Payers have continued to expand services requiring prior authorizations from providers for medical services, procedures, and treatments to patients to ensure the services are medically necessary, appropriate, and cost-effective. However, the process has become increasingly complex over the years, especially with the shift from fee-for-service to value-based care. It involves time-consuming steps that include gathering and submitting medical documents to insurance companies, waiting for approval, and often dealing with denials and appeals.
Additionally, every year the guidance is becoming stricter around the extensive documentation required for authorization. Procedures are being added that historically have not needed authorization. It is a growing challenge for staff to understand the clinical documentation and office notes that are required to support the authorization, and the administrative requirements have far-reaching impacts on finances, operations, and patients. Front desk staff are often charged with obtaining prior authorizations, which can be challenging given many competing priorities, including patient care. Unfortunately, implementing a standardized process across a centralized prior authorization team is not feasible for most providers.
Prior Authorization Challenges: Financial Impact
The administrative burden of prior authorizations has increased steadily over the years, leading to additional costs and workload. Impacts include:
- Increased Cost: The prior authorization process has significantly increased administrative costs to the healthcare system.
- Reduced Revenue: Denied prior authorizations upfront or during the adjudication process results in lost revenue for healthcare providers and can be difficult to overturn. Even worse, patients may ultimately choose to forego care altogether if they know their insurance is unlikely to cover it.
- Delayed payments: The prior authorization process can also result in delayed cash flow, causing major headaches for large providers and small practices alike.
Prior Authorization Challenges: Operational Impact
The increased time and effort required to manage prior authorization impacts healthcare operations, including:
- Resource Drain: The time spent on prior authorization administrative tasks can take away from other important tasks, such as coding and billing.
- Increased Workload: The prior authorization process adds to the workload of revenue cycle management (RCM) staff without necessarily increasing the number of staff members, leading to burnout and staff turnover.
- Errors and delays: The complexity of the prior authorization process can lead to errors and delays in care or additional denials, resulting in a negative impact on patient satisfaction and quality of care.
Prior Authorization Challenges: Patient Impact
The prior authorization process can negatively impact the patient experience in the following ways:
- Delayed care: The prior authorization process can delay patients' access to necessary care, potentially leading to avoidable health outcomes.
- Financial burden: Patients may be responsible for the cost of care if their prior authorization request is denied, which can be a financial burden for patients, especially those with limited incomes.
- Confusion and Frustration: Patients facing denials, experience confusion and stress over billing issues, resulting in a negative patient experience.
Fortunately, there are steps providers can take to address these challenges to optimize workflows, streamline the process, and leverage technology to reduce the burden of prior authorizations.
People Strategies: Sourcing Talent
One of the most critical strategies for navigating the prior authorization process is to optimize and develop workflows that benefit providers' bottom line. Healthcare providers need to ensure that they have the right resources in place to manage the prior authorization process effectively. Options to staff a high-performing revenue cycle team include in-house, outsourced services, or a hybrid model.
- In-house: Sourcing in-person or virtual support from the U.S. (Least cost-effective model.)
- Outsourced: Sourcing virtual resources from countries outside the U.S. (Most cost-effective model.)
- Hybrid: Utilizing a combination of onshore and offshore resources. (Cost-effective model.)
Outsourcing Best Practices
- Search and selection
- Return on Investment (ROI)
- Service Level Agreements (SLAs)
- Compliance standards (HIPAA)
- Investment in transformation, knowledge share
- Collaborative approach
- Analytics to monitor effectiveness
- Governance models to prevent misalignment between parties
- Executive support
Process Strategies
Streamlining the prior authorization process includes standardizing processes for different prior authorization workflows, reducing manual touches, and improving efficiency. Providers should also work closely with payers to ensure that they understand the requirements for each prior authorization. This means capturing the necessary information upfront and securing an agreement from the payer to cover the services. Providers should also track the status of prior authorizations to ensure that they are approved in a timely manner so that payments are not delayed.
Technology Strategies
Finally, leveraging technology can significantly improve the efficiency and accuracy of the prior authorization process. Automating certain aspects of the prior authorization process using generative artificial intelligence (AI), advanced bots, or intelligent automation tools can reduce the workload on staff, allowing them to focus on more critical tasks while minimizing the risk of errors. Additionally, healthcare providers can use predictive analytics to identify trends and patterns in prior authorization denials and rejections, enabling them to make necessary adjustments to their processes. We recommend identifying a technology partner that caters to your needs if your organization does not have the tools or capabilities in-house to automate portions of the prior authorization process.
With the right strategies in place, healthcare organizations can reduce the burden on staff, improve efficiency, and ensure that patients receive the care they need in a timely manner. Our webinar Cutting Through Prior Authorization Headaches, offers approaches for navigating the prior authorization process. Additionally, watch for a future article on adapting to payer changes with prior authorization requirements.
Matthew Bridge
Ryan Chapin
