Prior Authorization - From Burden to Value

Prior authorization, the way it’s been done for the past 60 years by health insurance payors, has taken a lot of flak – and rightly so. It has been deployed as and remains primarily a technique to delay and deny care to patients, it adds administrative burden to the cost of healthcare, and it has been implicated as a leading factor in physician burnout, including physician suicide. Despite these negative impacts, it’s only lately that any meaningful steps have been made to legislate changes in the process.

What I’d like to see is a major payor who has the vision (and guts) to quit reacting to rules and regs passed by lawmakers in attempts to change the prior auth (PA) process and instead, proactively change their PA process to glean its many benefits while limiting the detriment it causes. Using PA simply to control medical expenses misses the mark, causes delays in needed care, and frustrates patients, physicians, and facilities. That approach is passe, and frankly, for non-pharmacy requests, is ineffective at its stated goal of decreasing expense. (There is some cost benefit derived in the Pharmacy PA process, since rebates and discounts on medicines can be realized through driving members to certain drugs. This is a subject for a different time.)

The potential benefits of PA for a healthcare payor are many:

·      Medical expense leading indicator – What admissions and procedures are about to occur? How will they impact budget and IBNR projections?

·      Identification and discernment of utilization patterns in diagnosis and treatment – What new treatments are physicians looking to for certain conditions? How do they affect cost and outcomes? What’s the science behind them? Do we need to budget for these or let folks know they won’t be covered benefits?

·      Assessment of network utilization and identification of network gaps – We’ve built a network as a payor; is it being utilized to the degree that is needed? Are their holes in the network that need to be filled either from a specialty or time-distance perspective?

·      Reining in the gaming of hospitals and health systems in billing inpatient versus observation – Hospitals are so frustrated by the PA process that many have just decided to submit claims for all services as inpatient (more costly). Who are the biggest culprits of this? How can they be educated or incentivized to act differently?

·      Discovery of physician and facilities that are getting it right – Who is delivering the right care at the right time in the right place? Reward these people because they are creating value.

·      Identification of patients with new needs for management of their care (POSSIBLY THE MOST IMOPORTANT FUNCTION) – If an organization wants to decrease medical expense, finding its members at risk for adverse health (and increased cost) should be a top priority. Most payors, to maintain their NCQA or URAC accreditations, have policies and SOP documents that speak to the connection between their Utilization Management and Care Management departments. Few, however, consistently and effectively execute on this.

We have heard so much from payors lately about their commitment to ensuring the best and most appropriate care for their members. In fact, the transition from calling patients “covered persons” to naming them as “members” indicates a potential shift in the role that payors want to play in healthcare delivery. To call someone a member means they belong to your group, you will advocate for them, and you have their best interest at heart. We do not use this term lightly in the world of value-based care (VBC). As I’ve said before, part of the value in VBC is the value we place on the components of care – patient, physicians, and staff.

A member is to be valued and treated in such a way to reflects that. Part of this is ensuring the right care, at the right time, at the right place (level of care).

Are we expressing the value of a member when we issue a denial, simply to delay care, because all the “t’s” aren’t crossed, and the “i’s” dotted? If that person is a member, shouldn’t the payor do more to actively discern the need and access the information needed to decide if the care is medically necessary or not? Payors have access to information in ways that patients (members) do not.

Payors, as advocates for their members, need to leverage their means of information gathering and assist in getting the needed information to render a decision. They cannot simply sit passively by and blame it on the provider, not if they truly feel their insured client is a “member.” Also, payors need to educate providers in how best to serve their members’ needs – not punitively, but as the advocate of their member.

Here are some other ways a payor could improve the benefits of PA without adding to the administrative and cost burden (and possibly decreasing it:

·      Prior Auth Waiver (the so-called “Gold Card”) – This has been around for a while, but rarely is it used effectively. The easy (and ineffective) way to use is to give certain physicians and facilities carte blanche based on volume or perhaps effective requests. This is too general of an application. A targeted approach of certain physicians for certain procedures or certain facilities for certain DRGs is potentially more effective. The other hole in the bucket of waivers has been appropriate audits and followup. At one time, we didn’t have easy access to good data on utilization to keep a finger on the waiver pulse. That issue no longer exists. Yes, targeting and followup take time and effort, but when done right, waivers can be very effective at decreasing administrative burden, increasing the PA speed, and improving the member and provider (physicians + facilities) experience for over 95% of the cases while not negatively impacting medical expense.

·      Automation – Lots of talk about this lately. We should be able to automate most of the prior authorization process to the point of it mainly being prior notification (to gain the above-named benefits). Companies like Xsolis have been successful at building smart utilization management processes using both discrete field and natural language processing analysis to look at cases in the hospital. Their platform has been accepted by many commercial payors, though they lag in the Medicare and Medicaid markets due to Clinical Criteria requirements. The same principles could be applied to non-hospital requests like outpatient tests and procedures and for pharmacy requests. Speed and precision would be welcome changes to the current PA process.

·      Incentivize appropriate utilization and requests – What might happen if hospitals and physicians were reimbursed for services based upon the quality of their PA requests? In addition to the waiver mentioned above, the possibility also exists (contractually) to pay hospitals and doctors more or less depending on the information they provide to help the payor’s members get the right care at the right time in the right place. If a hospital submits 100% of their claims as inpatient, with 25-35% of them actually being observation (only 65-75% appropriate), their reimbursement rate would be less than the one that’s accurate 90% or 100% of the time. Same with docs. You submit all the needed information to show the payor’s member needs a test or procedure 95% of the time (or more), and you will get paid at a higher rate compared to your laggard colleagues. Where does the extra money come from? Savings in the administrative costs of the payor to do the conventional PA dance + a decrease in reimbursement to the bad dancers.

Prior authorization can be such a positive and important business tool for payors when done better and with the right goals in mind. As it is, used as a method to delay and deny, PA causes more problems than it’s worth, in my opinion. Who will step up and move PA forward into version 2.0 that creates value in the delivery and coverage of healthcare?