A Pain Point for Every Healthcare Stakeholder: Easing the Sting of Prior Authorization

By Jeffrey Sullivan, chief technology officer of the cloud fax division, J2 Global, Inc.

Jeffrey Sullivan

Time may heal most wounds, but it has done little to lessen the sting of prior authorization.

Despite decades of streamlining and automating healthcare business transactions, prior authorization remains one of the most burdensome, complex and costly administrative activities in the industry that creates hardship for all stakeholders—providers, payors and patients, contributing an estimated $25 billion per year to healthcare costs in the U.S. This is primarily because it remains a largely manual process and, therefore, prone to error.

With the number of transactions steadily increasing year over year, providers and payors need to collaborate and push for an electronic solution. The effort will involve changes to technologies as well as processes and regulations.

The high cost of business as usual

Prior authorization (PA) is a check run by insurance companies and third-party payors before they agree to cover the cost of certain healthcare services and medications. It was designed to ensure patients received the most appropriate and cost-effective care. However, increased demand for documentation, along with lack of standardization and automation, are undermining its original intent.

More than 77 million PAs are conducted manually each year. These transactions can require a significant amount of provider and staff time to research, prepare and resolve. This often entails printing information from different health information systems and then faxing or mailing the documents to the payor. Moreover, according to the CAQH Index, 84 percent of medical necessity documents exchanged manually often have too much or too little information, which results in delays and frustration.

Even more problematic is the negative impact the PA process has on patients. In an American Medical Association survey, 9 out of 10 physicians said PA delayed access to necessary care and nearly one-third reported it led to serious patient harm, such as hospitalization or death. PA delays and denials lead to treatment abandonment and, ultimately, poor outcomes.

How did we get here?

While the standard electronic method for the PA process has been available for more than a decade, adoption has been low for a variety of reasons, chief among them:

The path forward

Fully electronic PAs could make a tremendous difference in the efficiency and effectiveness of healthcare and potentially save payors and providers $6.84 per transaction. Change will only happen when providers and payors voice their demands for solutions that encompass technology, process and policy.

One without the other won’t suffice. Information exchange technologies exist, but if left to market demand, they languish. Standards that aren’t backed by policy will remain ignored. And regulations that are open to interpretation and costly workarounds add to administrative bloat.

At the end of the day, providers and payors need to remember that the end goal of all of these efforts, beyond controlling costs and eliminating waste, is to ensure patients get the most appropriate care as efficiently as possible for best clinical outcomes. Through collaboration and leveraging the power of their collective voices they can put pressure on the Centers for Medicare & Medicaid Services to reduce the burden of PA and advance reform.


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