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Fixing prior authorization

Powering the solutions that fix healthcare

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, 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. 

Prior authorization is the worst

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 prior authorization improvements, and in 2019, the ONC leader had some choice words on the subject:

Prior authorization “is a non-computerized kabuki of payment” that “needs to get rethought.”
Don Rucker, former ONC Director

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 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.

It’s time-consuming

The 2021 CAQH Index includes an in-depth analysis of how long provider staff spends on prior authorization transactions. They found that providers spend an average of 23 minutes on fully manual transactions (e.g. fax), 18 minutes on “partially electronic” transactions (e.g. web portal), and just 7 minutes on fully electronic transactions (e.g. ASC X12N 278). Significant time could be saved by moving all prior authorization requests to fully electronic. In 2021 alone, providers could have saved nearly 11 million hours. 

Prior Authorization Case Study Graph

In the midst of a global pandemic, the time of our healthcare 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 2021 AMA survey of physicians , 93% of providers reported that prior authorization 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. 

It’s expensive

The CAQH Index also took a hard look at how much prior authorization costs. You may have already guessed it, but it’s not cheap. Prior authorization cost the industry $686 million in 2021. Fully manual transactions cost providers an average of $10.95, partially electronic transactions cost $9.93, and fully electronic transactions cost just $3.43. Moving to fully electronic transactions would have saved providers nearly $350 million in 2021 alone.

Prior Authorization Case Study Graph 2

Providers are not the only ones that experience higher costs with manual transactions. They can also result in tremendous burdens on payer staff – each manual transaction costs a payer an average of $3.54. Meanwhile, electronic transactions cost just 7 cents each. When considering the total costs to providers and payers, electronic processing could save the industry over $437 million annually.

Prior authorization is already the worst, but it may be getting even worse (if that is possible). 81% of medical groups reported that prior authorization is becoming even more burdensome in a 2021 Medical Management Group Association poll. Indeed, manual and partially electronic processing times are getting longer. The 2021 CAQH average processing times were up compared to times reported in the 2020 report. Three additional minutes/transaction for manual processing, five minutes/transaction for partially electronic transactions. Meanwhile, the already low fully electronic times decreased by one minute. 

With something that is costing everyone too much and taking too long, you may ask, what is the point? Despite its bad rap, prior authorization 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 prior authorization saved CMS nearly $2 billion between 2012 and 2017 on a series of demonstration projects.

The solution: End-to-end electronic prior authorization

CMS has acknowledged the evidence that electronic processing will dramatically improve prior authorization. Early in 2021, they proposed a Reducing Provider and Patient Burden by Improving Prior Authorization Processes rule that would require all payers offering 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 it is coming. A request for information was recently issued seeking public input on an updated proposed rule. With this in mind, there is no reason for payers or providers to delay making significant progress toward electronic processing. 

Redox doesn’t sell prior authorization solutions – we help our customers integrate them. We can fully connect vendor technologies that use machine learning and artificial intelligence to expedite prior authorizations. Redox integration enhances the adoption of these technologies by embedding them directly in electronic health record system workflow and further accelerates decisions by eliminating fax machines, snail-mail, and web portals. Redox has helped our customers and their health care system partners to reduce staff processing times and overall prior authorization turnaround times by as much as 60%.

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 prior authorization solutions. Redox can also facilitate interoperability for these custom products, enabling fully electronic prior authorization processing.

Redox is currently engaged with a large worker’s compensation payer, connecting their custom prior authorization solution to their 250 largest healthcare organization partners with our Payer FHIR API, which embraces Da Vinci Prior Authorization implementation guides. The fully connected solution is expected to 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.

Prior Authorization Case Study
Before Redox: Current payer processes are nearly completely manual and rely on fax and/or mail for provider/payer communication.

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 prior authorization 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.

Prior Authorization Case Study 2
After Redox: After the provider enters an authorization request into the EHR, many authorization requests can be completely automated, reducing the burden on both the payer and their provider partners.

Together, we will fix this

Redox is excited to be connecting vendor solutions and custom payer solutions that are tackling prior authorization 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 prior authorization is “the worst”, in many ways, it is just the tip of the administrative iceberg in healthcare. According to CAQH there are $17.6 billion in potential 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.

Interested in integration?