Payers are erecting higher hurdles to care: How can hospitals clear them?

If you haven’t paid attention to the financial health of large insurers during the pandemic, it’s never been better. Unfortunately, the same cannot be said of hospitals and patients. Both are struggling to hurdle escalating barriers to scheduled care due to prior authorization requirements.

While prior authorizations are intended to reduce “unnecessary” procedures, they result in multiple burdens on providers and patients. No-auth denials are the first financial impact, and these can be as high as 10% of a provider’s net revenue. To offset these losses providers must often bill unsuspecting patients who are not prepared for the surprise bill for a covered procedure. Providers expend a massive amount of time, effort and cost into denials management as well as prevention strategies, including a dedicated team of authorization experts who attempt to stem the tide prior to service, with faxes, phone calls and web portals. This herculean effort is incredibly complex, arcane, expensive and often ineffective.

In a recent white paper, the American Hospital Association claims the main purpose of these administrative barriers is to restrict access and inappropriately withhold reimbursement. Prior authorization was required for more procedures than ever in 2020, and the trend shows no signs of slowing. And why would it? It works. But beyond the financial distress on hospitals and patients, prior authorization also can lead to poor patient outcomes. Nearly one in four physicians surveyed said prior authorization requirements led to a serious adverse patient event.

Regulators recognize the problem. CMS approved a rule on Jan. 15, 2021, designed to improve the process for payers participating in Medicaid, CHIP and QHP programs. The rule, which excludes commercial plans, requires three- and seven-day time limits for payers to decide, and includes requirements to use standard electronic transactions to automate the process. But payers are against the rule, and in February, the Biden administration appeared to withdraw it, disappointing providers that spend an average of 20 minutes and $13.40 per authorization to manually obtain permission to perform a procedure a physician already deemed necessary.

Automated authorization management
The technology to automate the bulk of the process is readily available and the 278 transaction standard has existed for more than a decade. Due to payer reluctance to adopt electronic transactions, providers have looked to technology companies to build automation tools using Robotic Process Automation (RPA) and intelligent rules engines to navigate the ever-changing labyrinth of payer portals, rules and requirements. The CMS rule would have required affected payers to build application programming interfaces (APIs), which would simplify this process. Insurers, including CMS, could save nearly $100M annually on their own if they adopted automated processes, according to the 2020 CAQH Index Report. It is easy to surmise the reason for lack of payer support is because it is financially more lucrative to maintain a convoluted status quo.

Don’t manage denials, prevent them
Hospitals don’t have to wait for government intervention. They can switch their focus from denials management to denials prevention. The only way to reduce no-auth denials is to prevent them proactively before a patient receives service. This strategy can be leveraged during four distinct points that make up Patient Access: ordering, scheduling, pre-registration and point-of-service registration.

Regardless which patient “touch point” hospital revenue cycle and patient access teams leverage, there are three process steps to successfully obtaining prior authorization: determination, submission, and retrieval. Usually, each step is a manual and labor-intensive process of faxes, phones, email and portals. The good news is there are new electronic and automated alternatives that make the process much more efficient and affordable.

The first automation opportunity is to electronically determine which accounts require authorization.  This requires an up-to-date payer authorization rules library. Predictive analytics and machine-learning allow a custom “rules engine” that detects when authorizations are required. Automated determination transforms the entire authorization process into an exception-based workflow, saving time, error, and cost. It also allows staff to focus their time only on accounts that need to be submitted.

Once auth-required accounts are identified, the submission process takes over. Typically, this is done by fax, phone or payer portal. Backup clinical documentation and clinical questions may be required. This step is arguably the most difficult for staff to navigate efficiently without a sophisticated workflow management tool. Fortunately, new automated submission engine and management tools can standardize and consolidate multiple payer web portals into one user interface. Users can efficiently navigate multiple payer portals, simplify interactive portal questionnaires, identify and upload clinical documents, and receive real-time guidance based on pre-determined payer requirements turned into algorithms.

Once prior authorizations are submitted, hospital staff usually must check and recheck the portal until a status is posted by the payer. Providers often experience their highest labor cost associated with this process. Fortunately, RPA speeds up the retrieval process significantly, further reducing time and labor cost. While many technology firms have developed automation tools for one or two of these steps, few have built an end-to-end authorization management system. And none have included the patient – yet. 

Involve the patient
Customers do not like financial surprises, especially when it comes to their healthcare, and today they want to be informed and engaged. If a payer requires or denies an authorization, the patient should be made aware so they can consult with their physician, benefits manager or payer to facilitate obtaining the auth, take the risk of paying out of pocket, or reschedule the procedure. A digital patient engagement system can alert patients via text, email or other means of the payer requirement and keep them informed as the process moves along.

Prior authorization is a massive and growing problem for patients and providers, and regulation is not likely to solve it completely or anytime soon. The good news is end-to-end automated authorization systems are evolving that will determine, submit, retrieve and engage patients digitally.

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