As both providers and payers continue to move towards risk-based contracts or alternative payment models, encouraging providers to practice in a more cost-effective model, the cumbersome prior authorization process is becoming less meaningful and more resource-intensive.
The current process of acquiring prior authorization is obsolete if not archaic. While other processes such as insurance eligibility, or patient responsibility have seen some improvements through the years, that is not the case with prior authorizations. Providers are still using phones, faxes, and payor websites to request, follow up and acquire prior authorizations which are a manual, time-consuming process and are prone to delayed or non-responses from the payors. Some bot technologies are trying to automate the payor website process by simulating the user interaction with websites, but this technology is not well developed and still requires a user to oversee the process.
In many cases, the provider is forced to make a hard decision between providing care for the patient and face the high probability of payment denial or delay the care for a later date. Rescheduling requires resources to connect with the patient and coordinate another appointment, contributing to a lost appointment slot and an inconvenience to the patient. Change Healthcare, an independent healthcare technology company, reports that between 2019-2020 prior authorization denials accounted for 11.6% of all denial root causes. Of the 11.6%, 61.2% of the prior authorization denials were for “Invalid Denials”, 25.9% were for “Authorization Denied”, 7.5% were for “Services Exceeding Authorization” and the rest were for other reasons. Invalid denials require additional resources and increased costs from both providers and payors to resolve even though the prior authorization process may have been followed appropriately.
Based on MGMA data, in 2019 alone, a whopping 90% of payors have increased services requiring prior authorization, while 9% stayed the same and only 1% have decreased. This indicates that either the payors do not see or understand the burden they are putting on the providers or the providers are not successful in negotiating better prior authorization processes for their patients.
On April 13, 2021, MGMA published its position paper and recommended the following advocacy priorities. You can find the entire position paper here: https://www.mgma.com/advocacy/position-papers/prior-authorization
- Reduce the overall volume of prior authorizations on medical services and drugs
- Waive prior authorization requirements for clinicians in risk-based contracts or alternative payment models, which are inherently designed to facilitate cost-effective care delivery and appropriate utilization
- Require transparency of payer prior authorization policy and establish evidence-based clinical guidelines available at the point of care
- Increase the automation and efficiency of any remaining prior authorization requirements through adoption of industry-developed electronic standards and operating rules
As we negotiate with payors to provide more cost-effective care for our patients, let us advocate for a complete overhaul of the prior authorization process including better automation and a reduction or elimination of the need to obtain prior authorization on risk-based contracts or alternative payment models.