Prior Authorization Primer: Challenges, Opportunities, and What’s Coming from 1upHealth

While there’s a lot of buzz around the topic of Artificial Intelligence (AI) in healthcare, Prior Authorization is getting its fair share of attention. It’s a target for improvement under CMS’ proposed Advancing Interoperability and Improving Prior Authorization Processes rule, and many payers are proactively updating their requirements ahead of the new regulations. 

As we at 1upHealth await the final rule – expected any day now – we’re busily expanding our product suite to ensure our customers not only meet the CMS requirements, but are also positioned to improve clinical outcomes and reduce administrative burden as a result.

What is prior authorization?

According to the American Medical Association (AMA), prior authorization is a “process that requires physicians and other healthcare professionals to obtain advance approval from a patient’s health plan before a specific service is delivered to the patient to qualify for payment coverage.” 

Prior authorization is a manual, lengthy process that varies from one payer to another. It’s also a many-to-many process as each provider interfaces with many health plans and each health plan interfaces with many providers. 

Today, payer utilization management teams rely on manual, non-standardized workflows for prior authorization, resulting in challenges for providers, patients, and payers alike.

Prior authorization challenges for providers and patients

In today’s physician practices, providers spend significant time and resources navigating the variations in prior authorization requirements and completing the required paperwork, diverting valuable resources away from patient care. In addition, prior authorization can delay treatment and impact optimal patient health outcomes. 

A 2022 AMA survey found prior authorization to be a barrier to providing timely, patient-centered care. Among physicians surveyed:

• 91% said prior authorization can lead to negative clinical outcomes
• 82% said prior authorization can lead to patients abandoning their course of treatment
• 34% said prior authorization has led to a serious adverse event for a patient in their care

Prior authorization challenges for payers

Providers and patients aren’t the only ones feeling the pain of prior authorization. Payers report challenges around: 

• Multiple vendor and system integrations needed to support the prior authorization workflow from end to end
• Low provider adoption of automated intake channels (i.e., payer provider portals) in favor of manual intake channels, such as phone, fax, and mail. In 2022, payers received 38 million manually submitted prior authorization requests and 44 million prior authorization requests with partial-manual submission. 
• Missing clinical documentation that requires additional outreach from the payer to the provider. 
• Costly manual transactions. For payers, a manual prior authorization request costs $3.72 per transaction, while an electronic transaction costs $0.05. 

The federal government is addressing these challenges through new regulatory measures, which will promote the automation of prior authorization and transparency in the reporting of approvals, denials, and delays.

Proposed CMS regulations around prior authorization

In December 2022, the Centers for Medicare & Medicaid Services (CMS) proposed a rule to expand access to health information and improve the prior authorization process by making it transparent, efficient, and standardized. The proposed Advancing Interoperability and Improving Prior Authorization Processes rule impacts Medicare Advantage (MA), Medicaid, Children’s Health Insurance Program (CHIP), and Qualified Health Plan (QHP) issuers on the Federally-facilitated Exchanges (FFEs).

The proposed rule would: 

• Require the implementation of a FHIR® standard application programming interface to support electronic prior authorization. 
• Require certain payers to include a specific reason when denying requests, publicly report certain prior authorization metrics, and send decisions within 72 hours for urgent requests and seven calendar days for standard requests. 
• Add a new electronic prior authorization measure for eligible hospitals and critical access hospitals under the Medicare Promoting Interoperability Program and for Merit-based Incentive Payment System eligible clinicians under the promoting interoperability performance category.

CMS estimates that efficiencies introduced through these policies would save providers more than $15 billion over a 10-year period. By one estimate, electronic prior authorization would be a $139 million savings opportunity for payers.  

Read the full news release from CMS here. The final CMS rule is expected any day now.

1upHealth to support electronic Prior Authorization (ePA)

With CMS taking steps to reform prior authorization, the healthcare industry is actively seeking technology solutions to align with these pending regulations. Providers and payers will need tools to adapt to the evolving regulatory landscape. As the largest provider of CMS APIs in the country, 1upHealth is committed to supporting our customers as they prepare to meet the requirements of the Advancing Interoperability and Improving Prior Authorization Processes final rule. 

We see this as much more than a check-the-box exercise. It’s an opportunity to aggregate prior authorization data alongside claims and clinical data and, in turn, make it available to be used for downstream use cases. To that end, our product roadmap includes a Prior Authorization solution* for payers following the Da Vinci requirements for FHIR-based APIs:

• Coverage Requirements Discovery (CRD) API so providers can confirm whether prior authorization is needed for a given service.
• Documentation Templates & Rules (DTR) API so providers can discover payer-specific prior authorization clinical documentation requirements.
• Prior Authorization Support (PAS) API so providers can submit their prior authorization requests with required data and receive responses on status, approvals, and denials. 
• Analytics around key prior authorization metrics 

*Contingent on CMS final rule

By acting as the FHIR API intermediary centralizing connectivity between payers and providers, we will reduce provider burden, decrease operational costs, and most importantly, improve patient outcomes.  

Coming Soon: HL7 FHIR Connectathon 35 

As part of our commitment to influencing and driving towards industry standards, 1upHealth will participate in the upcoming virtual HL7 FHIR Connectathon, taking place January 16-18, 2024.  During the Connectathon, we’ll be testing our current implementation of the CRD API as part of the Da Vinci Burden Reduction track, alongside other vendors. We’ll share highlights from the Connectathon in a future blog. 

1upHealth’s commitment to improving healthcare interoperability

Since our inception, we’ve been tackling healthcare’s hairiest interoperability challenges – and we’re just getting started. We look forward to helping our customers meet CMS regulations now and in the future, and moving beyond compliance to improve patient and business outcomes.  

Additional resources

Learn more about 1up Comply

Learn more about the HL7 FHIR Connectathon 35

Review Da Vinci Prior Authorization

Read the CMS Proposed Rule Fact Sheet

For more information on our Prior Authorization solution, contact us