Stop Pre-Authorization Breakdowns from Driving Denials

Lamon Willis: Welcome, everyone. Today's agenda on our topic regarding preauthorization is gonna cover scope of the crisis, issues with regulatory squeeze, operational breakdown, the bottom-line impact for organizations, strategic solutions, the next frontier.

I've got some strategies, four strategies to try to help mitigate things to do with prior authorization needs. I'll discuss some issues related to payer relations and continuous improvements.

And then we'll wrap it up and summarize what we've kind of discussed and talked about, and hopefully, we'll have enough time at the end for some questions and answers at that time.

So the first thing I wanna talk about is related to the physician's burden.

Currently, the pre authorization workload that physicians face is huge. It is one in which, there are forty five prior authorization requests that physicians get each week. That's each physician. And that takes up approximately sixteen hours of their time every week in managing those requests. Ninety five percent of those physicians, you know, are experiencing burnout as a result of things to do with these type of issues. As of March twenty twentysix, the administrative weight is really, it's a, you know, it's a big breaking point really, if you will.

The financial anatomy of this though is that it's not simply a single submission that is your cost. Right? When you quantify the hidden labor costs associated with this, it comes out to be about eleven thousand dollars per clinician per year because each submission costs the practice between twenty and thirty dollars to deal with.

And labor accounts for up to ninety five ninety percent of your the provider costs in a primary setting there, provider costs in the financial tracks transaction ecosystem. And so because of that, the the strategy has to be removing any type of manual touch points with things to do with prior authorizations. Manual touch points is the death of an organization as it relates to this topic.

Now the next thing is the clinical toll, and this has to do with the delays and adverse events that is taking place as a result. The administrative hurdles comprise a lot of things to do with patient safety. Ninety four percent of physicians report care delays, and one third of physicians have seen the delays result in serious adverse events for patients. And so if the prior authorization process isn't fixed, then there's a seventy eight percent, you know, a risk of seventy eight percent of those patients abandoning their treatment plan due to frustration and delays, that are going to take place as a result of that.

And what this then comes to is what I call and refer to as a, a tax. Right? An administrative burden that tax. This tax itself is essentially a a tax of process.

Right? It's a it's diverting resource resources from direct patient care. It's, a revenue risk as it relates to these prior authorizations and claim denials. And every dollar spent on these prior authorizations is a dollar that can't be invested in either clinical innovation, workforce development, or patient experience.

And so, for example, if your entire GDP of a nation is, you know, at risk, then you would you would say something's gotta be fixed with that. Right?

There's a a fund of three hundred and fifty thousand full time nursing positions that are available annually that money is going toward. But, if a hospital has twelve percent of their money tied up, then, you know, there's less beds that they can cover, there's less staff that they can hire. And so, again, it represents not only inefficiency, but it represents a risk to patient care.

Now this also impacts payers, and it impacts the the volatility of what payers are actually offering when they're offering contracts. And so I'll explain it this way. There is a a friction obviously in the market as a result of Medicare Advantage.

Ninety nine percent of those enrollees require services that have to have pre authorizations as compared to only fifty two services in a traditional Medicare setting. Right?

Medicare Advantage has between two thousand to thirty six hundred services that are going to require approval.

So think about that.

And then you'll realize that when you're processing forty six million requests in a year, it's a massive increase from previous years as to what you have to do in taking care of something that should not require this level of touch points.

And this brings me to denials. And so denials is a truly, it can be a a paradox here because there is a denial and an appeal cycle that is full of inefficiency. Medicare Advantage denial rates rose to seven point four percent recently.

Approximately eighty two percent of those denials are overturned on appeal.

And so that means that the majority of every bit of care that's being provided eventually becomes deemed medically necessary. And the providers are the ones that are bearing the cost of the appeals process. And the back and forth that has to occur with staff members either writing or calling or faxing or sending something through a portal or, an email message or whatever it might be. So, this becomes a big drain on resources and time that, individuals need to spend with other workloads.

This advantage situation then, the Medicare Advantage situation sets up a real perfect storm for, you know, what is going to happen. Not only it is already happening, but something that will just increase and snowball, as a result because the the market is only going to grow. There's thirty one million enrollees as of twenty twenty four, but that's projected to reach thirty eight million, by twenty twenty eight. And so organizations that are not prepared for this type of complexity are gonna be facing, just huge denial rates as that enrollment will shift and as it shifts from traditional Medicare to these advantage plans.

Now there is a little bit of a regulatory relief that has come over the horizon now. Maybe you're aware of this. Maybe you're not. Hopefully, you are.

The twenty twenty six CMS mandate that holds payers accountable under the specific rule that you see listed here and with the reference at the bottom. Payers must now decide, you know, that their requests are gonna take place within seven days and or expedited requests that are within seventy two hours.

And payers will now be required to publicly report these metrics and the turnaround times and denial rates. So this is a new area and avenue of public transparency that helps you with payers that you may need to avoid in the future. Right? And so as these metrics become available, you can be able you can take your staff who are responsible for payer negotiations, contract negotiations, and you can utilize that information to make better decisions about who you want to do business with and or the type of business that you want to do with them.

Right? Payers who fail to meet the deadlines and the, information as it's laid out in the rule are are going to be penalized and possibly face exclusion from provider networks. And so the new MIPS scoring and reporting measurements reward providers who adopt electronic prior authorization systems. And this creates again another financial incentive for compliance itself.

Alright. So let me talk about strategy number one for a moment and really bring to light some things to do with, you know, some ideas that may be beneficial for the organization.

You know, there needs to be some specialized and centralized staffing changes.

Physicians need their time back.

Using centralized clinical teams or certified pharmacy techs can help if you put them towards the prior authorizations. It can save physicians about forty hours a week.

Billing specialists and practice managers should be the ones who are handling the bulk of the manual entry and allowing physicians to focus on, you know, what they need to be involved with with any clinical peer to peer reviews that will obviously come about as a result of some of the things to do with prior authorizations.

Strategy number two has to do with your electronic health record, right, and your prior authorization. So you need to try to move away from portals and faxes as much as possible and have integration of your electronic medical record with the prior authorization tools. If your particular EHR provider has not, you know, updated their tech regarding this information yet, they need to get on it. Right? You need to be discussing this with them and asking them for deadlines and a rollout of when those items will come about.

Providers that are using exclusive methods like this spend about two point five fewer hours on prior authorizations a week. And so, again, that helps you to to be able to capture information and stop the gaps before they actually occur.

Strategy number three involves bridging the AI gap. And when we talk about AI, of course, there's plenty to discuss and so we won't go off on a tangent here. But, you know, you need to address technology divides between payers and providers. Already, payers are using AI, in sixty five percent of the case to deal with things to do with prior authorizations, with, claims, with other things, related to, the health care arena, while only eleven percent of providers are doing so.

And so AI can obviously predict requirements and automate repetitive tasks as it relates to prior authorization. So, you know, there there obviously are trust concerns that are legitimate that need to be overcome. There are budget hurdles, also that probably need to be overcome. But, these these items are ones that are worth facing and dealing with to be able to reduce denial rates for prior authorizations.

Alright. Strategy number four.

Cross functional clinical collaboration. So, you need to link case management and revenue integrity together.

If you verify coverage, obviously, at the point of scheduling, you you sidestep the last minute scramble that disrupts clinical workflows. And so, you know, there there are issues related to this that are more multifaceted than, obviously, what I'm simply saying and describing here. I realize that. There are issues in which hospitals and physicians have to get prior authorizations. Sometimes those things don't get translated over and communicated over appropriately and properly. Sometimes the code set that's being described changes. It's different.

And so all of those type of things notwithstanding, you know, when you're ahead of the game, if at all possible, that's going to only help you and your organization as it relates to dealing with the prior auth issues.

And then this, you know, deals this does come to the point of having to realize that there is a cash flow crisis if you have a lot of prior auth issues that haven't been dealt with. Right? So missed prior authorizations add an average of eighteen to twenty five days to your account receivables.

Each denied claim requires three to five staff touches. Right? So that cost goes up then, and it goes up from that twenty to thirty that I mentioned before to now seventy five to a hundred and twenty per denial.

But organizations who optimize their prior authorization process report that there's a twenty two percent faster cash collection compared to the industry average.

And so what that comes down to then is when your days in AR and your daily operating cost equal your cash trapped in prior authorization delays, you've got a problem. Right? So, that that is the area which, needs addressing. Right?

And so, if you miss the prior auth, the claim doesn't get just denied once. It enters, you know, essentially, a a Sisyphus loop, a cycle of of denial and appeal and resubmission. And, eventually, maybe it gets paid, but it's, you know, almost a month later. Right?

So a hospital, for example, that has, like, five hundred thousand dollars in daily operating costs every single day, you know, that they have AR that's a half million dollars sitting in limbo. Once you reach twenty, well, you've got ten million, in working capital that you can't access. You've got money that used to make, you're using it to make payroll, pay suppliers, fund different initiatives. But, you know, when your cash gets bad like that, you've got you've got a bigger issue.

Right? So if there's an opportunity to speed up your cash intake as a result, you certainly wanna take advantage of that.

So the next thing is payer relations.

And this would be referred to as, you know, a gold card negotiation.

So, you know, leveraging high approval rates for administrative relief.

So the example here is that, you know, if you've got items that you are required to get prior authorizations on and you always get them authorized and ninety percent of the time or you have a a turnover success in your appeals of these items as well, these are items that you want to challenge and try to get the organization that you're doing business with, the payer organization, to waive requirements for your high performing positions. Right? And, this would be, you know, what you might think of as a gold card that you don't have to get as much pre authorization, performed if you've been doing it correctly and getting it done appropriately and always get approved anyway. This is a no brainer, and it should be for the payer organization as well.

Alright. Continuous improvement is the next item that I wanna discuss and this has to do with, you know, the routine items that are really low hanging fruit, that are low value administrative tasks. But there are items that you need to find out that are services that, maybe they just need to go away as something being preauthorized. If they're always, if authorization is always given, then it's not really a true authorization should be required.

And so you should advocate with your payer to sunset those type of issues, sunset those type of programs where, you know, maybe that prior authorization issue is something left over from the long ago past. Right? And so you should try to get those payers to lift those requirements for any, you know, radiopharmaceuticals, biopharmaceuticals, or other types of services that have a near one hundred percent approval rate. Right?

When you do that, you save yourself.

Not only do you save yourself money, but you also then, you know, show your payers that yours they're gonna save money as well. Right? Because they don't have any hoops to jump through on their side also. And now with the new reporting requirements that they have in relation to prior authorizations, it's definitely something you can think of that will help you and benefit you in contract negotiations. Right?

Alright. So let me talk about some things and summarizing so far what we've discussed.

Probably the most valuable asset that physicians have when it comes to patient care is time.

Alright?

Operational excellence, obviously, is a good defense.

But, you know, in twenty twenty six, your preauthorization is a strategic revenue function, really. And optimization needs to take care of issues that steal time from your providers. Right?

Because you wanna reduce burnout and protect your margins. Operational excellence is going to ensure that you can focus on what matters most, and that's obviously delivering good care to your patients.

But it also then helps you in competing, right, in your area of expertise. Right? There's a workforce impact that comes to play here. And so ninety five percent of physicians report that burnout specifically is attributed to prior authorization workloads. And so organizations that streamline that process report that they have a forty percent higher physician satisfaction score.

And so that's a competitive advantage when you think about it in terms of recruitment for recruiting staff in your organization, specifically physician staff. Right? Because they're evaluating these type of things as part of their hiring process. And so reducing that burden from, you know, let's say, sixteen hours to six is a great differentiator in recruitment and also worth quantifying in total compensation discussions.

You know, many physicians are asking about these type of things as something that they do along with their pay structure. Right? They'll ask things about, for example, you know, do you have it centralized? Is your prior authorization process centralized?

Do you have a team of people that are working on this? Are they the same people, constantly who do this job? Is your, EHR integrated, with your payer systems? Are you utilizing AI to reduce manual data entry for this issue?

You know? This is why, those organizations that report this forty percent higher satisfaction score, this is why they report that is because those are the type of things that they've done. Right? So if you can give a physician back ten hours a week, that's five hundred hours a year, that's equivalent to probably adding about between seventy five thousand to a hundred thousand dollars in total compensation to their, you know, pocket.

And so they're definitely interested in things like that. They're definitely interested in it. And so in twenty twenty six, the excellence that we're talking about, it's not just a revenue strategy, but it's also a workforce retention strategy. It's a a recruitment advantage.

It's a a cultural statement that says to others, says, you know, we value the time that our providers spend. We built systems to protect it, and physicians will want to join an organization like that.

That's going to take work, though. It's gonna take work as we think about it.

And it's at this time, I'm a little early on my presentation. And this time, I will take questions if we've got any, Cordell, in the chat.

Cordell

We do, actually. A couple of people have asked for any recommendations you might have, for AI solutions to support their, pre auth.

Lamon

Presently, I don't have one that I could really just say this one stands out. Primarily, one of the things with AI is that you you have to set your parameters correct. Right? So anything that you're going to use an AI tool for, you've got to obviously put the guardrails on.

Right? And so the guardrails really are going to make the difference about what's happening and what's taking place, in utilizing your AI, along with your prior authorization process. And so I would say that focus there first and then see what the the tool looks like after that. Like, you know, what type of guardrails.

Let's see it in action. Let's test it.

You could actually have an organization test it for you before you, you know, buy and things like that. So that would be a recommendation before just picking one.

Cordell

Okay. Next question. A similar of the similar vein, do you know of any checklists or templates that could be leveraged say for presurgical like a presurgical checklist to ensure conservative treatment is met prior to pre authorization surgery?

Lamon

Yeah. So I I I don't have any off the top of my head that, I mean, I could just say.

You know, what I would recommend, what I would say is that you think about from the standpoint of what your payers are listing in their newsletters. Right? So when a payer has a, you know, a a decision coverage topic that they discuss.

So, you know, we know how Medicare has NCDs, LCDs, and they'll provide structure around, okay. Here's what we're looking for for, you know, paying for, different types of ultrasounds, at a certain, point in time for cardiac patients. Right? Or here's what we're looking for as a specific surgery, and this particular surgery, it meets these criteria.

They have to have these things. Right? And so you should you should think about that along the lines of what your payer is providing you with their newsletter information and then going through that and creating them yourself or, again, feeding it into an AI tool with those guardrails to make one for you and then ask the AI to test it. Right?

Test it against what it just did. Right? Make it, test it against what the payer's requirements are, and see if it meets meets your approval, meets passes the test.

Cordell

Yeah. Thank you. Next question. Going back to earlier in the presentation, when you say nine hours a week for a billing specialist and one hour a week by a practice manager for manual entry, is that per provider?

Lamon

It it usually is per provider. It's, one of the things that we found is that there are, so many of these prior authorizations coming in.

There was a hospital up in New York, I know, in the hospital arena for sure. This hospital had to hire, an entire department of staff to deal with this issue, and it was it's ended up costing them about a million dollars a year.

So there were there were a a score of staff that were hired to deal with these, prior authorizations, then the authorizations after they were you know, let's say they were denied, they had to be reappealed. And so all those different processes that they took them through, that particular person was spending, that that amount of time.

Cordell

Thank you. Next question is we have a third party vendor who works a large portion of our pre auth. Any recommendation on when they use portals and are told no auth required, yet a denial is received stating auth was not obtained?

Lamon

Yeah. So that's a that's a great question.

It it's, it's one of those things in which someone wants to pass the buck somewhere, and you've got to find out which, organization it is. Is it the payer? Is it your vendor that you're using? Is it a combination of both?

Yeah. There there needs to be a, you might, for lack of a better term, say, a come to Jesus meeting about that type of situation because, you know, everything is, in place to be able to do it correctly, and someone is saying it's not.

And so you need to know why not. You need to have a conversation with people, either in person or on the phone in a meeting and find out and determine why that keeps happening because it should not happen that way.

Cordell

Okay. Someone is wondering if the gold status is an actual position.

Lamon

Yeah. So I I don't know that it is. I, you know, simply think of it that way myself.

I don't know that there is such a thing where they call it that, that it's a gold card. I would say that you want to think of it that way, though, and you want to use it that way to make them understand what exactly you're looking for, right, and cause them to understand that on their end, they should be wanting you to treat them that way as well, right, where you consider the payer and the relationship as a a gold card kind of status as well. You know, you wanna continue to do business with them. You want their their patients, and you want their business. And so it should be a bilateral relationship that way.

Cordell

Alright. Next question. We have a big problem with getting the prior excuse me, prior auth approved for certain dates, and surgery might get moved up outside of the dates and are having to fight, fight, fight to get claims paid. Medical necessity was met. The only thing that changed was the date of service. Any suggestions for this particular fight?

Lamon

Yeah. So in in fights like that, something that always is gonna win, right, is your medical necessity issue. And what I would, I what I would do is when you have a payer and it's a a a payer that's doing that continuously with you, I would again, you know, you wanna have a meeting with someone who represents that organization and has, some type of authority, on their end to be able to discuss those things and make changes and or suggestions, you wanna have a meeting with them, and you need to discuss this fact with them that the facts are it's medically necessary. The dates are something that can be remedied with looking at medical records, determining what the appropriate dates are, and things like that.

And no one should be held, their feet held to the fire for, you know, oh, well, you you missed the day. The if the day is not the right day, you know, and and those type of things. That shouldn't be an issue at all as it relates to a patient's medical necessity for a procedure. And so you've gotta have conversations with them.

You've got to hold their feet to the fire as well with issues like that and, you know, have those hard discussions with them.

Cordell

Okay. Along the similar lines, DME, CPAP, is constantly being denied for medical necessity even though all documents are, proving medical necessity. Any ways to go about this particular process?

Lamon

Yeah. So, I I don't know that I can answer the question well, because I don't know all the parameters around it.

So I'll I'll have to say that if you want to send me an email, I believe my email's if it's not shared here, you know, Cordell, you're welcome to share it. But if you email me that question about the DME item, I can get back to you. But I need some more information and more parameters around the context of that in order to provide you a good answer.

Cordell

Okay. I'm gonna take one more question. I'm gonna answer it for you, Lamon, and that is someone asking if you are available for consulting purposes. The answer is yes.

And as soon as we close out this webinar, you'll be met with a question if you're interested in learning more about some of our revenue cycle management services like coding and auditing as a third party. So let us know there, and I'm gonna give everybody twenty three minutes of their day back. Thank you everybody for attending. Thank you, Levin, for the presentation.

And, again, we will be sending out in the next couple of days a copy of the webinar recording and the slides, so keep an eye out for that.