Some payers are now outsourcing the authorization process to third-party vendors for high-tech radiology, infusion, or radiation oncology. This further complicates an already-difficult task for patient access.

“The transition process is usually painful,” says Viviana Mahon, manager of the financial clearance unit at Moffitt Cancer Center in Tampa, FL.

The department has seen these problems when payers first outsource the authorization process:

  1. There is contradicting information between insurance and the third party;
  2. Patients are not loaded in the vendor’s system when the change takes place;
  3. The vendors do not have direction on which tests and drugs are authorized by the vendor, and which go through the insurance plan.

“The worst part is when the approval resides in the vendor and it is not transmitted to the insurance,” Mahon laments. “Once the claim processes, it is denied for no authorization, in error.”

Vendor-outsourced authorizations can result in inappropriate claims denials. This means the accounts must be reworked to avoid lost revenue.

“The cynic within me suspects that a payer’s decision to outsource may be driven in part to complicate, delay, and possibly influence the denial rate in the payer’s favor,” says Peter Kraus, CHAM, CPAR, FHAM, business analyst for revenue cycle operations at Atlanta-based Emory Healthcare.

While there may be legitimate reasons to outsource, there’s no question that the change can adversely affect revenue and satisfaction.

“It may not be fair to imply these are deliberate shenanigans,” Kraus acknowledges. “But it certainly can have negative effects — for both access staff and the patient experience.”

Typically, parameters for authorization are outlined in hospital-payer contracts. If patient access plays an advisory role in contract negotiations, it helps to ensure that all front-end payer-related expectations are realistic. Kraus advises the following tactics.

  • Patient access get involved to be sure authorization requirements are manageable, both by their own department and also by other hospital staff, such as care coordination. Timing, follow-up, provision for emergency care, and other factors should be considered carefully.
  • Hospitals strive to standardize the requirements for contracts.

Ideally, patient access doesn’t have to apply different rules for different payers. How realistic this is depends on several factors. Other contractual provisions, such as reimbursement rates, come into play. Also important: How eager each of the parties is to engage in a business relationship.

“Standardized requirements may not happen. But it should be one of the goals of contract negotiation,” Kraus says.

To make it more likely, patient access should bring data to the table.

“Work to convince the hospital’s contract negotiators that such consistency leads to a higher percentage of successful authorizations, fewer denials, and a better bottom line for the hospital,” Kraus adds.

Good Financial Outcomes

What if outsourcing the authorization process prevents contractual standards from being met?

“The payer should be called out for being in violation, not the vendor,” Kraus offers. “Prevailing sanctions resulting from contract violation should apply in this case.”

Standard contract language likely holds a payer’s vendors to the same standard of adherence as the payer itself.

“If the vendor deviates from contractual provisions, the payer is in violation and subject to whatever contractual terms apply,” Kraus says. If the requirements are met, says Kraus, it should not make a difference whether authorization comes from the payer or a contracted vendor.

“Realistically, when you add a third party to the authorization process, you invite a lot of finger-pointing when things go wonky,” Kraus adds.

If denials are made unfairly, it helps to be able to point to the contract language during the appeal process. Historically, patient access was not included in discussions on contract negotiations.

“Even patient accounts staff, who had to manage collections based on contractual provisions, were sometimes excluded,” Kraus notes.

Assuming patient accounts departments do have input, the argument for patient access to be there too is easy to make.

“Simply acknowledge today’s reliance on front-end staff performance to ensure successful financial outcomes,” Kraus says.

This doesn’t mean patient access will take part in face-to-face negotiations with payers. It means maintaining an ongoing collaborative relationship with the contract management team. Without insight from patient access, unrealistic requirements can find their way into contracts. “They need education to understand what access staff can and cannot do with respect to authorization,” Kraus adds.

Start the Conversation

Patient access can start the conversation with contract management by explaining what works and doesn’t work in their department — and why. For instance, it’s just not possible to wait up to 14 days for an authorization if a procedure needs to happen within a week.

“Access leadership in most hospitals know exactly which requirements are unrealistic,” Kraus says. This varies depending on the resources available.

“Articulating and explaining those provisions to a department possibly in a position to do something about them is an immediate goal,” Kraus notes.

However, it works both ways. Patient access is likely unaware of the realities of contract negotiation.

“Patient access must learn what works and doesn’t work for contract management staff in their negotiations,” Kraus says.

Some requirements are more difficult to manage than patient access would prefer, but are unavoidable from the contract management perspective. For instance, payers might refuse to budge on certain time frames.

“Many provisions we’d like to see in payer contracts are ‘asks,’” Kraus says. “We don’t get everything we want, which means that the hospital can’t necessarily point to contractual provisions when a payer or vendor misbehaves.” Kraus says that the mindset should be on ensuring that verification provisions are realistic and manageable, and that the payers or vendors can be held accountable when they deny a claim inappropriately.

“The shared learning process is important to both parties,” Kraus says.

The overall goal is for patient access to be taken seriously, and to build a relationship with contract management staff. Some good topics for discussion:

  • Time frames for obtaining authorization;
  • Mutually agreed documentation that authorization has occurred;
  • Making in-network and out-of-network eligibility clear to patient access staff;
  • How to handle patient challenges when authorization isn’t going well;
  • Provisions for remedying errors and lapses by patient access staff in obtaining authorization.

“Clear, consistent data and authorization instructions on patient insurance ID cards have been points of contention for decades,” Kraus notes. “Why not include expectations in the contract?”


  • Peter Kraus, CHAM, CPAR, FHAM, Business Analyst, Revenue Cycle Operations, Emory Healthcare, Atlanta. Phone: (404) 712-4399. Email:
  • Viviana Mahon, Manager Financial Clearance Unit, Moffitt Cancer Center, Tampa, FL. Phone: (813) 745-1937. Email: