6 minute read 23 Mar 2023
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How electronic prior authorizations can benefit stakeholders

Authors
Kaushik Bhaumik

EY US Health Technology Leader

Enterprise technology services executive and consulting leader, with a focus on the healthcare sector.

Sumitro Sarkar

EY Global Nexus for Health Leader

Experienced health consultant. Runner and drummer. Interested in sports analytics and fighting homelessness using data. Fan of the Miami Heat, New York Giants and Liverpool.

Glen Fernandes

EY Americas Nexus for Health Sales Architecture Leader

Health care analytics practitioner and creative product leader.

Contributors
6 minute read 23 Mar 2023
Related topics Health

Digitizing the process shows promise for lowering costs, boosting efficiency and improving experiences for payers, providers and patients.

In brief

  • Current prior authorization (PA) processes are time- and labor-intensive. Advanced technology can help, but adoption has been low.
  • Automating PA processes may accelerate decision-making and improve access to patient care. It’s also a requirement of legislation being considered.
  • Successful automation of PAs requires health care organizations to have a transformative mindset and consider a variety of issues.

Medical plans established prior authorization (PA) processes to make sure they only cover medically necessary patient care in a cost-effective manner. PAs can prevent wholly inappropriate service utilization or, more commonly, ensure that first-line treatments are attempted before care is escalated to more invasive or risky therapies. But in their current form, these nonstandardized, manual processes present challenges for the smooth processing of PAs, including physician burnout, huge costs to health care, delays or absence of appropriate care for patients, and a suboptimal stakeholder experience.

All stakeholders have to spend an enormous amount of time managing information for decision-making, necessitating the alignment of many resources to make it work. Electronic prior authorization processes can expedite the time from submission to decision-making, improving the ability to meet Centers for Medicare & Medicaid Services time frames (seven days for standard requests, 72 hours for expedited).

Transformation benefits

Prior authorization friction points

Source: CAQH.

  • Chart description

    Opportunities for automation on current prior authorization friction points:

    • Improve transparency of payer criteria
    • Reduce documentation effort and administrative burden
    • Leverage available clinical content within the EHR workflow

Although advanced technology such as automation can improve PA workflows, only 21% of prior authorizations are fully electronic, according to the Council for Affordable Quality Healthcare’s 2021 CAQH Index.¹

But it doesn’t have to be this way.

Automating administrative processes could mitigate some of the current challenges by enabling data interoperability and improving experiences for both members and providers. If seamless electronic communications were within reach, routine procedures like an MRI order could get a near-real-time response from the payer. Right away, patients would know what comes next in their treatment and leave the provider’s office feeling informed and cared for.

Digitizing the process would also greatly diminish providers’ administrative burden. The impact would be so significant that the medical industry could save $437 million a year, according to the 2021 CAQH Index.² Savings would result from the following:

  • A reduction in administrative costs
  • An increase in net promoter scores from providers and members
  • Faster access to patient care due to accelerated decision timelines
  • Lower denial rates due to transparency in coverage criteria

Policy imperative

Mandates from Washington also necessitate changes to current PA processes. If finalized, two recent proposals from the Centers for Medicare & Medicaid Services would place new requirements on Medicare Advantage organizations, Medicaid managed care plans and Children’s Health Insurance Program (CHIP) managed care entities, state Medicaid and CHIP Fee-for-Service programs, and qualified health plan issuers on the Federally-facilitated Exchanges to streamline processes related to prior authorization. This includes:³

  • Prior Authorization Requirements, Documentation and Decision (PARDD) API

    Beginning January 1, 2026, payers would be required to build and maintain a Fast Healthcare Interoperability Resources (FHIR) API that providers could use to determine if a prior authorization is required for a given item or service. Providers would also use the FHIR API to facilitate the request and indicate request statuses.

  • Denials and decision timelines

    Also beginning January 1, 2026, insurers would be required to inform the provider why a prior authorization was denied, and most insurers would be required to send providers PA decisions within 72 hours for expedited requests and within seven calendar days for standard, nonurgent requests.

  • Public reporting

    Beginning March 31, 2026, insurers would be required to publicly report certain prior authorization metrics, including how often patient data is transferred electronically.

  • Interoperability requirements

    Among other proposals, this would require insurers to include information about prior authorization decisions in Patient Access, Provider Access and Payer-to-Payer APIs.

Transformation requirements

Development of a next-generation prior authorization experience requires rapid shifts in organizational priorities, a digital operating model and advanced technology capabilities. For payers, this means addressing:

  • Regulations and compliance

    Companies would need to create an organizational environment to monitor processes enabled by the FHIR standard in real-world settings. They would also publicly report on the effectiveness and efficiency of prior authorizations.

  • The provider experience

    To establish a provider-centered approach, companies would be required to prepare and adapt their technology. And for physicians and staff to adopt it, both the user interface and user experience would need to be intuitive.

  • Integration with provider workflow

    As part of the provider’s electronic health record-keeping, payer prior authorization rules and content would need to be arranged. To achieve this, companies would need to maintain strategic partnerships.

  • The operating model

    Companies would need the right operating model within the provider network so all players in the ecosystem would be engaged as vested partners in their joint success.

  • The technology

    The EY team has found that reducing administrative overhead and improving payer-provider collaboration via prior authorization automation require payers to adopt an end-to-end approach with intuitive insights all the way through digital PA workflows and real-time electronic health record (EHR) connectivity. Such an approach demystifies how health plans can collaborate directly with providers and their workflows. Sample solution components include:

    Solution components Description Impacted stakeholders Benefits
    Prior authorization data repository and rules engine A standard-compliant FHIR API and associated data integration processes to build, maintain and share claims and encounter data (not including cost data) that automatically syncs with changing payer prior authorization rules Payer Reduction in time spent searching for claims and encounter data, leading to faster implementation time​ and improved ability to meet regulatory requirements
    Clinical therapy area selection A set of claims- and hypotheses-based analytics capabilities to identify and target specific clinical therapy areas (by volume and/or spend) to initiate launch of an electronic PA process Payer Sustained momentum and adoption of digital prior authorization initiatives by addressing friction points
    Electronic prior authorization SMART on FHIR Application A FHIR API that providers could use to determine if a PA is required for a given item or service, to facilitate the request and indicate request statuses Payer and provider Improved transparency of prior authorization requirements and less burden for providers from PA-related phone calls and faxes
    Real-time EHR connectivity A network of EHR connectivity and integration frameworks to embed near-real-time prior authorization functionality directly within a clinician’s workflow Provider Increased solution adoption due to the delivery of insights and actions with the proper patient context at the proper time within a clinician’s workflow
    Automated PA triage and review engine An approach to enable utilization management operations with digital technologies to eliminate highly manual intake tasks, standardize clinical decision-making, and improve audit accuracy and efficiency Payer Turnaround times met or exceeded by reducing handling time, improving document efficiency and standardizing clinical decision-making

Current PA processes take up valuable time and resources that could otherwise be used to offer stakeholders a better experience, save costs and provide patients more timely care in certain situations. But before a health care company can make the leap to digitizing prior authorizations, it must first adopt a transformative mindset to set the tone for an undertaking of this magnitude. Otherwise, the transformation could be more challenging than it needs to be, leading to delays or even failure. And given the impact that prompt prior authorizations could make, as well as the world’s increasing dependence on technology, digitization of PA processes seems more than logical; it may even help save lives.

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Summary

Electronic prior authorizations can improve the experience for patients, providers and other key stakeholders, using automation and other advanced technologies and standards to address the current processes’ shortcomings. Health care companies considering digitization of PAs must first adopt a transformative mindset and keep various issues in mind, including regulatory implications and integration.

About this article

Authors
Kaushik Bhaumik

EY US Health Technology Leader

Enterprise technology services executive and consulting leader, with a focus on the healthcare sector.

Sumitro Sarkar

EY Global Nexus for Health Leader

Experienced health consultant. Runner and drummer. Interested in sports analytics and fighting homelessness using data. Fan of the Miami Heat, New York Giants and Liverpool.

Glen Fernandes

EY Americas Nexus for Health Sales Architecture Leader

Health care analytics practitioner and creative product leader.

Contributors
Related topics Health