February 3, 2022
PA Series: Part 1 of 6
Most health plans in the US require providers to submit prior authorizations (PA) for certain health benefits, services, prescriptions and supplies. The PA process begins with the provider inquiring from the payer whether a PA is required for the health service and if so, the provider must then submit a PA request. Not only does this process pose an administrative burden to both payers and providers, PA in its current state often leads to care delays and presents a potential risk to patients. As the industry continues to move towards a more patient-centered and value-based system of care, PA modernization is an opportunity for payers and providers to reduce costs and provide greater value to patients, organizations and the industry as a whole.
With this in mind, the Centers for Medicare & Medicaid Services (CMS) proposed the Prior Authorization Rule to reduce the burden of PA on payers, providers, and ultimately, patients. The “CMS Interoperability and Prior Authorization” rule, with proposed start date of January 1, 2023, requires payers regulated under this rule (as it applies to Medicare, Medicaid, CHIP and QHP products) to utilize APIs that give providers more streamlined access to data.
Aimed at improving data exchange to reduce provider and payer burden, the rule will require payers to implement and maintain these APIs using the FHIR standard. While the rule applies to payers alone, both providers and payers will reap rewards from this interoperability innovation.
Following the announcement of the final rule in 2021, Seema Verma, CMS Administrator, stated in a press release: “Today, we take a historic stride toward the future long promised by electronic health records but never yet realized: a more efficient, convenient, and affordable healthcare system. Thanks to this rule, millions of patients will no longer have to wrangle with prior providers or locate ancient fax machines to take possession of their own data.”
“Many providers, too, will be freed from the burden of piecing together patients’ health histories based on incomplete, half-forgotten snippets of information supplied by the patients themselves, as well as the most onerous elements of prior authorization,” Verma continued. “This change will reverberate around the healthcare system for years and decades to come.”
The True Cost of Prior Authorization for Providers, Payers and Patients
As the heart of payers’ utilization management operation, PAs represent an enormous burden to both payers and providers. Furthermore, PAs can result in significant negative outcomes for patients. Studies on the true cost of prior authorizations show:
Manual PAs present a heavy administrative and financial burden for providers that involves tackling a series of phone calls, faxes, emails and web portals before finally gaining approval. In addition, the manual process of PAs impedes communication between payers and providers, obstructs the potential for collaboration, and creates unnecessary delays that result in suboptimal care.
A Lack of Interoperability Is the Biggest Obstacle Facing Payers
While government-sponsored programs such as Medicare, Medicaid, CHP and Qualified Health Plans are required to implement utilization management programs, most payers struggle to efficiently conduct medical necessity reviews in a timely manner. This results in unnecessary costs and delays in patient care.
The biggest obstacle facing payers in efficiently managing is the lack of interoperability currently in place. This means payers:
These hurdles, paired with varying complexity in the types of medical necessity review (inpatient versus outpatient, for example), result in significant variations in the amount of time spent on reviews. This results in a review cost from as low as $12 per case, to more than $70 per case. With the adoption of interoperable systems, the rule aims to reduce these variabilities for more predictable, consistent and lower administrative costs.
Historically, payers have struggled with a lack of access to patients' records and have relied on using multiple systems to manage PAs. The data silos created by these disparate systems (including data that is often months or years old) have meant difficulty collecting, analyzing and utilizing patient data, ultimately hampering prompt decision-making.
The Fast Healthcare Interoperability Resources (FHIR) standard defines how healthcare information can be exchanged between different computer systems, regardless of how it is stored on those systems. FHIR aims to make healthcare information, including clinical and administrative data, easily and yet securely available to those who require access to it.
The resources available through FHIR give users access to a comprehensive dataset on patients, in near real-time, that can be delivered and utilized by payers and providers to facilitate faster and more appropriate care. With FHIR, electronic PAs mean mapping clinical information from one point to another in a more timely and informative manner, which eliminates the ‘chart chase’ currently facing providers and payers. The accuracy of the information and the ability to obtain complete information on the patient in near real-time reduces administrative work such as compiling supporting documentation, calling and faxing payers and more.
The interoperability supported by FHIR offers a complete medical picture of the patient and allows payers to render decisions much more quickly. These faster determinations result in a reduction in wait times for patients, better treatment outcomes, as well the much-coveted reduction in the administrative burden and costs on payers and providers.
Smile Digital Health supports FHIR-based prior authorizations, which in turn reduces the administrative burden for providers and payers. Interoperability driven by FHIR helps improve the coordination between payers and providers necessary for more timely and cost-effective prior authorizations.
Although PA is crucial to healthcare services, patients, providers and payers experience a burden from the process. In fact, PAs have been identified as a major cause of provider burnout, as they expend vast resources to navigate the process – resources that could be better spent on patient care. Due to the complex nature of patient data, as it currently stands, patients unnecessarily pay out-of-pocket or abandon treatment altogether due to delayed PAs. At the same time, providers and payers both tolerate high administrative costs, reduced patient outcomes, and a lack of communication, collaboration, and transparency. The CMS Interoperability and Prior Authorization rule, when implemented properly, can deliver:
The rule presents an opportunity for both payers and providers to reduce costs and improve coordination and continuity of care. By embracing the FHIR standard, payers will not only reduce administrative costs but create an enterprise asset that sets them apart in the market. FHIR allows payers to create an interoperable data source that integrates seamlessly with their EHRs, breaking down information silos and putting data in the hands of both providers and patients, in a timely manner, for better outcomes across the board.
Through improved transparency, efficiency and immediacy, payers and providers will enjoy a greater level of trust, a mutually reduced administrative burden and create a better value proposition for their clients and patients.
To continue learning about the Prior Authorization Series, read our blogs:
Part 1: Why the CMS Prior Authorization Rule Is a Win for Providers and Payers
Part 2: A Mutual Burden for Providers and Payers and How Interoperability Can Facilitate Change
Part 3: Breaking Down CMS Rule: Open Standards Bring Healthcare Out of the Stone Age
Part 4: How CDS Hooks Will Break Down Data Silos in Healthcare
Part 5: Harnessing the Real Power of Data Interoperability
Part 6: Coming Soon…