Health Plan Payment and Reimbursement

Prior-authorization cost and time burdens increase for providers, report finds

January 22, 2020 4:07 pm
  • Processed prior authorization (PA) amounted to a $528 million administrative cost for providers in 2019.
  • PA increased in both cost and the amount of time per transaction.
  • Health plans warn another increase in the use of PA is coming.

Providers’ costs and time consumption from prior authorization (PA) markedly increased in 2019, according to a not-for-profit alliance. The findings underscore the need to curtail the health plan tool, provider advocates say.

Among the latest PA findings of the annual administrative burden report from the Council for Affordable Quality Healthcare (CAQH) were:

  • PA volume increased by 1% in 2019.
  • Providers’ PA processing cost was $528 million in 2019 (no total cost was estimated in 2018).
  • Provider savings from switching to electronic PA increased from $278 million in 2018 to $355 million in 2019.
  • The PA cost per manual transaction increased from $6.60 in 2018 to $10.92 in 2019.
  • PA time per manual transaction increased from 16 minutes in 2018 to 21 minutes in 2019.

April Todd, senior vice president for CAQH, said some of the increase in providers’ cost per transaction may stem from increased detail in this year’s survey-based report, which garnered information about portals for the first time.

The significance of the findings for providers

Provider advocates said the finding underscored the need for a broad federal push for health plans to provide electronic prior authorizations.

“In 2020, practices should not be forced to rely on fax machines to complete manual prior authorizations when health plans could modernize the process,” Anders Gilberg, senior vice president of the Medical Group Management Association, said in a written statement. “The federal government needs to streamline prior authorization by requiring a national automated approach to minimize administrative costs and delays in patient care.”

Providers would save $355 million annually from a complete shift to electronic PA processes, according to the CAQH report. The number of PAs conducted electronically actually declined from 18 million transactions in 2018 to 13 million in 2019.

Providers conducted 73 million manual PAs in 2018. The survey-based report added the category of “partially electronic” PA transactions in 2019 and found 27 million manual and 52 million partially electronic PA transactions that year. Partial electronic transactions aim to capture more detail about PAs conducted through tools such as patient portals.

The amount of time consumed by providers per transaction in 2019 was starkly different for the three types of PA transactions:

  • 21 minutes for manual PA
  • 8 minutes for PA through a web portal
  • 4 minutes for electronic PA

Additionally, providers should prepare for more PA requests in the future.

“We’ve heard from [health plans] that they anticipate that those requests for prior authorizations will probably go up in the future because of new technologies and things that they are seeing coming on the horizon,” Todd said in an interview.

Addressing concerns about prior authorization

Provider advocates have been pushing the Trump administration to help control increasing PA costs by using rulemaking to standardize PA requirements and processes. As part of that effort, in November, the American Hospital Association urged the Centers for Medicare & Medicaid Services to develop PA standards and increase its oversight of the health plans the agency regulates.

CAQH has adopted some voluntary health plan rules that aim to ease PA burdens, Todd said. And in 2020 it plans submit to federal regulators recommendations for requiring health plan changes through HIPAA.

“There are definitely efforts underway to move that very manual process to a more electronic process,” Todd said. “And with all of those efforts that are underway, we would anticipate over the next few years that we will see the use of electronic prior authorization increase.”



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