Examining the Cost of Manual Prior Authorizations

One particularly time-consuming and costly hurdle is obtaining Prior Authorization for services and medications. This post delves into the hidden costs associated with manual Prior Authorizations, explores their impact on healthcare revenue cycles in the RCM era, and outlines strategies to streamline this process.

The Prior Authorization Maze: Understanding the Burden

Prior authorization, or pre-authorization, is when a healthcare provider obtains approval from a patient's insurance company before performing a specific service or prescribing a medication. This process aims to:

• Control costs by ensuring medical necessity for services and medications.
• Reduce unnecessary procedures and inappropriate medication use.
• Prevent potential fraud and abuse within the healthcare system.

While the rationale behind prior authorization is sound, the manual process can be a significant burden for healthcare providers:

• Time-Consuming:??Gathering and submitting the documentation for each prior authorization request can be time-consuming for busy staff.
• Reduced Productivity:??The time spent on Prior Authorizations detracts from the time staff could dedicate to patient care and other critical tasks.
• Increased Administrative Costs:??Staff time spent on manual prior authorizations translates to increased administrative costs for healthcare companies.

The RCM Impact: How Manual Prior Authorizations Affect Revenue

The reliance on manual prior authorization processes significantly impacts healthcare revenue cycles in the RCM:

• Delayed Reimbursement:? ?Delays obtaining prior authorization can significantly delay reimbursement for services rendered, impacting cash flow.
• Increased Denials:?Only complete or accurate information in manual requests can lead to denials, resulting in lost revenue and additional administrative work for appeals.

Frustration and Burnout:?Manual prior authorizations are time-consuming and often frustrating, which can lead to staff burnout and lower morale. Imagine a situation where a healthcare provider dedicates numerous hours communicating with insurance firms, only to receive information that the requested prior authorization has been rejected.?This can be a demoralizing experience for the staff, leading to decreased productivity and increased turnover.

Quantifying the Cost: Estimating the Price Tag of Manual Prior Authorizations

Studies have attempted to quantify the financial burden of manual prior authorizations. Here's a breakdown of some key findings:

• The WEDI Prior Authorization Council?estimates that prior authorization costs account for approximately 2% of overall medical industry spending on administrative transactions.
• The CAQH Index?revealed that?the cost to providers for?manually generating a single prior authorization request?can be close to $11, while the cost to create?a request through an electronic portal?is?less than half as much.
• Research from the National Institutes of Health?suggests that provider groups can save an estimated $355 million annually by shifting to fully electronic prior authorizations.

Beyond the Numbers: The Human Cost of Manual Prior Authorizations

The financial impact is just one aspect. Manual prior authorizations also have a human cost:

• Patient Care Delays:??Delays in obtaining prior authorization can delay recommended treatments, potentially impacting patient outcomes.
• Provider-Patient Communication:??The time spent on manual Prior Authorizations can detract from healthcare providers' time for patient communication and addressing concerns.

Optimizing the Prior Authorization Process: Strategies for Success

Here are some strategies to streamline this process and minimize the financial and human costs:

• Embrace Electronic Prior Authorization:??Employing Revenue Cycle Management systems that feature integrated electronic prior authorization capabilities can greatly diminish the time and labor involved in this procedure. However, it's important to note that transitioning to electronic systems may require initial investment and staff training. The benefits, however, can be substantial, including faster turnaround times, reduced administrative burden, and improved patient outcomes.
• Invest in Staff Training:??Training staff on proper documentation practices and payer-specific requirements ensures accuracy and reduces denials.
• Develop a Dedicated Team:??Consider establishing a dedicated team within the RCM department to handle prior authorization requests. This team can develop expertise in navigating the process and advocate for approvals.

The Future of Prior Authorization: The Rise of Automation

The future of prior authorization lies in automation:

• Real-Time Decisions:??Advancements in technology are paving the way for real-time prior authorization decisions based on pre-populated patient data and established clinical guidelines.

Reduced Administrative Burden:? ?Implementing automated systems for prior authorizations could substantially lighten the administrative load for?healthcare providers, allowing them to allocate more time and resources?towards patient care. This shift towards automation brings a sense of relief, offering a brighter future for healthcare providers.

Improved Patient Outcomes:??Faster turnaround times for prior authorizations can lead to quicker access to necessary treatments, potentially improving patient outcomes. This potential for better patient care should serve as a strong motivator for healthcare providers to embrace electronic prior authorizations.

Additional Strategies for Success

Emphasize the importance of additional strategies to optimize the prior authorization process:

• Proactive Communication:??Maintain open communication with patients and physicians. Educate patients about the possibility of prior authorization requirements and inform them of any potential delays. This proactive approach empowers healthcare providers to take control of the prior authorization process.
• Collaboration with Insurance Companies:??Building positive relationships with insurance companies can facilitate communication and expedite the prior authorization process. Consider participating in pilot programs with insurers offering electronic prior authorization options.

A Rallying Cry for Healthcare Executives

The traditional method of prior authorization is a critical step, yet it needs to be a manageable burden for your medical institution. By adopting robust Revenue Cycle Management (RCM) tactics and keeping abreast of tech innovations, you can refine this procedure, mitigate its effect on your bottom line, and secure prompt compensation for your services.