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Understanding Prior Authorizations
Mark Droste
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Understanding Prior Authorizations

Prior Authorization requests are becoming more prevalent in healthcare. What is driving this process? How long has it been around? Why is it so challenging?

Prior Authorization requests are increasing in frequency due to genomic and esoteric testing rising in popularity. In response to the increased utilization, insurers are reacting by requiring Prior Authorization checks to provide a cost-saving to consumers by preventing unnecessary procedures. Whether it is for the patient or the insurance company’s benefit is debated by the AMA.

In 1996 HIPPA standardized the form for electronic precertification called the ANSI 278 services authorization called ePA for electronic Prior Authorization. Fast forward to the present day; physicians experience an average wait time from 1 to 3 days for Prior Authorization decisions, according to AMA.

The steps to obtain Prior Authorization vary across insurers and typically involve the completion and faxing of a Prior Authorization form. 88% of the required forms are either partially or entirely manual, according to Wikipedia. What is surprising, physicians have historically been responsive to market changes by upgrading their technology stack to improve workflow, according to the Council for Affordable Quality Care.

  • 95% adopted electronic claim submission
  • 87% of physicians have adopted EHR
  • 70% adopted e-prescribing
  • 8% adapted prior authorization ePA

What is puzzling the process of migrating from a cumbersome manual process to ePA has been slow, considering the standard has been around for many years. This technology gap is due to the software vendor facing challenges to reconcile variables of over 2,000 insurance companies, each with their own Prior Authorization request form and procedures.

Unlike electronic claims, e-prescribing and eligibility checking individual states have not forced insurance companies at the local level to adhere to long-established standards, delaying the ePA adaption.

Moving beyond the basic information requirements such as requesting physician, patient, insurance, demographics, CPT, and ICD-9 codes, the insurance companies are looking for justification why the testing was necessary. This often triggers supporting documentation required, such as previous treatments, medical records, and lab results to support the request.

Prior Authorization for outpatient services is reasonably managed; however, in a physician office setting, if a molecular test is ordered, the Prior Authorization process for laboratory testing is not well defined. Physician practice management vendors are slowly sorting out the Prior Authorization puzzle; however, laboratories could seize this as an opportunity to provide a better experience for their physician clients by championing change in the current process. Laboratories could build a decision support engine to determine if the Prior Authorization are needed or not needed based on predefined criteria such as type of procedure, CPT, ICD-9, and insurance could be a good start. Laboratories are the experts tracking turn-around-times TAT for tests; perhaps they can bring their expertise to create TAT for PA requests!


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