Prior authorization is a check conduct by some insurance companies or third-party payers in the United States before they agree to cover specific prescribed medications or medical procedures for patient. Prior authorization costs accounted for approximate two percent of overall medical industry spending on administrative transactions in last year 2019.
Analyzing data from medical plans covering nearly half of the insured US public, Council for Affordable Quality Healthcare found that the implementation of electronic prior authorizations improved by just one percentage point from 2018 to 2019 to 13 percent.
Prior authorizations represented the biggest cost-saving opportunity for providers. Researchers estimated that providers could save $355 million by shifting to fully electronic prior authorizations. An electronic way for prior authorizations has been in place since the early 2000s. Medical industry facing barriers and hence cannot fully automate the transactions. Barriers include provider awareness, vendor support, inconsistent use of data content allowed in the standard, state laws mandating manual processes, and lack of an medical documentation.
According to MGMA, last year that prior authorizations topped the list of regulatory burdens for medical groups. The association’s survey of medical group leaders showed that prior authorizations were very or extremely burdensome for most organizations.
Rapid increment in the face of manual PA and pressure from the value-based care model, the need is addition of real-time electronic PA systems that will simplify the administrative burden on stakeholders throughout the healthcare ecosystem. PA costs quickly compound into a significant burden. The high cost problem of PAs presents an equally large opportunity. The change to electronic PA systems has yet to result in significant cost savings and/or personnel reduction.
Currently, the huge majority of payers are committed to executing electronic PA solutions. Physicians report that they wait at least one business day for a PA decision. Patients often become discouraged by the PA process. Physicians say that PA programs have a negative impact on patient clinical outcomes.
These challenges can interfere with provider care plans, especially as physicians might not immediately know that a delay has occurred. As Prior authorization will continue to be an important cost-containment tool for payers and plan sponsors. The importance of a system that works for today’s providers and patients only grows.
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