Payers Are Moving to Automate, Streamline PA Processes

For years, health plans have turned to the prior authorization (PA) process to help prevent the use of unnecessary medications or medical procedures, improve patient outcomes and reduce costs. But as the use of PAs has exploded, physicians have pushed back, calling the restrictions onerous and accusing them of hampering their ability to provide care. Now, following years of complaints about PA, several health plans are cutting back on their use of the tactic, potentially spurring others to do the same.

Payers have used PA for decades to help reduce low-value or unsafe care, in turn protecting patients from ineffective or even harmful care and cutting down on waste and unnecessary costs for patients and plans alike. A Milliman report commissioned by the Blue Cross Blue Shield Association and published March 30, 2023, found that if PA were eliminated in the commercial market, increases in premiums could be between $43 billion and $63 billion annually.

However, some provider surveys have found that PA requirements at times have delayed access to care, led to patients abandoning treatments and even resulted in serious adverse events. And a March 2022 survey of medical groups found that requirements had increased over the prior 12 months, causing practices to spend more time and money on the process.

Over the past year, some payers have revealed that they are cutting down on their use of PA. At the beginning of the year, Aetna dropped its PA requirements for physical therapy in five states. UnitedHealthcare began doing away with almost 20% of its PAs for most commercial, Medicare Advantage and Medicaid businesses in the third quarter “as part of a comprehensive effort to simplify the health care experience for consumers and providers.” In addition, next year United will put a national gold card program in place that will allow provider groups meeting certain eligibility requirements to eliminate PA requirements for many procedures.

Cigna Healthcare revealed in August that it had eliminated PA requirements for almost 25% of medical services. With the more than 600 removed codes, the plan eliminated PAs on more than 1,100 medical services since 2020, it said. Cigna also revealed plans to remove PA tied to another 500 codes for Medicare Advantage plans.

More recently, some Blues plans have revealed that they also are streamlining their PA process. In September, Blue Cross Blue Shield of Michigan said it will “relax” about 20% of its PA requirements as part of its “ongoing effort to improve health care quality, experience, access and affordability for members, while also reducing administrative tasks for clinicians.” The plan also stated that it would expand its gold carding program to streamline PA for certain physicians.

And in November, Blue Cross Blue Shield of Massachusetts disclosed that it would eliminate PA requirements for home care services for its commercial members starting Jan. 1. “This change will eliminate 14,000 authorizations from the health care system, reduce administrative burden on clinicians, and help hospitals expedite discharges at a time when many are struggling with overcrowding,” said the insurer. “It will also reduce delays for members ready to transition their care from hospital to home.”

Moves Could Influence Other Plans

“We are hearing there’s a lot of talk about prior authorization requirements [and] the role they play in managed care,” acknowledges Michael Lutz, a senior consultant at Avalere Health. “There’s been a lot of press about prior authorization coming out of a few studies that have been done about what percentage of prior authorization denials that get overturned or that may not be accurate.”

Health plans, he tells AIS Health, a division of MMIT, usually review PA requirements annually, “but now I think there’s a much more concerted strategic review that is occurring.”

All the publicity about plans cutting back on PA requirements certainly could spur others to take a closer look at their approach and perhaps cut back on their constraints, says Ash Shehata, national sector lead for health care and life sciences at KPMG. “Any time we see changes in prior authorization, the payers generally move together in concert.”

Lutz agrees: “If you’re in a market with a plan that is being very vocal about removing their prior authorization requirements, are you going to want to go to a plan that has really stringent prior authorization requirements?”

However, Joe Paduda, principal of Health Strategy Associates, says that “public and physician pressure will likely be more influential than concerns about competitors.”

In addition, says Lutz, “with more advanced platforms and more advanced ability to report and to analyze the prior authorization process, there’s more of an opportunity to do some of this analytical review and see which services are having a high approval rate or getting denied and having a high turnover rate.” While this was harder to do when PAs were processed manually, electronic PA submission and automated adjudication make it easier to discover PA trends.

By streamlining and automating PAs, payers can “reduce turnaround time and cut administrative costs,” asserts Paduda.

“The move towards automation is really at the heart of it,” echoes Shehata. “Whether that is through claims review, automation and analytics, a lot of the payers have much more visibility into which processes are yielding potential opportunities for savings, streamlining care and evaluating the impact on fraud, waste and abuse. The ability to intake and ingest large amounts of data and create more robust data and analytical reviews that give the payers more insight into the prior authorization process” can provide the ability to see where PA “makes sense, where it is burdensome for the providers and where it is burdensome from a process perspective on their own staff and resources.”

However, he cautions, reviewing and modifying PA policies “will need to be done very carefully.…The evaluation process of prior authorization needs to be considered as part of the utilization management, care management, and grievance and appeals process. At the end of the day, those three processes are all connected, so if you remove some degree of prior authorization, there will still need to be analytics and reviews done on the other sides of those processes, which are highly regulated in many of the state departments of insurance. There are contractual requirements around the cycle time to be able to render opinions and complete prior audits. The whole cycle will need to be evaluated, not just the prior authorization process itself.”

AI Holds Promise, Caution

While much has been made about the potential of artificial intelligence (AI) in health care, some concerns exist as well, including around security. “When it comes to patient confidential information and medical records, we need to ensure that the representation of the information is correct, and the representation of the providers is correct,” contends Shehata. “As the tools become more robust, the expectation of privacy and security, and appropriate use, will need to govern how these tools are used to accelerate the use of technology in this process.”

It’s also important to understand where human intervention is needed, he says, “such as in complex cases — transplants or the NICU [neonatal intensive care unit], for example. It is very important to not only support the families but the physicians that are going through this process. There will always be a place for human touch and diligent medical review.”

Over the years, says Shehata, payers “have been working hard to automate the prior authorization processes.” He points to sleep therapies and radiology management as good examples of programs that have grown and become more automated, creating “a consistency around the standard of care, which is very important when trying to elevate quality. The payers are trying to cater to the providers that are part of their network but also use that body of science to help drive standardization of care.”

There is a role in managed care for PA “employed correctly,” asserts Lutz — that is, “when it’s not used as a barrier to care but when it’s used collaboratively with the provider to make sure that the patient is getting the right care on the first visit.…It’s hard. It requires a lot of coordination. It requires a lot of collaboration between the provider and the plan, but if used appropriately, I do think there’s a lot of value to the member.”

According to Lutz, “we’re sort of on the cusp of this new, more digital prior authorization process. Some plans are much farther ahead on it; other plans are just transitioning to electronic prior auth submission and review.” It would behoove both payers and providers to shift to using electronic PA because of the administrative burden and costs associated with a back-and-forth manual process. That said, “there’s a pretty significant technology investment” involved with shifting to an electronic process.

However, some challenges still exist with certain processes that do not have easily transmissible electronic information — “sleep apnea diagnoses have graphs and charts as part of the clinical documentation,” for example. “We’re getting there, but currently there’s still a lot of manual process to get some of that information over to the health plans.”

What Stakeholders Have Role to Play?

While PA is usually thought of as involving only payers and providers, Shehata maintains that moving forward, “it is important that we include the technology firms, both electronic health record vendors, as well as some of the more sophisticated artificial intelligence vendors. The vendors are going to be an important part of this process, not just the traditional payer and provider.”

In addition, while pharma manufacturers may not usually be thought of as part of the PA process, they do have somewhat of a role to play, says Shehata.

“Many of the manufacturers, particularly the pharmaceutical manufacturers and medical device manufacturers, have begun to set up managed care units. They are doing this because the therapies are much more complicated right now, and the unit cost is higher. If you look at specialty pharmaceuticals or precision medicine, there is more information around laboratory data, radiology data, a variety of imaging data [and] medical record history to make the determination of what is the proper course of treatment.”

Many customized therapies that are being developed, he says, “are going to require a rewiring of the system. We are going to need to be able to do many of these processes much more rapidly, especially as more of the population starts to leverage these kinds of therapies in their day-to-day care. Precision health and specialty care have been growing in various areas like rheumatology, certain oncology and other very high-cost therapies. We may also start to see it in breakthrough areas around things like weight loss and a variety of mental health issues. It will require a combination of the right degree of automation, the right degree of process control and governance and the right degree of human intervention.”

Lutz points to the “big push” to remove PA and any barriers to access to care, which “is a very noble approach. But if we take away all of the components of managed care, we’re kind of back to a fee-for-service world.…Philosophically, I believe the next challenge for industry is making sure that the processes are applied appropriately and correctly to facilitate access to the right care, and…not creating challenges to access, not creating undue equity issues, not creating any delays in access to care.

“And that’s a hard item to solve for because the line between it being beneficial and it being disruptive is really kind of blurry.”

Contact Lutz through Marita Gomez at marita.gomez@fishawack.com, Paduda at jpaduda@healthstrategyassoc.com and Shehata via Marissa Ross at marissaross@KPMG.com.

Angela Maas

Angela Maas

Angela has an extensive background of editing, reporting and writing for trade and consumer publications. She has written Radar on Specialty Pharmacy (formerly called Specialty Pharmacy News) since she joined AIS Health in 2005 and has broad knowledge of the various issues at play within the space. Before joining AIS Health, she was managing editor at Employee Benefit News and Employee Benefit News Canada and managing editor at HemAware (a hemophilia publication), Lupus Living and Momentum (a multiple sclerosis publication). She has a B.A. in English and an M.A. in British literature from Arizona State University.

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