closer to fixing it all. 

Change is good (and also maybe required).

Earlier this year CMS tried to finalize the Interoperability and Prior Authorization rule to streamline the PA process. The rule requires electronic processing through a prior authorization support application programming interface (PAS API), reduces the required timelines for payer decisions, and asks for more transparency to patients throughout the process.

“Thanks to this rule, millions of patients will no longer have to wrangle with prior providers or locate ancient fax machines to take possession of their own data. Many providers, too, will be freed from the burden of piecing together patients’ health histories based on incomplete, half-forgotten snippets of information supplied by the patients themselves, as well as the most onerous elements of prior authorization,”

Seema Verma, CMS Administrator

While everyone agrees PA needs to be better, not everyone was immediately pumped about the rule or its prescribed deadlines. The future of the rule (as written) is currently on shaky ground. That said, with significant benefits on the table, there is no reason to delay working toward the spirit of the rule and adopting technologies that will allow fully electronic PA processing. 

Get Started Today.

There are a growing number of PA solutions on the market today that can lead providers and payers toward a truly streamlined process by:

  • Enabling PA submission directly from the electronic health record (EHR) at the point of care (and eliminating the ancient fax machines)
  • Gathering and submitting all required clinical data necessary to complete the PA 
  • Automating all parts of the process that do not require a human touch

But to be truly “end to end”, a PA solution must connect a payer to all the providers in the payer’s network and/or a provider to every one of their patient’s insurance companies. Solutions that are not “end to end” may leave providers and payers with a less complex process for one provider/payer, but a more complex process overall as they may have multiple PA processes running simultaneously (some via fax, others via web portals and others via API). 

While electronic PA processes can simplify the steps for both providers and payers, a mix of manual, electronic, and partially electronic (web portal) processes can make the process more complex.

This is where Redox helps! We don’t sell PA solutions, but we can make sure that they are fully connected to do all the things in the bullets above (and probably more). And with existing connections to 10+ payers and 1700 provider organizations using 80+ EHRs, we can do it quickly. Further, using Redox can help ensure your PA solution will stay compliant as regulations are confirmed and technology standards evolve.

Redox can fully connect payers and providers to enable full end-to-end electronic PA.

Ready to improve prior authorization?

Whether you're a PA software vendor that needs to connect your product to payers and providers or a payer looking to connect your PA solution Redox can help.