May/June 2021

Coding Corner: The Future of Prior Authorizations Is Near
By Robyn Petersen, RHIT, CPMA, CCS, CPC; Insewa Berridge, CPMA, CPC; and Marlisa Coloso, RHIA, CCS
For The Record
Vol. 33 No. 3 P. 6

With the COVID-19 pandemic sending the country’s health care system into disarray, industry leaders now more than ever realize the need for high-quality, coordinated patient care and electronic data sharing among providers and payers. The pandemic has only intensified the longstanding desire of patients to have easier access to their medical data.

To help satisfy patient demands, in May 2020 the Centers for Medicare & Medicaid Services (CMS) published the Interoperability and Patient Access Final Rule, which establishes policies to break down barriers to access. CMS has since added to the rule by reducing the requirements for the electronic prior authorization process, a component that goes into effect July 1. (Currently, Medicare Advantage plans are not part of the rule, but CMS has indicated that this remains a possibility.)

These developments mean providers and payers must establish best practices to ensure compliance with the prior authorization rules.

Making Sense of It All
Prior authorization allows payers to validate the medical necessity of a procedure more easily by accessing a patient’s historical documentation. Basically, payers participate in the coordination of patient care, which, in turn, provides more timely reimbursement. Prior authorization also alleviates the cumbersome process of submitting claims only to have them partially or completely denied, requiring the provider to go through the costly and labor-intensive appeal process.

Data sharing through API-enabled health care exchanges is a key element of the final rule for payers in the Medicaid, Children’s Health Insurance Program (CHIP), and Qualified Health Plan (QHP) programs. (API refers to application programming interface, which allows multiple software applications to communicate with each other.)

Data sharing uses Health Level Seven International’s Fast Healthcare Interoperability Resources, a technology used by multiple software applications so that each can understand the data being shared. For example, it ensures that documentation from last week’s emergency department visit is available to the primary care physician when the decision to schedule surgery or refer the patient to a specialist is made. This exchange of data also follows patients when they move from one payer to another.

Electronic Prior Authorization
Prior authorization is a method through which health care providers can request approval from payers to provide a medical service, prescription, or supply before the service is provided, thereby avoiding a potential denial. The final rule enables providers to send prior authorization requests via an EMR. In turn, payers respond via the EMR, thus streamlining the process for quicker approvals.

Urgent requests must receive a response within 72 hours while nonurgent requests must be addressed within seven days. The rule also requires payers to provide detailed reasons for denials, which creates an open dialogue with providers and better communication between all those along the care continuum. For example, when a provider is informed that a procedure is denied due to lack of documentation, it could take steps to ensure that future requests for the same procedure include this information.

Including the reason for denials reduces the correspondence between providers and payers and the time it takes to complete the process.

These enhancements to the electronic prior authorization process increase efficiency, help prevent medically unnecessary procedures and fraud and abuse, and offer a path to fewer denials and appeals.

Effect on Day-to-Day Operations
Prior authorization is required before performing certain procedures or treatment, or ordering prescription drugs. It must be completed for the insurance company to provide full (or even partial) coverage. Without prior authorization being approved by the payer, the patient may be held responsible for the bill.

Electronic prior authorization helps cut down on expensive or unnecessary care. For example, a prescription for a brand name medication when a generic is available would require authorization to justify the reason for not giving the more economical version.

Another area where prior authorizations are beneficial is to ensure duplicate services are not being rendered. For example, a denial is issued when a primary care doctor orders a head CT scan when one had been ordered by the emergency department only two weeks prior. As a result, the primary care physician will review the completed scan to decide whether an additional scan is necessary.

The update to the prior authorization rule improves electronic data exchange among payers, patients, and providers. The new process allows payers and providers to gain access to complete patient histories, minimizes unnecessary treatments, and improves coordination of care. With the deadlines for responding to urgent and nonurgent requests in place, it also reduces the time to receive a decision.

The rule requires that all payers in Medicaid, CHIP, and QHP programs create an application that would grant data exchange and electronic prior authorization. This application communicates and shares data electronically between payers and providers. It also increases patient access to health information, which, in turn, enables them to take their data with them should they switch payers or providers.

The rule has the potential to reduce duplicate authorizations and denials, streamline documentation processes, and improve communication between payers and providers. It is anticipated that electronic access will allow for data to be available when and where they are needed, which promotes better care, reduces costs, and encourages a cohesive relationship between payers, providers, and patients.

With the final rule going into effect July 1, it’s time for facilities to take the following steps in order to meet the deadline:

• Create a committee of appropriate team members to address the needs of the facility to ensure compliance. Set regular meetings to discuss a plan of action. Possible departments/individuals to include in the committee are IT, compliance, nursing, HIM, patient financial services, patient access services, data analysts, and revenue cycle officers.

• Conduct regular and direct communications with your top five payers with regard to their action plans. What are the payers’ needs? How can you assist? How are data to be accessed? What are the system requirements?

• Compare the authorization documentation requirements from the various payers to determine whether a standard template can be used or whether each payer requires a unique set of templates for medical services and prescriptions.

• Discuss issues such as processes, staffing, labor, education, costs, and total impact.

• Compile your current prior authorization denials and trend by reason, time, and payer. This will help determine the exact requirements to obtain approvals. It will also come in handy when interoperability begins and payers start providing reasons for authorization denials. Authorization denials should be reviewed regularly to determine best practices for keeping them to a minimum.

• Contact your EMR vendor to determine whether any changes or accommodations are necessary to update the technology in order to effectively exchange data with payers.

• Once a plan is completed and data exchange is taking place, continue meeting to ensure that processes are working. Monitor approvals and denials to ensure denials are decreasing, and then decide whether steps need to be taken to improve the process.

(Provided there is an understanding of who holds the key roles in the office, these tips and best practices can also be utilized by physician offices.)

Be sure to educate the team, from providers to coders and billers, on the policies and procedures necessary to achieve consistency in the new-look prior authorization process.

— Robyn Petersen, RHIT, CPMA, CCS, CPC, is founder and CEO of STAR Medical Auditing Services.

— Insewa Berridge, CPMA, CPC, is director of auditing and coding at STAR Medical Auditing Services.

— Marlisa Coloso, RHIA, CCS, is director of business development and HIM director consultant at STAR Medical Auditing Services.