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Preauthorization is a microcosm of the healthcare industry – well intended, but unnecessarily complex and indisputably broken. It is messy and hard because it necessitates bringing both clinical and administrative data together from disparate systems to form insights and make decisions. The good news is that while it might be messy and hard, Redox is connecting the solutions that will fix it. And, if we can fix this, we will be one giant step closer to fixing it all.
Preauthorization is the worst
Payers, providers, regulators, and patients rarely agree, but they are united in their disdain for preauthorization. It might, quite literally, be the worst. In 2018, providers and payers released a consensus statement that called for preauthorization improvements, and in 2019, the ONC leader had some choice words on the subject:
Many of us have experienced a preauthorization (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 when it doesn’t it can be an administrative time sink for both provider and payer staff, and may even impact the delivery of care.
The 2022 CAQH Index includes an in-depth analysis of how long provider staff spends on preauthorization transactions. They found that providers spend an average of 20 minutes on fully manual transactions (e.g. fax), 12 minutes on “partially electronic” transactions (e.g. web portal), and just 9 minutes on fully electronic transactions (e.g. ASC X12N 278). Significant time could be saved by moving all preauthorization requests to fully electronic. In 2022 alone, providers could have saved nearly 17.4 million hours.
Providers’ preauthorization transactions in 2022
In the midst of widespread shortages, the time of providers and their staff is more precious than ever. Redirecting time spent on administrative tasks to patient care would undoubtedly improve patient experiences and maybe even save lives. In a 2022 AMA survey of physicians, 94% of providers reported that preauthorization processes have delayed the delivery of care. Delays can result in life-threatening events, hospitalization, or even death. Approvals can take 1-14 days, and denials can sometimes take many weeks or even months.
The CAQH Index also took a hard look at how much preauthorization costs. You may have already guessed it — it’s not cheap. COVID-19 provided a bit of a reprieve on preauthorizations to ease the administrative burden, but with those restrictions now lifted, 2022 was the most expensive year on record. Preauthorization cost the industry $1.01 billion in 2022. Fully manual transactions cost an average of $14.52, partially electronic transactions cost $7.24, and fully electronic transactions cost just $4.92. CAQH estimates that moving to fully electronic transactions would have saved the industry nearly $449 million in 2022 alone.
Preauthorization is already the worst, but it may be getting even worse (if that is possible). 79% of medical groups reported that preauthorization is becoming even more burdensome in a 2022 Medical Management Group Association poll.
With something that is costing everyone too much and taking too long, you may ask, what is the point? Despite its bad rap, preauthorization is quite well-intended. It is meant to ensure that recommended treatments are safe and evidence-based, while also preventing healthcare overspend. 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 Government Accountability Report estimated that preauthorization saved CMS nearly $2 billion between 2012 and 2017 on a series of demonstration projects.
The solution: End-to-end electronic preauthorization
CMS has acknowledged the evidence that electronic processing will dramatically improve preauthorization. In December 2022, CMS proposed new rules that would push the industry toward preauthorization solutions that reduce the most burdensome process in healthcare today. An overview of these rules is available in a recent Redox blog. The comment period for the proposed rules closed in March 2023. If finalized, the rule will require all payers offering Medicare, Medicaid, CHIP, and Qualified insurance products sold on the federally facilitated exchange to adopt fully electronic processing. While it may take some time for this rule to reach the finish line, there is reason to believe the implementation date will hold as January 2026. With this in mind, there is no reason for payers or providers to delay making significant progress toward electronic processing.
The Redox Payer FHIR API allows payer and provider organizations to blaze a trail as early adopters of the new FHIR standard, with the practicality of being able to connect to all other ONC-approved legacy standards (X12, HL7v2, NCPDP, etc.) as the rest of the industry catches up. Redox manages the complexity of receiving and sending data in multiple formats so that payers and providers can remain focused on perfecting their custom preauthorization solutions. They can also breathe easy knowing that Redox will help them adapt to CMS Prior Authorization interoperability requirements as they are finalized. Get into the technical weeds with us by tuning into our recent Tech Talk on Da Vinci FHIR.
Integrating prior authorization vendor products
Redox doesn’t sell prauthorization solutions – we help our customers integrate them. There is a growing number of exciting preauthorization solutions on the market that use artificial intelligence and machine learning to reduce administrative burden and expedite the preauthorization process for both providers and payers. Redox Nexus can fully integrate these vendor technologies with native electronic health record (EHRs) workflows and connect them to clearinghouses and payer systems of record to fully automate the preauthorization process from end-to-end.
Redox has helped our customers and their health care system partners to reduce staff processing times and overall preauthorization turnaround times by as much as 60%.
Integrating custom preauthorization solutions built in-house
While there are a growing number of solutions on the market, some providers and payers have unique needs that may not be fully met by commercially available solutions and they are hard at work developing custom preauthorization solutions. Redox can also facilitate interoperability for these custom-built products, enabling fully electronic preauthorization processing.
Redox is currently engaged with a large worker’s compensation payer, connecting their custom preauthorization solution to their 250 largest healthcare organization partners via Redox Nexus. The Redox solution embraces Da Vinci Prior Authorization implementation guides. The fully connected solution will eliminate manual legacy processes that include a combination of fax, email, scanning, and snail mail. It will save both the payer and connected providers countless hours of staff time.
Before Redox: Current payer processes are nearly completely manual and rely on fax and/or mail for provider/payer communication.
Redox Nexus allows payer and provider organizations to blaze a trail as early adopters of the FHIR standard and ensure compliance with pending CMS requirements. It also provides the practicality of being able to connect to all other ONC-approved legacy standards (X12, HL7v2, NCPDP, etc.) as the rest of the industry catches up. Redox manages the complexity of receiving and sending data in multiple formats so that payers and providers can remain focused on perfecting their custom preauthorization solutions. If you want to dig deeper into our solution and how it works, join our recent tech talk on X12 to FHIR translation to learn more.
Together, we will fix this
Redox is excited to be connecting vendor solutions and custom payer and provider solutions that are tackling preauthorization challenges head-on. We are proud to be a part of fully automating processes so that our nation’s providers have more time to spend with their patients and patients receive the care and treatment they need in a timely fashion.
While we have established that preauthorization is “the worst”, in many ways, it is just the tip of the administrative iceberg in healthcare. According to CAQH there are $22.3 billion in potential annual savings to the industry if all administrative transactions could transition from manual to fully electronic. There is no doubt that once we fix the worst problem, we will have what it takes to fix the rest including eligibility and benefit verification, claim submissions, coordination of benefits, claim inquiries, claim payments, and more. We say bring it on, we are ready.