The burden of prior authorization

Prior authorization (PA) is a relatively new concept created in a more digital age. Before PA, as far back as the 1960s, there were utilization reviews. According to a division of the American Case Management Association (ACMA), the utilization review is explained as a way to limit unnecessary hospital stays and cut costs.

Nowadays, PA is a term that refers to the permission required from the patient’s insurance carrier, in some cases, in order for an item or service to be covered by the patient’s insurance carrier. Much like its predecessor, utilization review, PA is designed as somewhat of an annoyance to push lower cost alternatives. 

And recent data suggests that PA requirements are on the rise: 98% of practices reported that payer prior authorization requirements stayed the same (19%) or increased (79%) in the past 12 months, according to a March 2022 stat poll by the Medical Group Management Association (MGMA). 

The most recent American Medical Association (AMA) physician survey suggests that patients have been negatively impacted by delays caused by the PA process. When asked how often the PA process delays access to necessary care, 93% of respondents reported care delays due to PA, and 56% reported that care was always or often delayed. 

82% of physicians said that in at least some cases, patients entirely abandoned their recommended course of treatment due to issues related to the PA process.

Many issues can arise from treatment abandonment, and the AMA found that 34% of physicians reported that PA has led to a serious adverse event for a patient in their care, including a whopping 24% that said PA led to a patient’s hospitalization. 

Even though 98% of health plans said they use peer-reviewed, evidence-based studies to inform their PA programs, 30% of physicians claim that PA criteria are rarely, if ever, evidence-based. 

Now, the negative perception about prior authorization didn’t pop out of thin air. On average, practices spend 13 hours working on about 41 prior authorizations per week. In fact, approximately 40% of physicians have staff who work exclusively on PA. 

When employers seek out health plans for their employees, employers generally attempt to reduce costs. That can result in care with numerous PA requirements. The heavy lifting of these requirements can, in turn, promote treatment abandonment and ultimately 51% of physicians said PA has interfered with a patient’s ability to perform their job. No one comes out ahead if an employee can’t perform their job, and yet employers continue to choose these health plans for their employees. 

Solutions to accommodate the influx of PA requirements are seemingly few and far between. It turns out that 62% of providers feel they do not have the technology to evaluate whether a prior authorization is required for a medical service, diagnostic test or medication without initiating a prior authorization request, per WEDI survey.

Fax and telephone are still the most common ways that prior authorization takes place, even today, when there are automated ways to provide prior authorization. 

Electronic prior authorization (ePA) is an automated prior authorization solution that can save a practice hours and even days of work and is available with most EHRs. With this solution readily available, the patient can leave an office with a valid prescription, improving patient care.

Even though ePA would potentially save providers $355 million annually from a complete shift to electronic PA processes, according to the Council for Affordable Quality Healthcare (CAQH) report, health plans are slow to adopt electronic prior authorization. That being said, sending prior authorization requests electronically through payer portals has increased in popularity. 

Besides adopting ePA into your prior auth/daily workflow, you can also implement other technologies that can help increase revenue this year. The Council for Affordable Quality Healthcare found that by fully adopting electronic processes from the list of transactions you can find below, the industry can reduce waste by $13.3 billion annually, a third of it being administrative spending. A total of $9.9 billion can be saved by medical plans and providers. 

Those eight transactions are:

Eligibility and benefit verification

Claim submission


Coordination of benefits

Claim status inquiry

Claim payment

Remittance advice

Prior authorization

Shameless Plug: Rivet's tools help your practice succeed.

Rivet offers software solutions that integrate with your EHR for up-front patient cost estimates (that comply with the No Surprises Act and have prior auth flags for participating health insurance providers), as well as denied claim and underpaid claim solutions. To see a demo and discuss billing pain points, request a Rivet demo with a Rivet business development representative.

View blog posts:

No items found.