Smart Electronic Prior Authorization as a Gateway to Care Management
David J. Sand, MD, MBA
June 9, 2022
Prior authorization in health care is a valuable but typically frustrating tool. Ideally, requiring adherence to evidence-based guidelines can help protect patients from physical harm, providers from legal actions, and the healthcare system from fraud, waste, and abuse. Nonetheless, the prior authorization process is often viewed as a burden by providers, necessitating staff resources and delaying care. Generally, the experience is considered abrasive.
Insurance companies, perhaps surprisingly to many, also view the prior authorization process negatively. The process is highly regulated by state and federal government, and companies are regularly audited with the potential for severe penalties, including restrictions on their ability to do business, significant fines, and even the loss of their contracts.
While healthcare providers and their patients typically view prior authorization as a weapon for cost control, it is actually a tool for care management—when used effectively. At its most basic level, prior authorization encourages adherence to evidence-based best practices and disincentivizes inappropriate services and treatments through non-reimbursement.
Why is prior authorization even necessary?
Prior authorization serves a vital safety and quality function in our healthcare system, protecting patients from care that is considered not “medically necessary.” This often confusing term does not mean care is not necessary for a patient’s condition, but rather, as I’ve been saying for nearly 20 years, it ensures the right care, for the right individual, in the right amount, in the right place, at the right time.
Just about any medical treatment or test can be harmful, even under the best circumstances. A misleading test value or spurious finding on an imaging study can lead a provider and her patient down a potentially dangerous path.
As an example, a recent study of MRI scans (Spine J., 2018) revealed only 13% demonstrated results that required action. And of the scans that raised concerns about possible cancer or infection, 81% were incorrect, yet led to further (unnecessary) testing in 59% of those cases. Clearly, we cannot allow indiscriminate use of medical services if we are concerned with the safety of patients.
As healthcare providers and payers, we are fiduciaries of the system and our taxpayer dollars. As total healthcare expenditure in the US approaches 20% of the economy, we must exercise responsibility over healthcare spending.
The importance of prior authorization to utilization management
Utilization Management, and specifically prior authorization, is one technique to limit excessive and unnecessary consumption of limited healthcare resources. Even when a service is “covered” by an insurer, the patient still has a financial responsibility.
The provider is also educated in the process, knowing what is necessary and appropriate in similar situations, thus improving the quality of health care and patient experience. Often, providers who regularly demonstrate knowledge of, and adherence to, the evidence-based guidelines receive “gold card” status from the payer and are exempted from the process. Prior authorization is also an expensive process for healthcare insurers. Aside from the regulatory obligations, reporting and audits, the transactional costs of prior authorization are significant. When up to 90% of all prior authorization requests are ultimately approved, the associated costs, delays, and abrasion are of dubious value (AMA, 2021).
Utilization Management can be used to improve quality and the patient experience, help prevent patient harm, reduce over-medicalization, and reign in the rising cost of health care. The typical prior authorization process, as it exists today, starts with a provider’s submission of a request, usually by fax. At this point, the turnaround time “clock” is tolled, and the deadline is established for the insurer to render a determination.
Multiple regulatory rules and reporting requirements are triggered as well. The information is gathered by an intake coordinator at the insurer and entered in the adjudication system. The clinical documentation is attached, passed to a Utilization Management nurse, and evaluated against the review hierarchy. The hierarchy starts with eligibility and flows to plan benefits; national and local coverage determinations (in Medicare); state benefits (in Medicaid); FDA and compendia; plan policies/guidelines; and ultimately peer-reviewed, published literature and authoritative texts.
If the nurse reviews the information provided with the request, and the request is consistent with the hierarchy, the request is approved. More often, the nurse determines the clinical information accompanying the request is insufficient and initiates a request to the provider for additional documentation. In many cases, there is a back and forth lasting several days or more to get the information.
If the request still does not meet the requirements, the request is sent to a physician reviewer whose role is to determine if the requirements are met or if there are extenuating circumstances. The physician’s determination is passed back to the nurse, and the provider and patient are apprised of the decision by phone and/or mail. The entire process is tracked and audited, and the insurer is liable for every step.
When the request is approved, the process ends. However, if the request is denied, the provider and patient have the opportunity to appeal in another highly regulated and resource-intensive process. And still, this is generally where the pathway ends. The entire process is time consuming, expensive, tedious, and abrasive. Yet there could be a benefit, which is typically ignored.
Automation is critical to managing prior authorization
This highly routinized “dance” lends itself to automation. Without question, there are requests that are uniformly approved, have low potential for harm to the patient, and additionally have low potential for fraud, waste, and abuse. Health insurers will often require a request, yet automatically approve the request without human intervention or review for reporting, tracking, and auditing purposes. There are also requests where the cost of the item or service is less than the cost of the review transaction. These too are typically approved without intervention if a request is required at all.
There will always be requests that are complex and require review by clinical peers. These requests require review, not because the determination is complex, but because the procedure is invasive; expensive; subject to fraud, waste, and abuse; potentially experimental or investigational; or may not be covered. The rules and guidelines for these services tend to be well established, and whether or not the guidelines are met is, in most cases, clear cut. The technology to address these situations is evolving at an exciting pace.
In May 2020, the CMS issued the Interoperability and Patient Access final rule. Reducing the administrative burden of prior authorization was a major intent of this rule. By using SMART on FHIR® technology in a properly designed and architected system, almost all of the pain points described above can be eliminated.
A typical scenario might go something like this: John has been seeing his internist for several years for osteoarthritis in his knees. She has treated him appropriately with all the conservative treatments available, and he has exhausted any benefit from continued physical therapy, acupuncture, and other complementary and alternative medical treatments.
She sends John to the orthopedic surgeon, who determines through examination, imaging, and a review of his records that it’s finally time for John to have a knee replacement, if he wants to remain active. With John sitting in the office, the surgeon sends a request for the surgery through the insurance company’s portal. The electronic prior authorization process detects the request, verifies eligibility and benefits, selects the appropriate guideline, “reaches” into the EMR, extracts the necessary documentation, and compares it to the guideline requirements.
If the EMR documentation demonstrates John and his doctors have done everything appropriately, and the guideline requirements are met, the system sends the prior authorization approval back to the surgeon. This all happens in under a minute while John is still sitting in the office. The system then sends any required correspondence and documents needed to approve the prior authorization. If the request is missing required documentation and cannot be approved, John’s doctors are provided with that information as well.
The SMART on FHIR electronic authorization process helps everyone
The SMART on FHIR electronic authorization process has just saved everyone the waiting game and expedited John’s care. It has also saved the provider the cost of paying a staff member to manage the process and the insurer the cost related to adjudicating the request and providing notification. On top of that, it saved the worry of meeting regulatory compliance turnaround requirements, helped staff avoid multiple calls to Member Services checking on the status of the request, and continued to provide the quality, safety, and financial oversight everyone involved needed.
But as the TV infomercials say, “Wait! There’s more!”
Prior authorization requests contain a plethora of information, such as ICD and CPT codes for the condition and service under review, additional conditions and codes for comorbid conditions, and clinical information from the EMR. All of this provides a golden opportunity to better understand the patient, make appropriate referrals to case management, engage the individual in targeted campaigns and programs, perform additional outreach to assist with social determinant risks…and the list goes on. Most of this information is usually ignored once the request is approved.
Using the SMART on FHIR transaction, these data points can be captured. Then, an enabled population health management platform with tight integration between the various health plan functions can configure rules that allow the UM process to communicate with the Care Management teams, community outreach programs, and community-based referral organizations (CBROs). Future care needs can be reasonably anticipated, and barriers can be removed before they become critical impediments. The organization’s resources can be optimized, the episode of care can be streamlined, and the member experience can be vastly improved.
An electronic prior authorization process—used with an enterprise management platform that has tightly integrated cross-organizational functionality—will have an impact that reverberates throughout the system. The process will resonate with every stakeholder in positive ways. Members will benefit from timelier and streamlined care. Providers will experience financial savings and reduced abrasion. Payers will similarly experience financial benefits from transactional savings and other resource and cost-of-care savings. They will also realize improved CAHPS, NPS, Stars, network relations, as well as the potential for more growth in membership from the relationships engendered simply by being a good business partner.
David J. Sand, MD, MBA
Chief Medical Officer for ZeOmega
As Chief Medical Officer, Dr. David J. Sand provides overall clinical vision to the organization, helping to ensure the safety, effectiveness, and relevancy of ZeOmega’s thought leadership. He also provides clinical direction on product development, positioning, and relevance for the company’s evolving markets.
Dr. Sand is a board-certified otolaryngologist-head & neck surgeon. After dedicating 12 years to a solo clinical practice, he transitioned to become the chief medical officer of Permedion, a URAC-accredited IRO in Ohio and HMS, a national program integrity vendor to 46 different state Medicaid agencies and the CMS. Since then, Dr. Sand has served as chief medical officer in multiple Medicare Advantage and Medicaid health plans. Most recently he was chief medical officer of Care N’ Care, a provider-owned Medicare Advantage Plan in Texas, and as the national chief medical officer for Medicare for Anthem BCBS.
Dr. Sand has participated on the board of the National Association of Independent Review Organizations (NAIRO), the American Diabetes Association, and has been a Fellow of the American College of Surgeons, the American Institute of Healthcare Quality, the Institute of Medicine of Chicago, and the American Academy of Facial Plastic and Reconstructive Surgery. He has also spoken nationally on fraud, waste and abuse, palliative and end of life care, and quality improvement.
Dr. Sand received his Bachelor of Science and MD degrees from Brown University in Providence, RI, and his MBA with honors from Regis University in Denver, CO. He served his surgical internship at Pennsylvania Hospital in Philadelphia and his otolaryngology residency at Temple University Hospital in Philadelphia.