A growing number of states have passed prior authorization legislation to combat payer requirements resulting in delayed care, lost revenue, and dissatisfied patients.
- Patient access departments lack resources to appeal the surge in denied claims.
- A coalition created criteria to streamline prior authorization processes.
- Some health plans have agreed to eliminate authorization requirements for hundreds of services.
Ask any patient access leader to describe his or her biggest headache, and the answer likely will have something to do with the authorization process.
“The authorization process is probably our top issue within the revenue cycle,” says Margaret Schuler, system vice president of revenue cycle for Ohio Health.
Patient access departments struggle to keep up with all the authorization requests. “It’s gotten completely out of control. The payers are making up their own rules,” says Karen Hoppe, a senior consultant at Craneware, an Atlanta-based company specializing in revenue cycle improvement.
Patient access departments lack sufficient resources to appeal all of the “no auth” denials they’re facing — something that hasn’t gone unnoticed by payers. “Payers are using that as a ‘do not pay’ tactic — what’s the percentage of denied claims that are really going to get reworked?” asks Hoppe.
The sheer number of denials is overwhelming many departments. “I’ve never seen so many claims denied as in the past year or two, and I’ve been in the business since the early ’90s,” says Hoppe. “It’s amazing to me how payers can consistently deny claims and hospitals have no recourse.”
Legislation: Partial Solution
Some states have passed legislation addressing “surprise” medical bills in response to public outcry over patients being stuck with unexpected high costs due to a hospital or provider’s out-of-network status. “But I don’t hear a lot about how payers are denying claims,” says Hoppe. “I would love to see more being done at the federal level so the payers cannot be just denying claims without good reason.”
A growing number of states are passing laws to curtail payers’ authorization practices. Delaware, Ohio, Arkansas, and Virginia all have passed prior authorization legislation.
“Ohio’s Prior Authorization Bill is a great first step to improving the issues,” says Angela Ferguson, MBOE, director of patient access services and precertification at The Ohio State University Wexner Medical Center in Columbus. The following provisions went into effect Jan. 1, 2017:
- Insurers must disclose all prior authorization rules to providers at least 30 days in advance of the new requirement.
- Enrollees of the health plan must receive basic information about which drugs and services require prior authorization.
- Providers are allowed to request a “retrospective review” for unanticipated procedures that were performed during an authorized procedure, with some limitations.
- Providers are allowed to request a “retrospective review” for services that required a prior authorization that was not obtained, when certain criteria are met.
As of Jan. 1, 2018, insurers will be required to have a web-based system to receive prior authorization requests and a faster timeframe for prior authorization decisions.
“Insurers also will need to include more clarity when responding to a prior authorization request, including acknowledging receipt of the request and specific reasons if denying,” says Ferguson.
The newly enacted legislation is welcome, but timeframes are still too long, says Ferguson: “Payers will still have 10 days to respond to non-urgent requests, and 72 hours to respond to urgent requests.”
Standardized timeframes for all payers is one of the biggest advantages that Ferguson sees with the legislation. Currently, payer timeframes vary widely. “There are payers who take 14 days, 21 days, or 30 days,” she explains. “It is very challenging for staff to manage all these different timeframes.”
If a test is scheduled seven days out and the payer has a 14-day turnaround time, the authorization may not be in place in time. This requires a conversation with the provider.
“If the test can safely be rescheduled, we will do that. If it can’t, we move forward,” says Ferguson. “Sometimes those turn into cases that you have to do appeals on, and sometimes are ultimately written off.”
The legislation will not affect the number of services requiring authorizations. “There’s the chance that payers will require authorizations on a broader scope of services,” says Ferguson.
Previously, payers required authorizations mainly for high-dollar procedures, primarily surgeries. Now, payers also are requiring authorizations for high-volume procedures. “Even though MRIs and CT scans are not the most expensive procedures we do, the volume is greater than surgical procedures,” says Ferguson.
Although the legislation won’t solve all authorization headaches for patient access, it has called attention to the issue. “If nothing else, it’s making people more aware of all the behind-the-scenes work that has to be done because of the requirements of the payers,” says Ferguson.
Schuler says consistent medical necessity standards are needed: “If payers and providers could agree on medical necessity standards across the industry, we wouldn’t need the authorization process.”
Because the problem has not been addressed federally, states are developing their own regulations. “The payers are national payers. From the payer’s vantage point, they are going to now have to put in processes which address each individual state,” says Schuler.
Automation Is Needed
Part of the problem with prior authorizations is that the process is very manual. “It becomes a rework process over and over again,” says Schuler.
Payers already have invested significant resources in their provider portals. The problem is that the portals are not automated. Patient access has to go to many different portals to find information on what’s required. “It’s very inefficient and ineffective. You have to comb through hundreds of medical policies. It’s just not feasible,” says Schuler.
Medicare is very transparent in the publication of its medical necessity criteria.
“We’ve had the ABN [Advance Beneficiary Notice of Noncoverage] process and NCCI [National Correct Coding Initiative] edits,” notes Schuler.
The same is not true for commercial payers. “You can’t buy an ABN medical necessity scrubber for the managed care payers. You have to go to every payer portal and read their individual medical policies,” says Schuler. (See strategies for medical necessity denials.)
Payer policies are not in an electronic toolset that makes it easy to check medical necessity based on the diagnosis and current procedural terminology (CPT) codes. “Payers are also hiring companies to administer their medical policies,” says Schuler. Most diagnostic services are managed by a third-party authorization vendor, further complicating the process.
“If authorizations are here to stay, electronic transactions are necessary to reduce costs,” says Schuler.
Many Added Costs
Clinical care is being delayed because of payer timeframes. “When somebody’s dealing with cancer or a high-risk medical condition, they don’t want to wait for their care,” says Schuler.
Patient satisfaction and customer service are top priorities for patient access, but prior authorization requirements clearly frustrate patients.
“Patients can receive unexpected non-covered services billed to them, and/or a delayed statement months after delivery of service, due to the lengthy appeal process,” says Schuler.
Hoppe knows of at least one payer who routinely denies any claim without an authorization in the system, even though the authorization actually was obtained. “They are trying different tactics to deny claims,” she says. “Hospital associations and state associations really have to band together to fight the payers.”
Larger health systems might be able to negotiate better contract terms with payers, putting smaller community hospitals at a distinct disadvantage.
“They don’t have the resources to go fight these payers. They are losing money and, ultimately, will get bought out by a bigger hospital,” says Hoppe. “There needs to be more collaboration across hospitals. Many really work in their own silos.” (See story on a coalition formed to address prior authorization requirements.)
Authorizations are an attempt to manage healthcare costs by reducing services that are not medically necessary. “But even though it appears to be reducing utilization of services, it’s adding to the cost of care due to the administrative burden of the process,” says Schuler.
A physician community already struggling with reimbursement cuts likely lacks resources for the labor-intensive process to authorize an ordered service at the hospital. “Therefore, either the authorization process doesn’t happen, or it’s performed by the hospital,” says Schuler.
Many patient access departments obtain authorizations on behalf of providers. To get paid for rendered services, hospitals have to add resources to patient access and the business office. Even payers are adding resources to manage the denials ending up in appeals.
“Everyone loses in the authorization process right now — the patient the provider, the payer, and the hospital,” says Schuler. “We need a solution that works for everybody.”
- Angela Ferguson, MBOE, Director, Patient Access Services and Precertification, The Ohio State University Wexner Medical Center, Columbus. Phone: (614) 293-2453. Email: Angela.Ferguson@osumc.edu.
- Karen Hoppe, Senior Consultant, Craneware, Atlanta, GA. Phone: (781) 789-4272. Email: K.Hoppe@craneware.com.
- Margaret Schuler, System Vice President, Revenue Cycle, OhioHealth. Phone: (614) 544-6427. Fax: (614) 544-6486. Email: Margaret.Schuler@ohiohealth.com.