Prior Authorizations - The Pros, the Cons and What to Expect in 2021

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Simplifying the US healthcare system is far from a new challenge, but recent announcements by the Centers for Medicare & Medicaid Services (CMS) and the Office of the National Coordinator for Health Information Technology (ONC) have solidified the importance of tech standardization and interoperability as some of the biggest combatants of bureaucratic red tape. Prior authorizations, or PAs, have long symbolized the epitome of these patient care bottlenecks, and as new demands come to the forefront, these long-standing procedures are facing higher scrutiny.

The Basics

Prior authorization, or PA, is the process that providers-such as doctors, nurses and pharmacists-undergo in which they make a case to health plans that the prescribed medication or procedure is medically necessary and should be covered. Not all prescriptions or services require PAs, but because the exchange between payers and providers is often conducted via phone or fax, determinations can take anywhere from a few minutes to several weeks and may require multiple submissions or appeals.

“This is a time-intensive process that places a burden on pharmacists, providers, health plans, and most critically, the patient awaiting treatment,” according to Corey Bradham of CoverMyMeds, a platform that allows providers to submit prior authorizations for medications securely and efficiently.

While it’s true they are the source of headache for practices and pharmacies - 86% of physicians believe the burden of PA is high or extremely high - the concept of PAs began around the 1950s as a check on the surge of hospital visits occurring due to increased healthcare access via employer-based coverage. Utilization reviews, as they were called, were primarily meant to detect irregularities in physicians’ care and curb growing costs in local hospitals. Now, they’ve become a standard method of not just saving money but also preventing potentially dangerous procedures the prescriber may have been unaware of.

“Prior authorizations can help ensure appropriate access to therapy, identify medications that could have dangerous interactions with other medications or help prevent over-prescription of addictive medications,” says Corey.

They can also prevent payers from spending exorbitant amounts of money on a brand medication when a cheaper alternative would work. Some experts say that this check on unnecessarily high costs also slows down price increases to the consumer in the form of lower premiums, deductibles or copays.

Effects on Burnout & Patient Care

With the heavy administrative burden and treatment delays they come with, however, it makes sense to ponder how much the pros outweigh the cons. For one thing, its effect on patient health and outcomes is startling. An American Medical Association survey noted that 90% of physicians say prior authorizations negatively impact patient care by either delaying or abandoning treatment by patients. According to Corey of CoverMyMeds, prescription abandonment costs the healthcare industry a lot of money—adding up to as much as $280 billion in avoidable costs each year.

The administrative burden on the part of providers and staff is not insignificant either. A Healthcare Financial Management Association report concluded that processed prior authorizations cost $528 million in administration for providers in 2019, and an AMA survey found that 86% of physicians consider the burden to be high or extremely high. 88% said it has only worsened in the last 5 years. Because payer systems notoriously lag behind on technology - as do many practices - the continued use of fax and other inefficient modes of communication exacerbate inherent obstacles.

Max Owen, DrChrono’s Billing Operations Manager, has been in the industry for over 13 years and says PA efficiency hasn’t progressed all that much, except perhaps in light of COVID.

“Due to the pandemic, many insurance companies are waiving requests that they previously had before, so there’s been some leniency. But apart from that, I haven’t seen much change in the process,” he says.

Despite the unsatisfying adoption rates, ePAs have proven to be a quicker alternative. 62% percent of prior authorization requests submitted electronically have a two-hour or less turnaround time, compared to a 2 to 14-day window with faxed PAs. Still, 33% of providers use fax or phone when submitting urgent authorizations.

“I would say 80% of the time the prior authorization is via fax, and 20% of the time it’s through their website..in my experience, many insurance companies don’t even have the capability to process prior authorizations electronically.”

Changes on the Horizon

However, policy pushes in recent years have highlighted the importance of mandating ePA capability and usage, as well as improvements in electronic health record data. The 2018 SUPPORT Act requires “electronic prescription programs to be able to securely transmit prior authorization requests for covered drugs under Medicare,” in addition to consulting with standards development organizations on interoperability rules and API development.

CMS finalized a sweeping rule this month that mandates standardized APIs for payers operating in Medicaid, Children’s Health Program and federal exchange plans. Some of the PA-focused requirements won’t go into effect until 2023, but the idea is that insurers will eventually gain greater transparency into patient data for decision-making, and providers and patients should gain more insight into the status of PAs via their EHR or patient portal. It also requires payers to make determinations in a shorter amount of time.

“If payers adapt to the new technology, it simplifies all the work that we do for prior authorizations,” says Max.

So while the rate of progress leaves much to be desired, recent regulations, new cloud-based capabilities and patient advocacy give reason for providers to be cautiously optimistic.