Controlling the Cost of Prior Authorizations is a Growing Concern. Insurers Should Opt for an Immediate Solution.

More than 46 million prior authorization requests were submitted to Medicare Advantage (MA) insurers in 2022. Virtually all enrollees in Medicare Advantage (99%) are required to obtain prior authorization (PA) for some services – most commonly, higher cost services, such as inpatient hospital stays, skilled nursing facility stays, and chemotherapy. FHAS estimates 2024 PA requests will exceed 50 million.

Current Prior Authorization Processes Waste Time and Money

According to public data from Centers for Medicare and Medicaid Services (CMS), more than 80% of the denied prior authorizations that are appealed end up being overturned.

Source: Medicare Limited Data Set, Contract Year 2022 Part C and D Reporting Requirements; Public Use File, Part C and D Reporting Requirements Contract Years 2019-2021

Congress and CMS Ramp up Pressure for Reform

Lawmakers have raised concerns that prior authorization imposes unnecessary roadblocks to necessary care. In response to some of these concerns, CMS recently finalized three rules centered around clarifying PA criteria, streamlining the process, and evaluating PA policy effectiveness. Additionally, lawmakers in Congress have introduced several bills to reform various aspects of prior authorization.

Why Prior Authorization Costs Matter

Runaway medical expenses are hurting the finances of Medicare Advantage plans. Insurers are warning that higher-than-anticipated utilization in Medicare Advantage will squeeze profits or make insurers unable to participate in some geographic markets. Further, CMS continues to promote Medicare Advantage in lieu of traditional Medicare, which has led to more than 37 million beneficiaries enrolled in Medicare Advantage out of the 67 million Medicare eligibles.

Benefits of Prior Authorization Outsourcing

Outsourcing prior authorization (PA) to an Independent Review Organization (IRO) offers several benefits for healthcare providers and organizations. 

1. Improved Efficiency and Focus: Outsourcing allows healthcare providers to focus on patient care rather than administrative tasks, improving overall operational efficiency. Additionally, IROs have dedicated teams that are well-versed in managing prior authorizations, leading to faster turnaround times and more consistent outcomes.
2. Expertise and Compliance: IROs specialize in regulatory compliance, ensuring that prior authorizations are processed according to the latest laws and guidelines. This minimizes the risk of errors or denials due to non-compliance. They often employ specialists with deep knowledge of insurance policies and medical necessity criteria, increasing the likelihood of approval.
3. Cost Savings: Handling prior authorizations in-house can be time-consuming and labor-intensive. An IRO can reduce the administrative costs and overhead associated with staffing, training, and maintaining in-house PA teams. Partnering with an IRO can also limit delays or errors in the PA process, preventing potential revenue losses from claim denials.
4. Scalability: IROs can quickly scale their operations to handle fluctuating volumes of prior authorization requests, which might be challenging for in-house teams to manage efficiently.
5. Enhanced Patient Satisfaction: When prior authorizations are processed more quickly and accurately, patients can receive timely care without prolonged delays or interruptions, improving their overall experience.
6. Reduction in Denial Rates: IROs typically have better success rates in securing authorizations due to their expertise and established relationships with payers. This reduces the rate of denials, appeals, and rework, improving overall revenue cycle performance.
7. Access to Technology and Automation: Many IROs leverage advanced technology and automation tools that streamline the PA process, ensuring faster submissions, real-time status updates, and more accurate tracking of requests.
8. Minimizing Burnout for In-House Staff: Administrative burdens like prior authorizations can contribute to staff burnout. Outsourcing reduces this load, allowing in-house staff to concentrate on higher-value activities and reducing stress.

Simplify Prior Authorizations with FHAS

Since 1996, FHAS has been a leading provider of prior authorizations for insurers, with full URAC, CMS-IDRE, and ISO 9001:2015 certification. 

Our clients include the Centers for Medicare and Medicaid Services (CMS) and health agencies in Alaska, Arizona, Delaware, District of Columbia, Hawaii, Idaho, Indiana, Michigan, Minnesota, Montana, Nebraska, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania (multiple agencies), Puerto Rico, Tennessee, Utah, Vermont, Virgin Islands, and Washington. 

FHAS has a nearly 30-year history of furnishing prior authorization for insurers with 100% timeliness and more than 1 million prior authorization and pre-certifications performed. Our certified nurse reviewer coders bring vast experience performing prior authorizations regarding inpatient and outpatient hospital, skilled nursing facility, prescriptions, DME, and medical necessity. 

Contact us today to learn how our prior authorization service can reduce the burden on our business.