Why are prior authorizations so manual?

So why are prior authorizations such a manual process?  Whether it’s the joy of filling out paper fax forms, the carpal-tunnel inducing manual entry of data into payer web portals, or being on endless hold on the phone, prior authorizations today remain the bane of most practices:
  • The American Medical Association estimated that $31 billion is spent annually on prior authorizations by providers.
  • The Kaiser Family Foundation estimated 868.4 million hours are spent annually obtaining prior authorizations.
  • According to Milliman, manual prior authorizations cost $10.78 per transaction vs. $2.07 for an electronic transaction.  That’s $8.71 in savings per electronic transaction.
So one would think that in this day and age, that prior authorization transactions should be as easy as paying bills on your smartphone.  Guess again.  So why are prior authorizations still stuck in the  world of 1980’s fax tones?
1) Like politics, all healthcare is local.  Each geography has its own unique mix of providers, payers, and plans.  What that means, is that it is impossible to have any semblance of standardized workflows.  Each payer has its own fax form or clunky home-grown web portal that maps to its own internal workflows.
2) Local business requirements are always changing.  There are constantly changing forms or payer web portals.  Keeping up with change in today’s EHRs or practice management systems is impossible.  (How fast does your EHR vendor make changes? months? years? at all?)  Remember, these systems were never designed to manage change at the pace of the real world.
3) Everyone has their own system. None talk to each other today.   Whether it’s siloed provider EHRs or ancient payer systems, none meaningfully transacts electronic data with all their business partners.   It’s hard enough to get Cerner systems to talk to each other, let alone with say an Epic, Allscripts, or NextGen EHR.  And don’t even think about interoperating with a DOS payer system.
So, all healthcare is local, local business requirements are constantly changing, and none of our systems talk to each other.  What you get is $31 billion of last mile work-arounds to get anything done. We pay people to transcribe data on paper fax and type data into outdated systems.
This. Is. Insane.  As a physician working in the trenches, this is appalling and offensive.
This is why we have spent years studying the prior authorization problem. This is why VALER delivers automation today for prior authorizations, referrals, and eligibility.
To learn more, shoot me an email or message me: www.voluware.com steve@voluware.com @steveskim @voluware

Why are prior authorizations so painful?

So why are prior authorizations so painful?  As a young pediatric surgeon trying to build a practice back in 2012, this was precisely the question I asked myself every month as I looked through my accounts receivables (AR) reports.  Prior authorizations were consistently my largest source of denied payments and write-offs.  On top of that, prior authorizations were a constant source of frustration for both my office staff and for my patients in getting care delivered.  Fast-forward five years and it doesn’t seem like things have gotten much better with prior authorizations.  Some would even say that it has gotten worse with time.   That’s why I co-founded Voluware (www.voluware.com) to create a smarter way to automate prior authorizations.
Here are some of the disturbing facts around the costs of managing prior authorizations:
1) The American Medical Association (AMA) reported an estimated $23 – $31 billion is spent annually by U.S. healthcare providers on prior authorizations.
2) A Health Affairs article in 2011 estimated that the $83,000 was the average spend per physician on interactions with insurance companies.
3) The Kaiser Family Foundation estimated that 864.8 million hours per year are spent by physicians on prior authorizations.
So why prior authorizations are so painful?  I’ll share some insights gained during my 5 year journey in understanding and fixing the thorny issues around prior authorizations:
1) Prior authorizations are extremely manual processes.  Whether it’s paper fax forms or typing data into a clunky payer web portal, the act of requesting a prior auth is an intensely manual activity.  In some of our time motion studies, it took around 16 minutes per authorization to fill out forms by hand and fax in.  It can be even worse when you need to call for an authorization as you face an eternity on hold.
2) Why are prior authorizations so manual?  Prior authorizations are so incredibly manual because of a fundamental lack of interoperability.   None of our existing information systems on the payer side and the provider side seem capable of meaningfully exchange data.  Within this gap, manual faxing or data entry into a web portal represents the lowest common denominator integration of the information the respective workflows of business partners.
3) Why is there no interoperability of information systems when it comes to prior authorizations?  Despite having an electronic standard for prior authorizations (EDI 278) for well over a decade, a fundamental inability handle the complexities of prior authorizations at a local level has hampered meaningful adoption.  Much like politics, all healthcare is, for the most part, fundamentally local.  That means local contractual agreements, local provider networks. and homegrown or outdated information systems never constructed to seamlessly transact data.
4) Why can’t information systems seamlessly transact data? This boils down to two very fundamental issues.  The first is that most systems, whether they are EHRs on the provider side or utilization management systems on the payer side, are old.  Like 1970’s MUMPS and DOS old.  These systems were never designed to keep up with the constantly changing business requirements and were certainly never built to talk to one another.   The second issue is the more challenging of the two.  Every system, whether it is on the provider side or payer side, is designed to act as its own source of truth.  Even if two systems were able to talk to each other, without an efficient method to reconcile and normalize the data between systems renders any brute force integration effort ineffectual.
Well, I hope that this was a useful primer on why prior authorizations are so painful.  Stay tuned as I delve deeper into the nuts and bolts of the above mentioned pain points, and show you how our VALER platform was designed to automate prior authorizations.  Please reach out if you would like to learn more.  steve@voluware.com  www.voluware.com @voluware #VALER #AutomatePriorAuth