Published: Jan 17, 2024
Revenue Cycle Management

Prior Authorization Software: Key Benefits & Elements Your Organization Needs

Suzanne Delzio
Suzanne Delzio
8 minute read
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“Prior authorization is a real burden for me pretty much every single week,” explains Memorial Sloan Kettering Cancer Center oncologist Dr. Fumiko Chino, MD in a recent interview with the American Medical Association. “Again and again patients will tell me that it [the prior authorization process] is so opaque it makes them feel hopeless.”

It’s no secret that prior authorizations are one of healthcare’s most dire challenges. In Dr. Chino’s recent study of 178 cancer patients receiving prior authorizations, the majority rated this step in their care as “bad” or “horrible.” Worse, these poor experiences reduced patient trust in the healthcare system overall.

The good news is that progress in fixing prior authorization delays is occurring on both the legislative and technological fronts. 

Beyond the dozens of legal initiatives currently in state legislatures, prior authorization software is helping to improve the patient access experience right now. Here you can review the many benefits of this technology. If you’re spearheading a prior authorization implementation or improvement, mentioning these benefits should gain support in your department. Learn how it cuts costs, alleviates staff burden, delivers faster patient care, and more.    

What is Prior Authorization Software

Prior authorization software is a tool that automates the verification of patient insurance coverage of treatments, procedures, and medications recommended by providers. Once the authorization is submitted, it also tracks payer approvals, denials, and requests for documentation, alerting providers to updates.  The software helps providers speed care-delivery and reduce denials, thereby improving the patient experience. Prior authorization software replaces much of the cumbersome manual prior authorization protocols that overburden staff.

The prior authorization software landscape today

As mentioned above, hope for reform does exist. Currently, most U.S. states are considering legislation to fix how prior authorizations waste time and delay care. In 2023’s legislative session, nearly 90 prior-authorization reform bills were considered in 30 states. Several remain on the table for potential passage.

This increased scrutiny has led some insurers to ease up on prior authorization requirements. For instance:

  • UnitedHealth is cutting back on 20 percent of its prior authorization requests for treatments ranging from spine surgeries and breast reconstructions to outpatient services and durable medical equipment.
  • Humana has done away with prior authorizations for cataract surgeries for Medicare Advantage members in Georgia.

Still, as reflected in the examples above, the payer concessions remain limited. Most physicians still assert prior authorization delays interfere with patient care and even cause hospitalizations and deaths. 

Technology easing the prior authorization burden

While waiting for more favorable healthcare legislation to roll out, healthcare organizations are speeding and perfecting prior authorizations by using prior authorization software. An AHIP poll reported in Rev Cycle Intelligence found that 71 percent of providers who used electronic prior authorization (ePA) tools said their patients received care faster than when their staff completed prior authorizations manually. In fact, payer decision time dropped a drastic 70 percent – from 18.7 hours to 5.7 hours.  

Time saving is just one advantage healthcare leaders have found comes from using prior authorization software. As you’ll read below, the 2022 CAQH Index sees the medical industry saving a total of $449 million each year with its adoption. 

Manual v. automated prior authorization trends

Where does the healthcare industry stand today?

Despite prior authorization software’s extensive potential benefits, healthcare organizations’ progress in adopting fully electronic processes for prior authorizations remains limited. 

Traditionally, prior authorizations were handled manually via fax, phone, and shuffling through hard copies of payer contracts. Today, most physician groups use some automation, but the holdouts are slow to adopt electronic options, despite proven advantages. 

Source: 2022 CAQH Index

As this image shows, most providers are partially electronic, with 39 percent using both manual and automated approaches in 2022. The number using a fully electronic or automated solution has risen from 21 percent in 2020 to 28 percent in 2022. During the same time, the slice of providers using a fully manual approach has dropped just one percent from 34 percent to 33 percent. 

Given that automating prior authorization is a critical component of the AMA Recovery Plan for America’s Physicians, it’s surprising that one-third of providers are still mired in a manual approach. The AMA has been sponsoring legislation and lobbying legislators with the aim to:

  • Cut the overall volume of prior authorizations required by payers 
  • Increase transparency of requirements 
  • Promote automation 
  • Ensure timely care for patients

The critical step of automation involves prior authorization software. As the most recent CAQH Index explains,

”Given the ongoing burden associated with conducting prior authorizations, public and private efforts continue to focus on best practices, standards, and technology to help reduce burden and support use of the electronic standard.”

The problems with manual prior authorizations

If you’re one of the holdouts waiting to incorporate prior authorization software into your patient access process, see if these costly stumbling blocks with the manual method sound familiar. 

Overwhelming administrative workload leading to staff attrition 

Conducting prior authorizations manually is cumbersome. It forces provider staff to exchange frequent phone calls and faxes with insurers, a time-intensive process that keeps patients waiting. Further, overwhelming amounts of tedious work is one of the most common reasons for back- and front-office staff attrition.   

With each manual prior authorization process taking 20 minutes, prior authorization tasks just become overwhelming. Recently, Experian surveyed 200 employees responsible for staffing the revenue cycle function at healthcare providers. All respondents reported that revenue cycle staff shortages are negatively impacting both their revenue cycle and patient engagement. 

According to the Study on Allied Healthcare Workforce Retention, 49 percent of non-clinical healthcare workers are considering leaving their current employer for a different healthcare role and 39 percent are considering leaving their current position for a different industry. A 2023 CWH Advisors study found that 63% of providers had staffing shortages in their revenue cycle departments. 

Software frees staff from the majority of tedious and repetitive prior authorization work, a primary drive of staff attrition.

Errors leading to rejections 

Having staff manually conduct prior authorization also leads to a high risk of errors or loss of information stemming from the back and forth between providers and insurers. Healthcare providers' teams often have to complete prior authorization tasks between managing faxes, phone calls, and logging into insurer portals. The lack of seamless data exchange results in payers and providers operating in isolated data environments. Fragmentation causes delays, making real-time monitoring and decision-making a challenge. Because it completes every action without tiring or distractions, automation can enhance the precision and thoroughness of prior authorization submissions.

The software can also act as an assistant to the staff member, increasing accuracy. AI- and automation-driven software can verify patient details, identifying any absent or incomplete information and urging healthcare providers to fill in required particulars before submitting. This approach diminishes the likelihood of requests being rejected or contested due to mistakes or missing information.

Compliance issues

With manual processes, providers lack real-time visibility into changing payer rules. This lack of clarity means new requirements may be missed or misinterpreted, leading to longer waits for approval and requests being denied. Not only do these oversights have major consequences for patient care, but they also run the risk of increasing out-of-pocket costs

Higher costs 

The CAQH index mentioned above has calculated that the U.S. medical industry could save $449 million overall by switching to an electronic solution using prior authorization software. Automation reduces the need for more employees as well as the costly, denial causing errors involved in the prior authorization process.

Benefits of prior authorization software

Given that 80 percent of US healthcare providers today are accelerating spending on software and IT, clearly they appreciate its benefits. Market researchers project revenue cycle technology adoption to expand at a compound annual growth rate (CAGR) of 10.3% from 2023 to 2030. It’s these benefits that draw them: 

Reduced write-offs and increased productivity

Fast, accurate software helps ensure prior authorizations land at the payer free of mistakes so that denials diminish and net revenue increases. Many case studies reflect these kinds of improvements. For instance: 

Rhode Island’s second-largest health system, Care New England, reduced their write-offs by 55% after automating their prior authorizations. 

An East Coast orthopedic group with over 70 providers at 11 locations saved $55,000 in just the first three months after their transition to automated prior authorization process and services. 

As far as productivity and efficiency are concerned, when the Cleveland Clinic automated their prior authorization process, they had these results:

  • Overall turnaround time dropped by 6.7 days when using automation compared to manual processing
  • Authorizations returned for additional clinical information cleared 4.3 days faster with an automated system than when staff submitted manually.
  • Authorizations requiring P2P review cleared 11 days faster with an automated system.

 These transformations not only improve financial performance but also enhance staff satisfaction. 

Improved Patient Satisfaction and Access to Care

Faster processing and approval times mean patients receive their treatments more quickly. For example, recently Washington Based Connected Care, an ACO with 5,800 physicians and 380,000 patients, was struggling with an overburdened administrative staff and a prior authorization approval time lag of up to 15 days with an average of seven days. Neither patients nor staff were happy with the organization. They selected a prior authorization solution that integrated the payer submission requirements and required clinical documentation within their EMR so they could submit authorization requests directly from the EMR.

The elimination of PDFs, scanned documents and faxes cut workload and chaos significantly for staff. The software returned authorization determinations sometimes within seconds and the organization was able to notify patients of approval or denial in a matter of days rather than weeks. These changes significantly improved both patient and staff satisfaction. 

Additionally, automated prior authorization offers strategic advantages like identifying approved therapeutic alternatives before patients leave the office. By pre-populating prior authorization forms with patient information, organizations save significant staff time.

Reduction in Administrative Costs

Implementing prior authorization software significantly reduces the time and the resulting resources spent on manual processes.  Time savings translate into financial savings,  after all. By automating the prior authorization process, healthcare organizations can significantly reduce the need for specialized staff positions to manage these tasks, leading to cost savings. Additionally, real-time cost estimates provided to patients can improve the payment process and financial transparency. For these reasons, the CAQH Index and others are predicting that the use of electronic prior authorization processes can save healthcare organizations $449 million annually. 

Processing Efficiency 

 Electronic prior authorization processes allow for quicker and more efficient processing of requests. For example, practices can leverage standardized insurance eligibility and prescription formulary information. This streamlines the workflow, reducing the time spent on prior authorizations and increasing the speed at which patients receive their medications or services.  This improved communication reduces bottlenecks in the authorization process, thereby enhancing overall efficiency.

With a more efficient process accomplished in real-time, patients can be scheduled quickly, and clinical and administrative staff members can focus on higher-level functions like an improved patient experience.

Reduction of Administrative Burden 

The administrative workload in healthcare is significant, often involving extensive paperwork and manual processes. Prior authorization software automates many of these tasks, such as eligibility verification, determination of prior authorization requirements, pre-checking submissions for errors, and monitoring the status of requests. This automation not only saves time but also reduces the likelihood of human error.

Improved Compliance and Accuracy 

Most automation tools keep track of changing payer rules and automatically update all steps, pulling the correct forms for each prior authorization request. This leads to improved compliance with the changing rules of payer plans and enhances the accuracy of the authorization process.

Enhanced Patient Care

By freeing up staff from manual, time-consuming tasks, healthcare organizations can focus more on patient care and complex cases, thus improving overall patient outcomes and satisfaction.  These tools contribute to better healthcare delivery by allowing staff to focus more on patient-centered activities.

Better Decision-Making Support

With real-time access to information and automated decision-making processes, healthcare professionals can make more informed and prompt decisions at the point of care.

How prior authorization software works

Prior authorization solutions providers can offer a software-only solution or a software + services solution. The first depends on you to have staff to monitor the software and step in when exceptions or complicated prior authorization cases arise. With a software + services solution, the third-party provider can handle both standard prior authorizations and put their own, often carefully trained staff on getting exceptions to the payer in complete form. 

With prior authorization software only, you can expect: 

Patient Information Entry - The provider enters relevant patient information into the software. This typically includes patient demographics, insurance details, and the specific service or medication that requires prior authorization.

Insurance Verification -  The software verifies the patient's insurance coverage and benefits to confirm if the requested service or medication is covered and if prior authorization is necessary.

Authorization necessity discovery - One quick way to speed the patient journey is to determine whether a prior authorization is needed in the first place. If not, providers can schedule services quickly. If they are required, care is on hold until the prior authorization is approved. 

Request Submission -  If prior authorization is needed, the provider or their staff completes the request form within the software. This typically involves providing clinical information, such as diagnosis codes, procedure codes, and necessary medical documentation that supports the necessity of the service or medication.

Automated Checks and Requests -  The software automatically checks against the insurer’s requirements and guidelines to ensure that the request meets all criteria. Robust software solutions can alert provider staff to whether they’ve missed any steps or filled in any fields incorrectly. This way, it can forego denials.  It can then electronically submit the prior authorization request to the insurance company. These prior authorizations are known as “touchless” submissions. Not all submissions are “touchless.” 

Follow-up and Status Tracking - The software tracks the status of the authorization request and notifies the provider of any updates. It may prompt for additional information the insurance company indicates it needs.

Approval or Denial Notification - Once the insurance company reviews the request, the software updates the provider on the outcome — whether the request is approved, denied, or requires more information.

Integration with Scheduling and Billing -  In many cases, prior authorization software is integrated with the provider’s existing electronic health records (EHR) and scheduling systems. This integration allows for the deployment of prior authorization processes at the time of scheduling or during the billing cycle.

Operation of the software can include:

RCM team or provider staff member - While the software is designed to be user-friendly, having an RCM team member or a dedicated staff member knowledgeable in billing and insurance processes helps. They can effectively manage the software, ensuring that all necessary information is accurately inputted and that any follow-ups or additional information requests are promptly addressed.

Deployment Timing - The deployment of prior authorization software can vary. In some practices, it is integrated into the patient scheduling system, activating upon scheduling. In other situations, it could deploy during the medical billing process or at any point when the need for prior authorization is identified.

Additionally, some insurance companies have specific portals or systems for prior authorization that may not be fully integrated with all third-party software, which can affect the process. Providers should choose software that aligns well with their practice's needs and the requirements of the insurance companies they commonly work with.

Prior authorization automation’s support system

Prior authorization automation depends on other patient access tasks to fulfill its promise of lower denials and faster care. 

Eligibility verification is a critical first step in the prior authorization process. Providers must know whether the patient’s insurance is current and whether their benefits cover recommended treatments. They must also know if the patient may have other insurance plans that can get their bills paid. For a long time, as with prior authorizations, staff researched and determined eligibility by researching contracts, payer restrictions, and patient details. Again, this process also had to be shoehorned in between other front-office tasks.  

Eligibility automation supports prior authorization solutions

Modernizing your manual approach to prior authorization through specialized software is not just a step towards efficiency, but a leap towards significantly enhancing both revenue and patient satisfaction. By embracing the key elements and benefits of prior authorization software, healthcare providers can streamline their processes, reduce administrative burdens, and minimize errors. This shift not only improves the speed and accuracy of authorizations but also ensures a better patient experience by reducing wait times for necessary treatments. 

On the other hand, continuing with manual prior authorization processes exposes providers to the perils and pitfalls of outdated methods, including increased risk of errors and delayed care. Therefore, investing in prior authorization software is a prudent decision that aligns with the evolving demands of the healthcare industry, ultimately leading to a more profitable practice and a higher level of patient care.  

But prior authorization software doesn’t operate in a vacuum. It depends on reliable patient eligibility verification solutions like MD Clarity’s Clarity Flow. U.S. healthcare providers’ claims denial rates hit 12% in 2022, and lack of eligibility is a top reason payers deny provider claims.

Clarity Flow supports your eligibility staff by automatically checking coverage when a visit is scheduled, notifying patients of their coverage before service, notifying patients of their coverage before service and more. Get a demo to see it in action. 

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