The cost of prior authorization requirements on physicians’ practices
has continued to increase—up 60% in 2019 to manually generate a request
to insurers.
The just released
CAQH 2019 Index,
which concluded that the healthcare industry can save $13.3 billion on
administrative waste through automation of eight transactions including
prior authorizations, said the medical industry could see potential
annual savings of $454 million by transitioning to electronic
prior authorizations.
The Medical Group Management Association (MGMA) said the CAQH report
confirms its own concern about the burden prior authorizations place on
physician practices.
“The just-released CAQH 2019 Index confirms MGMA’s findings that the
financial burden of prior authorization requirements on physician
practices is increasing at an alarming rate,” said Anders Gilberg,
senior vice president of government affairs at MGMA, in a
statement.
The CAQH index, put together by the nonprofit alliance, revealed that
the cost for providers to manually generate a prior authorization
increased from $6.61 in 2018 to $10.92 in 2019, Gilberg said. Payer cost
for the same transaction decreased from $3.50 in 2018 to $3.32 in 2019.
At the same time, the cost for providers to generate an electronic
prior authorization transaction dropped from $2.80 in 2018 to just $1.88
in 2019, and the cost for payers stayed steady.
However, overall industry use of electronic transactions increased
only slightly from 12% in 2018 to 13% in 2019, the CAQH report said.
“In 2020, practices should not be forced to rely on fax machines to
complete manual prior authorizations when health plans could modernize
the process,” said Gilberg. The federal government needs to streamline
prior authorization by requiring a national automated approach to
minimize administrative costs and delays in patient care, he said.
Insurers, however, are pledging to do more and just last month launched a
new initiative
aimed at expanding the use of electronic prior authorization, hoping to
address an issue most providers say is the most burdensome they face.
The Fast Prior Authorization Technology Highway initiative aims to
use technology from Availity and Surescripts in physicians’ offices to
speed up requests and responses for prior authorization, where a
provider must get permission from an insurer before prescribing a pricey
drug or performing a certain surgical procedure.
The initiative is led by insurance industry group America’s Health
Insurance Plans and several member insurers including Anthem, Cigna and
WellCare. It will have physicians’ offices volunteer to work with
insurers to incorporate the new processes into existing technology.
Having to seek prior authorization from payers is the
most burdensome regulatory issue for practice leaders, and it’s only getting worse, according to an MGMA survey taken last year.
The CAQH report said prior authorization is the most costly,
time-consuming administrative transaction for providers. On average,
providers spent almost $11 per transaction to conduct a prior
authorization manually and nearly $4 using a web portal. The cost of an
electronic transaction is $1.88.
Adoption of electronic prior authorization by medical plans remained
low relative to other administrative transactions, with only that one
percentage point increase in electronic adoption from 2018 to 2019, the
report said.
The use of partially electronic transactions through payer’s web
portals rose by almost 20 percentage points after a 21 percentage point
decline, while manual use decreased 18 percentage points. Medical plans
have reported that this shift to partially electronic versus manual
utilization is the result of concerted efforts to encourage providers to
submit prior authorization requests through plan specific portals, the
report said.
The process is time-consuming for practices. On average, a manual
prior authorization required 21 minutes of provider staff time, while
electronic prior authorization transactions can be completed in four
minutes.
Prior authorizations were just one of the changes the CAHQ report
highlighted. The U.S. healthcare industry spends $40.6 billion annually
on just eight healthcare administrative transactions related to
verifying patient insurance coverage and cost-sharing, obtaining
authorization for care, submitting claims and supplemental information
and sending and receiving payments, according to CAQH researchers.
CAQH found that by adopting fully electronic processes for just these
eight transactions the industry can reduce waste by $13.3 billion
annually—33% of administrative spending. Those eight transactions are:
1. Eligibility and benefit verification
2. Prior authorization
3. Claim submission
4. Attachments
5. Coordination of benefits
6. Claim status inquiry
7. Claim payment
8. Remittance advice
Of the $13.3 billion in potential savings through automation, $9.9
billion can be saved by medical plans and providers, while $3.4 billion
can be saved by the dental industry, according to the report. In both
industries, the greatest savings exist for providers as compared to
plans.
The report also found that while the industry has made progress in
automating fee-for-service processes, the industry is transitioning to
value-based payment models. And there is a need now for more
interoperable administrative and clinical systems.
While the industry has already avoided $102 billion annually by
automating administrative transactions, significant opportunities for
additional savings remain for both the medical and dental industries,
CAQH said.
“While a greater percentage of business transactions are now
conducted electronically, the U.S. continues to spend more on healthcare
administration than any other nation,” said Kristine Burnaska, director
of research and measurement at CAQH. “The Index offers a roadmap for
those areas where further automation can drive down costs and burdens
for both providers and plans.”
CAQH called for greater collaboration across industry stakeholders to
harmonize and accelerate approaches that can accommodate emerging
market needs. For example, standards and operating rules must be updated
more quickly to support changing technology, payment models and patient
care delivery strategies.
“While the industry has reduced administrative complexity by
automating fee-for-service processes, our healthcare system is
evolving,” said April Todd, senior vice president, CORE and Explorations
at CAQH. “As the industry transitions to value-based payment models and
the need for interoperable administrative and clinical systems becomes
more acute, we need to adapt in order to maintain and improve upon the
progress made to date.”
https://www.fiercehealthcare.com/practices/costs-prior-authorizations-increase-for-physician-practices-at-alarming-rate
