Legal, Payers

Payers Can Reform Prior Authorization to Make it Faster, Smoother But Will It Satisfy the AMA?

In a recent interview, Dr. Jesse Ehrenfeld, the president-elect at the American Medical Association, outlined how the major pain point of physicians has gone from the EHR to prior authorizations requests. But none of the individual efforts that payers are making is enough.

By Arundhati Parmar on April 18, 2023

Prior authorization has emerged as a flash point between payers and providers as the former tries to manage what they believe is waste in the system while the latter accuses payers of trying to deny care.

Through prior authorization, patients have to get advance clearance for certain types of care from their insurance companies through their providers but the process is widely recognized to be inefficient and slow at best.

In a recent presentation at a healthcare conference in Nashville, Dr. Jesse Ehrenfeld, the incoming president of the American Medical Association, pointed to how bad things are when it comes to prior authorization and deep dissatisfaction among providers.

“The number one pain point for physicians for many, many years … was the EHR and not prior authorization,” Dr. Ehrenfeld declared in an interview last month, implying how something that was onerous and continues to be so in delivering care has now been supplanted by an even worse administrative burden.

Recognizing that the situation is untenable, payers are actually taking steps to reform their processes and acknowledge they can do better. Some are establishing real time electronic prior authorizations reducing the time to get these payer approvals to a few hours from several days or weeks especially if the request for prior auth comes from familiar and high-quality providers in their network.

Isn’t that an improvement? Not according to to Dr. Ehrenfeld.

Let me tell you what’s now happened — there is no unified solution. So you can have E-prior authorization and the third party payers say, ‘Well this is the solution, this is what you asked for.’ But every organization has a different portal, so suddenly you’re logging in to a whole number of additional systems. United has a system, Cigna has a system. It’s not integrated. So we’ve now added this additional layer of activity that, you know, sounds good on paper. E-prior authorization, wouldn’t that be wonderful? You click a button, but that integration doesn’t exist today. So it’s just added more activity and work and another screen in the practice. Which the insurance companies love because what does it do? It just is another barrier to patients actually accessing the services that [they’re] trying to get.

So what would work? Ehrenfeld suggested the following:

You could envision a world where short the information flows from the point of care through the EHR out through a PBM to the company, and this happens in real time. That would be useful. Yes. That does not exist today in most circumstances.

Only a regulatory framework can bring about this unified approach.
I don’t think the insurance companies have an incentive to make the investment to align. And why would Third Party Payer A work with third Party Payer B unless they’re required to do so through a regulatory approach? And that’s why what’s happening with the proposed rule out of the federal government around Medicare Advantage plans and prior authorization. [It] is a little bit of an opportunity to start to move things in a positive direction.
That proposed rule is the one that the Centers for Medicare and Medicaid proposed back in December and if finalized will go into effect in 2026. Under it, payers under the purview of the agency would need to use the  to use “Fast Healthcare Interoperability Resources (FHIR) Prior Authorization Requirements, Documentation, and Decision API (or PARDD API) to automate the prior auth process. This would also allow patients to access information about these requests and decisions, according to the Kaiser Family Foundation.
When the rules are finalized, payers would also have keep providers in the loop by letting them know whether the prior auth request was approved, denied, or whether more information is needed. More importantly, payers would have to provide the specific reason for a denial. Currently, only patients are informed of denials and the reasons for it, and only some providers are notified but but not all irrespective of the plan the patient is on.
The proposed rules also require payers to speed up their decision making process. According to KFF, timeframes for a standard prior authorization decision notice for Medicare Advantage plans and Medicaid managed care plans would need to be shortened to seven days from 14 days.
Another requirement is the annual public reporting by payers on their website of a list of all services that need prior authorization and certain metrics associated with it. —  such as the overall percentage of prior authorizations that were approved and denied as well as the percentage of prior authorization requests approved after appeal, and the average time for a prior authorization decision, according to KFF.
The American Medical Assoociation is not the only one supporting this CMS proposed rule around interoperability and prior authorizations. The American Hospital Association urged CMS to finalize these rules in mid March.
Meanwhile, the lack of transparency in prior authorizations and the general desire to make healthcare easily accessible is something that Congress too is looking into, with its Gold Card Act that was introduced in 2022. And several states like Texas have also taken steps to make prior authorizations less burdensome.
Dr. Ehrenfeld acknowledged these efforts, but he still thinks CMS’s proposed rules are what will move the needle the most.
“There are a variety of things that states have done at a state level that have provided some relief,” he said. “But the first, overarching effort that we think will come into play is, is out of CMS. And we’re very supportive  of what they have brought forward.”
Photo: tang90246, Getty Images