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Prior Authorization Denials: Meeting Today’s Challenges While Building for the Future

By Connie Smith

The cost and administrative burden associated with prior authorizations is not new, nor is it getting better for physicians or health systems. According to MGMA, provider practices report a significant spike in prior authorization requirements since 2020. Some plans are now applying prior authorization to a wider range of services, including those for which the treatment protocol has remained the same for decades and there is no evidence of abuse. And it’s not only the sharp rise in prior authorization demands, as practices also report increased denials, delayed approvals for care, and constantly changing rules.

One critical factor that further complicates the environment is that prior authorizations are still mostly manual, costing an average of $13.40 and 20 to 60 minutes per manual transaction, often completed using websites, phone, and fax. The negative impact on patients and their physicians cannot be underestimated. According to 94% of providers, the prior authorization process causes delays in patients’ access to necessary care, and 30% say such delays have caused a severe adverse event for a patient in their care. For some payers, once an authorization is denied, the provider’s only options are to appeal or wait 45 days to resubmit the request, further slowing the care process.

In this challenging environment, the best approach to preventing prior authorization and claim denials is to focus on the front end of the revenue cycle, ensuring all the information needed to secure the authorization is gathered up front. This article highlights best practices for using revenue cycle and patient access technology to prevent authorization denials today while building a foundation for transforming the process in the future.

Three Best Practices That Help Prevent Authorization Denials
1. Transition to Digital Orders: Surprisingly, 90% of providers still rely on fax communications. Paper-based ordering for diagnostic, laboratory, or radiology tests is fraught with errors and omissions that can lead to authorization denials. For health systems, working with employed and independent providers in their market to transition to electronic ordering will create a consistent starting point for care delivery. For employed providers, encouraging the use of electronic ordering capabilities through the EHR can reduce reliance on faxing. For independent referring provider practices, who typically have a wide range of different EHRs, many health systems offer order management technology via a patient access solution that complements the EHR. Such technology makes it faster and more convenient for providers to submit orders electronically to the servicing health system.

2. Accept Only Complete Orders: In a largely manual environment, physicians often submit orders without including basic information needed to assess medical necessity. Servicing providers should confirm that the ordering provider has included diagnosis and procedure codes, answers to questions about prior treatment, and the chart notes pertinent to justification of the service.

3. Confirm Adherence to Known Treatment Protocols: Although prior authorization requirements vary across payers, there are requirements that are typically consistent. For example, most payers require an X-ray before a more expensive study, such as an MRI or CT scan can be ordered; and conservative treatment, such as physical therapy, needs to be prescribed before more aggressive treatment, such as surgery. When an order is received, confirm that the appropriate prerequisite steps have been taken before proceeding with the prior authorization request.

A Path Forward With Cooperation and Enabling Technology
While the best practices highlighted above can be very helpful today, a better way could be possible in the future. According to an AHA Survey, medical necessity is the most common reason health plans deny prior authorization requests, even as health plans are known to change their requirements often. Instead of this adversarial stance, what if health plans cooperated with health care organizations and technology solution providers to embed medical necessity requirements within the electronic ordering process?

Such collaboration would be a gamechanger. Consider that each payer uses their own series of questions—typically answered through a website portal—to determine when their requirements for medical necessity have been met. When a physician orders a diagnostic test, the questions are designed to determine if the test is warranted based on the patient’s diagnosis, prior treatments, and intended care plan.

If payers shared the logic that drives the decision process, it could be embedded within a patient access platform, making it part of the ordering provider’s workflow up front. Through intelligent automation and machine learning, the patient access platform could ingest the payer logic and use it to guide ordering providers through the questions at the time of order. The workflow can be dynamic, for example, when ordering a CT scan, the flow of questions would change depending on whether the patient has had an X-ray. At each point in the process, the system could enforce requirements that result in complete and accurate information to drive authorized payer determinations. Moreover, with a complete digital order that complies with payer requirements in hand, automatic real-time eligibility, network, and health plan validations could proceed, followed by automated submission for prior authorization. Both accuracy and speed would increase dramatically.

The technology exists today to dramatically reduce the labor and cost associated with prior authorizations. What’s needed is a higher degree of collaboration and accountability among the key stakeholders—health plans, health care providers, and technology solution vendors. By leveraging technology, health care providers will be able to deliver appropriate care faster and receive appropriate payment without delay, leading to a dramatically better experience for patients and their physicians.

— Connie Smith is senior director of authorization technology and services for R1 RCM.