Payers have continued to expand services requiring prior authorizations from providers for medical services, procedures, and treatments to patients to ensure the services are medically necessary, appropriate, and cost-effective. However, the process has become increasingly complex over the years, especially with the shift from fee-for-service to value-based care. It involves time-consuming steps that include gathering and submitting medical documents to insurance companies, waiting for approval, and often dealing with denials and appeals.
Additionally, every year the guidance is becoming stricter around the extensive documentation required for authorization. Procedures are being added that historically have not needed authorization. It is a growing challenge for staff to understand the clinical documentation and office notes that are required to support the authorization, and the administrative requirements have far-reaching impacts on finances, operations, and patients. Front desk staff are often charged with obtaining prior authorizations, which can be challenging given many competing priorities, including patient care. Unfortunately, implementing a standardized process across a centralized prior authorization team is not feasible for most providers.
Prior Authorization Challenges: Financial Impact
The administrative burden of prior authorizations has increased steadily over the years, leading to additional costs and workload. Impacts include:
- Increased Cost: The prior authorization process has significantly increased administrative costs to the healthcare system.
- Reduced Revenue: Denied prior authorizations upfront or during the adjudication process results in lost revenue for healthcare providers and can be difficult to overturn. Even worse, patients may ultimately choose to forego care altogether if they know their insurance is unlikely to cover it.
- Delayed payments: The prior authorization process can also result in delayed cash flow, causing major headaches for large providers and small practices alike.
Prior Authorization Challenges: Operational Impact
The increased time and effort required to manage prior authorization impacts healthcare operations, including:
- Resource Drain: The time spent on prior authorization administrative tasks can take away from other important tasks, such as coding and billing.
- Increased Workload: The prior authorization process adds to the workload of revenue cycle management (RCM) staff without necessarily increasing the number of staff members, leading to burnout and staff turnover.
- Errors and delays: The complexity of the prior authorization process can lead to errors and delays in care or additional denials, resulting in a negative impact on patient satisfaction and quality of care.