Breaking the Denial Cycle: The Future of Prior Authorization
Prior authorization (PA) has long been a bottleneck in the revenue cycle, delaying care, straining resources, and contributing to claim denials. While revenue cycle management (RCM) aims to ensure timely payment and reimbursement, its real success hinges on patient access. When scheduling appointments, receiving care, filling prescriptions, and understanding bills are seamless, both patients and healthcare organizations benefit.
However, obstacles stand in the way. Patient registration and eligibility problems top the list of reasons behind claim denials, but prior authorization presents an even greater challenge. Clinicians dedicate significant time and effort to securing approval from insurers – only to face frequent rejections, delays, and lost revenue.
PA has become a heavy burden, but it doesn’t have to be. Adopting an automated solution can modernize a practice’s claims process while safeguarding quality patient care and reducing negative impacts on clinicians and staff.
Prior Authorization: A Persistent Patient Access Challenge and a Common Source of Denials
Prior authorization has been part of RCM for decades. But it’s morphed over time from its initial purpose of helping payers identify costly – and unnecessary – medical procedures and medications. Today, it’s a barrier most clinicians must overcome before providing almost any type of care, including routine services, medications, and complex surgeries. Failure to satisfy prior authorization requirements results in a claim rejection.
For the past few years, national denial rates have hovered around 12%, according to the Optum 2024 Revenue Cycle Denials Index. That equates to millions of rejected claims every year. A snapshot from a 2023 KFF analysis revealed that Medicare Advantage denied 3.2 million of nearly 50 million prior authorization requests. With other commercial and private payers added in, that number is much higher.
For patients, those rejected claims translate into unavailable care, such as a vital imaging study they can’t have or an advanced therapy they can’t receive. In fact, in the 2023 American Medical Association (AMA) prior authorization physician survey, 94% of doctors report that denials delay care. Additionally, 78% say patients often abandon care after a rejection, leading 24% to confirm that a prior authorization denial has resulted in a serious adverse event for a patient.
PA denials also present a significant financial cost to patients. In the same AMA survey, 79% of clinicians reveal that a rejection may force patients to pay hefty out-of-pocket expenses for the care they need.
But the impact of prior authorization denials spreads beyond patients. It touches healthcare clinicians and their staff, too. The average practice submits 43 prior authorization requests each week. For many offices, submitting claims takes up nearly one-third of their work hours. That’s why 35% of clinicians have staff dedicated to prior authorization claims. Still, 27% of clinicians report their claims are almost always denied. Most forgo an appeal because they’ve been unsuccessful in the past. Alongside the pressure placed on staff, prior authorization/rejections carry a hefty price tag for clinicians. According to the 2024 Council for Affordable Quality Healthcare (CAQH) Index Report, nationwide administrative costs linked to prior authorization rejection totaled $1.3 billion. Consequently, it’s no surprise that 95% of clinicians say prior authorization significantly contributes to their burnout.
The detrimental effects of prior authorization denials are widespread. That’s why it’s vital to address the complexity of the process and implement systems to avoid pitfalls.
Best Practices to Reduce Prior Authorization-Related Denials
Streamlining the prior authorization process is a clear, simple goal. But hitting the target can be difficult because there are many reasons why a payer may deny a claim. The most common reasons include:
- Delays in obtaining authorizations leading to retroactive denials: Denials occur when healthcare clinicians provide care before they receive prior authorization approval.
- Failure to follow payer-specific guidelines or protocols: Claims fail to fulfill the payer’s prior authorization requirements.
- Incomplete or incorrect documentation: Claims lack patient details, treatment plan specifics, or supporting clinical documentation.
- Lack of medical necessity or insufficient evidence: Claims do not sufficiently explain why the patient needs a specific medication or treatment.
Fortunately, there are several strategies that practices can implement on the front end of their RCM to avoid prior authorization delays and rejections. These best practices include:
- Automating the prior authorization process: Manual prior authorizations require significant time and money investments. They are also vulnerable to more mistakes. Practices can sidestep these problems and save resources by embracing automation in the prior authorization process. Automated, technology-driven solutions lead to fewer claims errors and a lower rate of denials.
- Standardizing documentation through tech-enabled scribing: Ambient scribing solutions that integrate into a practice’s electronic health record (EHR) can capture real-time details about a patient and their health needs. Using templates and checklists ensures clinicians consistently record required information and automatically include it in every prior authorization request. For this strategy to be successful, practices must frequently review and update their documentation practices to stay aligned with each payer’s protocols.
- Communicating effectively with payers: Having an open line of communication with every payer is essential, and it offers several benefits. It’s a way for practices to stay current on any updates to a payer’s prior authorization process, including changes in coding or documentation requirements. It also makes it easier for practices to follow up on any pending prior authorization applications or fulfill requests for additional information that may prevent a delay or denial.
- Conducting internal audits: Internal reviews of submitted prior authorization requests can help practices pinpoint problems that lead to rejections. By regularly reviewing documentation, prior authorization staff can identify the most common errors and take steps to correct them. Routine audits enable practices to continuously improve prior authorization efforts, reducing delays and denials over time.
Leveraging a Technology-Enhanced, Human-Enabled Authorization Strategy
Successful prior authorization depends on multiple moving parts. Practices must submit sufficient documentation, provide proper codes, and comply with all federal, state, and payer regulations. Consequently, the opportunities for mistakes are vast.
Implementing a technology-enhanced, human-enabled authorization strategy can alleviate many of these worries. These tools can simultaneously improve the patient experience and outcomes. Certain components can lead to greater prior authorization success, including:
- Automated verification systems: Technology-enhanced tools remain under prior authorization staff supervision so they can intervene when necessary. The software in these systems determines a patient’s insurance coverage and eligibility in real-time. These systems mirror human actions, enabling them to take over the repetitive tasks typically associated with the prior authorization process. As a result, they reduce errors and potentially save prior authorization staff countless hours.
- Predictive analytics: By pairing data analysis with machine learning algorithms, practices evaluate each prior authorization request prior to submission. Predictive analytics detect and alert prior authorization staff to any potential problems that may trigger a denial. This gives them an opportunity to correct the mistakes on the front end. Practices can also leverage predictive analytics to create protocols that help staff sidestep common errors.
- Electronic prior authorization (ePA) systems: By integrating into existing EHRs, these systems reduce paperwork by alleviating the need for prior authorization staff to enter information into individual health plan portals manually. These platforms allow clinicians to submit real-time digital prior authorization requests for services or medications. Payers automatically review requests and send dashboard notifications to inform clinicians of a decision. Based on the result, clinicians either proceed with care or pursue an appeal. According to the 2024 CAQH annual study, clinician and payer adoption of ePA systems is on the rise.
IKS Patient Access Solution Suite Addresses Front-end Pain Points to Optimize Revenue Generation and Reduce Denials
For many practices, the current revenue cycle is a siloed system. This creates barriers in the prior authorization process, leading to poor patient experiences and lost revenue capture. To address these problems, IKS Health created an autonomous patient financial clearance system that includes streamlined PA.
This closed-loop system is a pre-active solution. It uses adaptive cognitive software to maximize operational performance and prevent revenue loss. It works at the front end of RCM to improve patient access. By combining technological accuracy with human oversight (when needed), the system secures prior authorization approval and clears the reimbursement pathway before 95% of patient visits. To simplify the process, the IKS system focuses on:
- Registration integrity: Cognitive technologies identify and resolve demographic and other types of errors
- Eligibility verification: Automated technologies verify patient coverage in real time
- Benefits verification: Automated technologies mine payer systems to ensure the availability of benefits
- Benefits matching: Automated technologies verify benefits align with likely procedures
- Insurance discovery: Automated technologies detect whether self-pay or multi-eligible patients have benefits coverage they didn’t know about
- Coordination of benefits: Automated technologies determine which payer to bill for services when patients have more than one type of coverage
- Patient liability estimation: Cognitive technologies prepare an estimate of a patient’s potential out-of-pocket expenses
- Prior authorization: Electronic prior authorization systems detect the need for prior authorization and assemble, submit and monitor claims
This low-touch system successfully eliminates most front-end errors, decreasing the burden on prior authorization staff. It also reduces prior authorization denials, lowers patient access costs, and boosts revenue collections at the point of service.
By intervening to eliminate prior authorization mistakes at the front end of the revenue cycle, practices can streamline patient access. This ensures greater patient care continuity while strengthening their financial stability. Contact IKS Health for more information about our autonomous patient financial clearance system.
