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3 ways prior authorization transformation will change health care


The recent CMS regulations will truly transform the PA process, both by requiring real-time data exchange and transparency in communication of how a decision was made.

Streamlining prior authorizations: ©Piter2121 - stock.adobe.com

Streamlining prior authorizations: ©Piter2121 - stock.adobe.com

Prior authorization (PA) has long been a care and coverage bottleneck for all involved—patients, members, providers, and payers. What’s been needed is structure to connect all stakeholders and systemize the process. In January 2024, the Centers for Medicare & Medicaid Services (CMS) finalized requirements to streamline the prior authorization process; this proposed requirement will be enacted in January 2026. This new regulation aims to shorten the timeline for the prior authorization process to immediate or as little as 72 hours for individuals who get their health insurance through Medicare Advantage, Medicaid, or a Qualified Health Plan on the exchanges by automating prior authorizations at the point of care.

According to an American Medical Association (AMA) survey, 86% of physicians reported that prior authorization requirements led to greater use of health care resources, resulting in unnecessary waste instead of cost savings. On the other side of the ecosystem, health payers acknowledge that new capabilities will improve prior authorization. AHIP recently released a statement following CMS publishing the Interoperability and Prior Authorization Final Rule in which AHIP acknowledges that “CMS took a step in the right direction by finalizing the Interoperability and Prior Authorization rule. Health insurers have been diligently working to build the infrastructure to expand data sharing with patients, providers, and other payers. With this rule CMS creates a roadmap for public and private payers in federal programs to work in tandem with providers to put this preparatory work into practice to improve patient access, outcomes, affordability, and experience.”

CMS marching order:Accelerate prior authorization transformation

The pace to PA transformation accelerated in 2021 with the emergence of Patient Access API, which required payers to provide access for patients to download their data through their preferred third-party app. This ushered in a new era of interoperability and data sharing designed to reduce unnecessary burdens in health care. The recent CMS 0057-F regulations will truly transform the PA process, both by requiring real-time data exchange and transparency in communication of how a decision was made. The new CMS mandate for PA will not solve all its inherent pains. However, providers will more easily understand a health plan’s requirements for utilization review, and health plans must provide a response (either approved or pend) to an authorization request at the time of receipt.

Reasons why health plans need to be vested in transformation

For health plans, the case has never been clearer for a straightforward, faster, and impactful PA process. High-impact PA ups the ante with an analytical approach to flag clinical decisions that need priority nurse review. The algorithmic decision support can identify high dollar clinical usage patterns, fraud, waste, and abuse (FWA) patterns and current procedural terminology (CPT) conversion/alternative treatment. Traditional, siloed utilization management programs are not adequate to meet current market conditions: a high-cost clinical resource pool and financially pressured payers and providers. Internal research from Sagility shows that 80+% of authorizations reviewed are eventually approved without any modifications, and only a few of the cases need a detailed review for necessity. This leaves a lot of room for digital intervention in the provider interaction channel to instantly auto-approve and provide an outcome via digital assists for better member care.

Experts such as health care business process management (BPM) partners have the combined digital solution and skillset: experienced clinicians supported by AI workflows to effectively manage the process and cost. Backed by process re-engineering, automation and digitization of the prior authorization process will ease provider burnout and change the perception of this process. Traditionally, the prior authorization step has been viewed as cumbersome, with high administrative costs running into billions of dollars across the U.S. health care sector. BPM partners with experience across both payers and providers can collaborate and bridge gaps to improve the quality of care, as well as outcomes.

Member/patient gains from better, faster authorizations, and decision transparency

The intent of PA is not to deny care, but to ensure that care given is safe and clinically appropriate for the patient’s condition and disease state. However, to date, the traditional PA model can delay care since the process has been cumbersome to providers. In some cases, the authorization process may lead the provider to consider alternative treatment pathways that don’t require a PA or lead them to abandon plan of care altogether. Prior authorization transformation will result in immediate authorizations or reduce the wait time associated with them.

Further, transformation improves the provider-payer collaboration by requiring health plans to clearly disclose how a PA determination was made.This demystifies the decisioning process and educates the provider on how a determination was made.

Three impacts of prior authorization transformation

  • Faster care for patients and members. When patients receive an authorization while they're still in the provider's office, they are more likely to follow through with the recommended treatment. This impact is measurable by both outcomes and downstream effects.
  • Reduce compliance cost for providers and payers. For a payer, the cost of a medical necessity review can be more than $60, while a provider may spend over $17 dollars to prepare and submit a PA request. A McKinsey study found that automation can eliminate up to 75% of the manual input in the PA process, leading to considerable cost savings to both the payer and the provider.
  • Better provider-payer collaboration. For years, providers have struggled with the PA process because each payer’s requirement for approval is unique to them. Transformation means that the payer will disclose their requirements through a series of questions to the physician for input. Through the Q&A process, physicians can better ascertain what is being asked about the patient, the procedure and the reason for the request. Further,Q&As lead to a more standardized, calibrated review process, which results in higher, consistent quality review. Shortened turnaround times also allow the provider to better coordinate care, leading to better patient outcomes.

PA transformation offers high ROI with timely and accurate decision-making

The return on investment from PA transformation can be more than 30% financially for payers; it makes sense to consider transformation less of a compliance issue, but of a better business case issue on multiple fronts: cost of operation, quality of care, and speed to care.

Nikki Henck is Senior Director, Utilization Management at Sagility where she oversees strategy and delivery for Sagility Utilization Management and Specialty Solutions. Nikki has over 17 years of health care experience in the areas of strategy, solutions, operations, technology, and implementation.

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