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Outsourcing Prior Authorization Process: An Approach to Optimizing Your Revenue Cycle and Improving Patient Care                                        

Author: Dr. Aamer Nawaz Syed, Pharm. D
Prior Authorization Specialist at Staffingly, Inc.
What is Prior Authorization?

It is a health insurance company utilization management approach that requires certain operations, tests, and drugs ordered by healthcare practitioners to be assessed for medical necessity and cost-of-care implications before they are permitted.

A health insurance payer’s choice to approve or reject a prescribed course of treatment based on the results of a prior authorization review will influence whether a provider or pharmacy gets reimbursed for a claim and, if so, whether reimbursement is for a whole or partial amount.

Is the Occurrence of Prior Authorization Increasing?

Yes, there is a noticeable rise in the number of prescribed medications and medical procedures that need prior authorization. The main force behind this is insurance companies’ hunt for strategies to rein in the skyrocketing costs of healthcare, particularly those incurred by cutting-edge new specialty medications or developing technologies. Although some treatments or services can clearly improve patient outcomes, they frequently have exorbitant fees and are still relatively new to have a track record.

How does Medical Necessity Impact Prior Authorization?

Medical necessity is a legal principle that governs clinical conditions and offers a framework for assessing the treatment given to a patient by a doctor or other provider. It is applied in line with generally recognized medical standards to evaluate particular diagnostic and therapeutic suggestions. Insurance companies will not pay for prescribed care if it does not meet the standard of being medically required.

Receiving payer approval for care requiring prior authorization usually requires proving medical necessity.

What Drawbacks do Prior Authorizations have?

The most major adverse consequence is the delay in patient access to care caused by prior authorization. The patient journey is hampered by it, and some patients may decide not to receive treatment.

In fact, according to 75% of doctors who took part in an AMA survey, problems with the prior authorization procedure often lead patients to forego the prescribed course of therapy. In the same survey, 28% of doctors said that preauthorization had caused a patient under their care to experience a major adverse event.

Prior authorization’s administrative burden prevents physicians from providing patient care and adds to the rising tide of “physician burn-out.”

How can Administrative Burden and Physician Abrasions be reduced?

Healthcare professionals frequently recoil at the thought of defending a recommended treatment to insurance companies. This in and of itself causes conflict between payers and providers.

The “paper chase” that follows the submission of a prior authorization request only serves to exacerbate this conflict, increase the administrative load placed on the revenue cycle team, and exacerbate the hostility between providers and payers. However, there are ways to alter this situation.

Automating or outsourcing the prior authorization process is one of the greatest ways to head off the issue so that the administrative burden of faxes, phone tags, and emails are eliminated. Physicians are less likely to become overwhelmed by the procedure.

According to the American Medical Association (AMA), doctors spend 16 hours a week on authorizations, and roughly 90% believe this delays patient access to care. Returning those hours to doctors so they can use them for patient care might enhance results, lower administrative strain, and improve relations with payers.

Why is Prior Authorization Particularly Burdensome for Diagnostics/ Imaging Centers and Long-Term Care Pharmacies?

Alternative care settings, such as diagnostic labs and long-term care pharmacies, typically don’t interact with patients directly. They must instead rely on an originating provider, such as a hospital or doctor’s office, to refer them to clients and interact with patients on their behalf. With the lab/long-term care pharmacy being one step removed from the patient in this business connection, prior authorization becomes even more complicated.

The diagnostic or imaging centre is forced to use the referring provider as a go-between and rely on them to handle any concerns with the insurance company if there is even one error in the prior authorization process. Rendering providers understand that they can only exert so much pressure on the referring hospitals and doctors before they risk losing future business because they rely on referrals from the originating providers.

Although it might be useful to confirm that a patient’s insurance will cover procedures, the prior authorization process can also be incredibly time-consuming. Pre-authorization takes a long time, which many medical professionals and support workers are discovering reduces their output and delays in providing care.

Common problems include:

• Patients’ delayed access to essential services or treatments.
• Higher overhead costs for practices, particularly when they have to recruit personnel to perform pre-authorization responsibilities.
• Unpaid time spent by doctors or other practice employees.
• Workflow inefficiencies and interruptions in practice.

According to the AMA, pre-authorization takes up roughly 1 hour of doctor time, 13.1 hours of nurse time, and 6.3 hours of administrative time per week. This equates to 853 hours of staff time yearly or $82,975 in labor costs for each full-time physician.

Outsourcing Prior Authorization Process:

Pre-authorizations performed through an outsourced service are facilitated between your clinic and the payer by a third party, which is exactly what it sounds like (such as insurance companies or Medicaid). To get prior authorization for inpatient and outpatient operations and pre-certifications for hospital admissions, the third-party organization gathers patient information from your practice.

The fact that an outsourced pre-authorization service has created a centralized and streamlined procedure that tends to reduce any patient data inaccuracies is a benefit of their services. They specialize particularly in this type of work, so they are highly knowledgeable about the procedure and what needs to be done – unlike physicians and nurses who are attempting to balance this with the rest of their work!

An outsourcing firm will take care of tasks like:

• The end-to-end pre-authorization process
• Any necessary follow-up, for instance, if the doctor needs to provide further details for the pre-authorization.
  • Appeals against rejections, where appropriate.

Outsourcing the pre-authorization procedure is one way to free yourself from all the hassles.