Streamlining prior authorization: Legislative initiatives, automation prospects and preparing for the future

Prior authorization has long frustrated healthcare providers, insurers and patients. This process, designed to control healthcare costs and ensure appropriate care, often leads to administrative inefficiencies and delays in patient treatment. However, legislative efforts and advancements in automation offer hope for a more streamlined and efficient system. This article explores the current state of prior authorization burdens, the legislative initiatives aimed at reform, the potential for automation and steps healthcare stakeholders can take to prepare for a more efficient future.

The current prior authorization landscape

The current landscape of prior authorization in healthcare is characterized by significant challenges and frustrations for providers. According to this year’s survey by the American Medical Association (AMA),¹ prior authorization’s impact on physicians and patients is substantial. The survey debunks health insurers’ claims that prior authorization helps control costs and ensure quality care. Instead, it reveals a toll that far exceeds any alleged benefits.

For example, physicians report a range of adverse outcomes and additional costs associated with prior authorization, including:

1. Higher utilization of healthcare services: An alarming 86% of physicians reported that prior authorization led to increased utilization of healthcare services, resulting in unnecessary waste rather than cost savings.
2. Ineffective treatments: Approximately 64% of physicians reported that patients initially received ineffective treatments due to step therapy requirements mandated by prior authorization.
3. Additional office visits: For 62% of physicians, prior authorization led to additional office visits, adding administrative burdens to their practices.
4. Urgent or emergency care: A concerning 46% of physicians reported that prior authorization led to patients requiring urgent or emergency care, indicating that delays in treatment could escalate healthcare needs.²

Moreover, the survey questioned the evidence-based nature of prior authorization criteria, with only 15% of physicians believing such standards were often or always evidence-based. The adverse consequences of prior authorization include serious patient harm, negative clinical outcomes, delays in necessary care and patients abandoning recommended treatment courses. Incredibly, 88% of physicians noted that the administrative burdens associated with prior authorization were high or extremely high, completing an average of 45 prior authorizations per physician per week and spending an average of two business days.³

The survey underscores the urgent need for prior authorization reform to benefit healthcare providers and patients by reducing care barriers and administrative strain.

Legislative initiatives for prior authorization reform

Various efforts to reduce this burden have been launched at the federal and state level. At the national level, the Centers for Medicare & Medicaid Services (CMS) took a significant step toward alleviating prior authorization burdens by issuing the Medicare Advantage (MA) Part D Final Rule on April 5, 2023. This rule encompasses revisions to regulations concerning MA, Medicare Prescription Drug Benefit (Part D) and more. Of particular importance is the rule’s focus on addressing concerns related to prior authorization in MA plans, which often hindered access to timely care.

Key highlights of the MA Part D Final Rule include:

1. Clarification of clinical criteria: Establishes more explicit clinical criteria guidelines for prior authorization, helping streamline the process.
2. Alignment with coverage determinations: Plans must adhere to national and local coverage determinations and evidence-based criteria when making prior authorization decisions.
3. Streamlined prior authorization: Streamlines prior authorization requirements, reducing administrative complexity.
4. Continuity of care: Mandates the establishment of MA plan Utilization Management Committees to prevent disruptions in care.
5. Extended validity: Prior authorization approvals must now be valid for as long as medically reasonable, ensuring that patients receive uninterrupted care.⁴

These changes are designed to ensure that MA enrollees have consistent access to necessary medical care while maintaining tools for medical management by healthcare plans.

CMS also proposed CMS-0057-P: Advancing Interoperability and Improving Prior Authorization Processes Rule, which focuses on advancing interoperability in healthcare and improving the prior authorization process for various healthcare payers, including MA organizations, Medicaid, CHIP programs and more. Key provisions of this proposal include:

1. Patient access application programming interface (API): Starting Jan. 1, 2026, regulated payers must include information about prior authorization decisions in the Patient Access API to enhance patients’ understanding of the process.
2. Provider access API: Impacted payers must establish a Provider Access API by Jan. 1, 2026, enabling in-network providers to access patient data, including prior authorization requests and decisions.
3. Payer-to-payer data exchange on FHIR®: When switching health plans, patients can opt in to share their data, including prior authorization requests and decisions.
4. Improving prior authorization processes: Proposals within the rule aim to make prior authorization more efficient, including creating a Prior Authorization Requirements, Documentation, and Decision (PARDD) API, specific denial reasons, and time frame requirements for decisions.
5. Electronic prior authorization measure: A new electronic prior authorization measure is being proposed for Merit-Based Incentive Payment System (MIPS)-eligible clinicians and hospitals to promote electronic requests using certified EHR technology.⁵

Additionally, CMS is soliciting feedback on several requests for information (RFI) related to interoperability standards, exchange of behavioral health information and improving information exchange in Medicare fee for service. These initiatives build on previous efforts to enhance interoperability and streamline the prior authorization process, ultimately reducing administrative burdens and improving patient access to care.

Another federal effort going through proceedings is the Improving Seniors’ Timely Access to Care Act, which focuses on modernizing the antiquated prior authorization process in MA. Key provisions of this bill include:

1. Electronic prior authorization: Establishes an electronic prior authorization process, eliminating the need for outdated faxing methods.
2. Real-time decisions: Requires the U.S. Department of Health & Human Services (HHS) to establish a “real-time decisions” process for routinely approved items and services.
3. Transparency: MA plans must report to CMS on the extent of their prior authorization use and the rate of approvals or denials.
4. Evidence-based guidelines: Encourages plans to adopt prior authorization programs aligned with evidence-based medical guidelines in consultation with physicians.⁶

The final effort being discussed at the federal level is the GOLD CARD Act of 2023, introduced by Congressman Michael C. Burgess and Congressman Vicente Gonzalez, which aims to reform the prior authorization process for MA plans. If enacted, this legislation would exempt healthcare providers from requiring prior authorization for a MA plan year if the provider had approved at least 90% of prior authorization requests in the preceding year.

Key points of the legislation include:

1. Exemption criteria: Providers meeting the 90% approval threshold for prior authorization requests in the previous year would qualify for a “gold card” exemption from prior authorization requirements.
2. Limited reviews: Reviews for the gold card exemption would occur at most once every 12 months, providing some stability to qualifying providers.
3. Revocation provisions: MA plans would have the authority to revoke a provider’s gold card status during a plan year if certain conditions are unmet. This includes situations where less than 90% of claims submitted would have been approved for prior authorization or, in cases of submitting fewer than ten claims, less than 90% of the last 10 claims submitted would have been approved for prior authorization.
4. Physician appeals: The legislation allows physicians to appeal gold card revocations they believe were wrongly decided, providing a mechanism for recourse.
5. Secretary of HHS rule: The Secretary of HHS would be required to issue a rule regarding the use of prior authorization by MA plans. This rule aims to ensure continuity of care for individuals transitioning to or between coverage, with the goal of minimizing disruptions in ongoing treatments from previous plans.⁷

In summary, the GOLD CARD Act seeks to simplify and improve the prior authorization process for healthcare providers participating in MA plans. It establishes criteria for exemption, outlines review and revocation procedures and mandates the creation of rules to ensure the smooth transition of care for individuals switching between coverage plans.

At the state level, a groundswell of activity is underway to address the burdens of prior authorization. Nearly 90 prior authorization reform bills have been introduced across 30 states. These legislative initiatives reflect the growing recognition of needing to reduce the volume of prior authorizations and mitigate potential harm to patients.⁸

Several states have recently considered reform bills during their legislative sessions, including Arkansas, California, New Jersey, North Carolina, Maryland, and Washington, D.C. These bills employ various strategies to curb excessive prior authorization requirements and promote more patient-centric care.⁹

For instance, Maryland’s proposed legislation aims to streamline the process by requiring just one prior authorization for a prescription drug if the insurer has previously approved the drug and the patient continues to derive benefit from it. Washington, D.C., and New Jersey have introduced comprehensive reform bills that include a “grace period” of 60 days to ensure continuity of care when patients switch health plans. These bills also seek to eliminate repeat authorizations for chronic and long-term conditions, establish explicit timelines for insurers to respond to prior authorization requests and appeals, and mandate that practicing physicians review denials that are appealed.¹⁰

The goal of many state bills is to require insurers to disclose on their websites which services and drugs need prior authorization and their approval rates for these requests. This transparency effort seeks to illuminate the “black hole” of information held by insurers, aiming for a more open and accountable system. 

These state legislative efforts have the potential to significantly improve the prior authorization process and enhance patient access to care while also aligning with broader efforts at the federal level, but they are not without opposition. 

Insurance industry responses to prior authorization

The insurance industry has historically defended prior authorization requirements, citing them as essential tools for enforcing best practices and guidelines for care management. They argue that prior authorizations help physicians identify and avoid care techniques that may harm patient outcomes, such as prescribing medications that could potentially contribute to opioid addiction.

However, recent developments indicate a willingness among some major insurers to voluntarily reduce the volume of prior authorizations and streamline the process. Notably, three major insurers — United HealthCare, Cigna and Aetna CVS Health — announced plans to drop certain prior authorization requirements and introduce automation in their processes.

United HealthCare, for instance, stated its intent to eliminate nearly 20% of prior authorizations for nonurgent surgeries and procedures starting in the summer, applying these changes to their commercial, MA and Medicaid businesses. Additionally, they plan to launch a national gold card program in 2024, which, if physicians meet eligibility requirements, would eliminate prior authorization requirements for most procedures. While these initiatives reflect a willingness to reduce administrative hurdles, UnitedHealthCare also announced plans to require prior authorization for diagnostic (non-screening) gastrointestinal endoscopies in June, citing data that suggests potentially harmful overuse of scopes.¹¹

Cigna has also made efforts to streamline prior authorization processes by removing prior authorization reviews from nearly 500 services since 2020. Similarly, Aetna CVS Health implemented a “gold card” program and reduced prior authorization requirements for certain medical procedures.¹²

However, some insurers have faced increased scrutiny from state regulators. A ProPublica/The Capitol Forum article revealed that Cigna doctors were denying claims without fully reviewing patient files, a practice that contradicts insurance laws and regulations in many states. Over a two-month period, Cigna doctors denied more than 300,000 payment requests using this method, averaging just 1.2 seconds per case. This report raised concerns about the thoroughness of prior authorization processes and led to calls for greater transparency and accountability in insurance practices.¹³

The potential of automation in prior authorization

While legislative efforts are underway, the need for immediate solutions must be addressed. The beginning of this article highlighted how healthcare organizations face a complex landscape, requiring labor-intensive processes. Automation emerges as a powerful ally, offering tangible benefits that can transform the healthcare industry.

Benefits of automation include:

1. Staff augmentation: Automation is not about enhancing human expertise, not replacing it. By automating routine and time-consuming tasks, staff members can redirect their efforts toward more strategic and impactful responsibilities. This boosts overall productivity and enhances job satisfaction among healthcare professionals.
2. Increased accuracy and reliability: Automation relies on coded workflows that guide each step of the prior authorization process. This results in increased accuracy and reliability as compared to manual methods. The adherence to predefined rules minimizes variations, contributing to a smoother and more efficient workflow.
3. Reduction in write-offs: Case studies have demonstrated tangible results in terms of write-off reductions through the implementation of automation.¹⁴ By removing variances and standardizing processes, organizations experience a notable decrease in financial losses. The automated workflow allows staff members to focus on tasks that require their unique skill set rather than mundane and repetitive activities such as copying, pasting and clicking.
4. Avoidance of last-minute cancellations: Automation enables proactive management of prior authorizations, reducing the likelihood of last-minute cancellations. By optimizing the approval process, healthcare providers can enhance patient care and satisfaction while avoiding unnecessary disruptions to scheduled procedures and treatments.
5. Increase patient loyalty: Automating prior authorization processes reduces waiting times and aligns appointments with patients’ healthcare needs, ensuring patients receive necessary treatments promptly. Despite the challenges in quantifying patient loyalty in monetary terms (unless we tie it to the cost of recruiting new patients), the indirect benefits on patient satisfaction underscore the vital role that automation plays in fostering positive patient experiences. Satisfied patients are more likely to stay loyal, refer others and contribute to the overall growth of the medical group.

Many healthcare organizations are turning to existing automation solutions to streamline highly repeatable tasks such as authorization predetermination, status verification and instant approval submissions. While a variety of vendors offer these solutions, the integration level with current source systems and payer coverage varies significantly. The current landscape of existing automation solutions includes three key areas of challenges and opportunities:

1. Vendor variety and integration levels: Many automation solutions provide standardized portals for managing prior authorizations. While these portals can be effective, they often require administrators to navigate multiple platforms, contributing to potential inefficiencies. A select few solutions, however, offer seamless integration with EHR systems. This integration enables administrators to handle all aspects of the prior authorization process within a single interface, enhancing workflow efficiency and reducing the risk of errors associated with manual data transfer between systems.
2. Payer coverage considerations: The effectiveness of automation solutions often hinges on their ability to navigate the intricacies of different payer requirements. Medical group administrators must carefully evaluate the payer coverage offered by automation vendors. Some solutions perform well with certain payers but lag with others, creating potential gaps in the authorization process. Opting for a solution with broad and comprehensive payer coverage ensures a more versatile and adaptable automation system.
3. Submission automation: While some automation solutions excel in predetermination and statusing, only a handful offer end-to-end automation by submitting the prior authorization on behalf of the healthcare provider. This level of automation reduces the administrative burden on staff and expedites the overall authorization process. Choosing a solution with submission automation capabilities can significantly enhance the efficiency of prior authorization workflows.

Healthcare organizations must navigate the delicate balance between the existing capabilities of automation solutions and the ever-changing landscape of healthcare requirements. As the demand for comprehensive automation increases, vendors are presented with opportunities to refine and expand their offerings. Access to large language models (LLMs) has opened the door to automating prior authorizations that require the submission of clinical data. Depending on the specialty, these authorizations could represent 80% to 90% of their total volume. Healthcare executives must engage with vendors to understand future enhancement plans, ensuring their solutions use the latest technology and remains aligned with the industry’s dynamic needs.

Preparing for an automated future

Preparing for the adoption of automated prior authorization processes is a strategic endeavor that can yield significant benefits for healthcare providers. Based on our experience supporting the deployment of hundreds of workflows, here is a guide to help healthcare providers navigate this transition:

1. Assessment of current processes: Begin by conducting a thorough assessment of your current prior authorization workflows. Identify pain points, bottlenecks, and areas prone to errors. Break down these challenges by location and specialty. This assessment serves as a foundation for understanding the specific needs and challenges that automation can address and provides a good starting point for a pilot program.
2. Define clear objectives: Whether it is reducing processing times, minimizing errors or enhancing overall efficiency, having clear and measurable objectives will guide the implementation and evaluation phases of adopting a prior authorization process. The most common outcomes we have seen across our clients include reducing staff overtime, authorization-related write-offs, and turnaround times and increasing completed transactions without staff intervention.¹⁵
3. Integration with EHR systems: Prioritize automation solutions that seamlessly integrate with your existing EHR systems. Integration ensures a cohesive workflow, reduces the need for manual data entry and enhances overall accuracy.
4. Vendor selection and collaboration: Carefully evaluate potential automation vendors. Engage in conversations to understand their capabilities, integration options and long-term roadmap. Choose a vendor that aligns with your organization’s goals and can adapt quickly.
5. Training and change management: Recognize that the adoption of automated processes requires a cultural shift within the organization. Overcommunicate the benefits for staff members and closely review the new workflows, clearly highlighting all the handoffs. Implement effective change management strategies to facilitate a smooth transition. Be aware that performance will slightly decline as it adjusts to the changes over time. This economic principle, also known as the J-Curve,¹⁶ is also applicable to innovation and transformation projects.
6. Data security and compliance: Ensure that the chosen automation solution is in compliance with industry regulations regarding data security and provides robust measures¹⁷ to safeguard patient information throughout the prior authorization process.
7. Start with pilot programs: Pilot programs allow for real-world testing, fine-tuning of workflows and identifying any unforeseen challenges or opportunities for improvement before a full-scale rollout. This approach is also known as the crawl, walk and run approach.
8. Continuous monitoring and optimization: Post-implementation, establish a system that allows for regular assessment of the performance of the automated processes, gathering feedback from staff and collaborating with the vendor to implement enhancements as needed.
9. Patient education and communication: Keep patients informed about changes in the prior authorization process. Communicate the benefits of automation, such as reduced waiting times and enhanced accuracy. If you are using automation to communicate the status of the authorization request or to schedule patient appointments, let them know. Clear communication helps manage patient expectations and contributes to a positive experience.
10. Stay informed about industry trends: Stay abreast of evolving industry trends and technological advancements. The healthcare landscape is dynamic, and ongoing education ensures that your organization remains at the forefront of innovation, ready to adapt to emerging technologies.

Federal and state legislators are increasingly focused on the administrative burden of prior authorization and its impact on quality of care, sparking excitement for potential transformative changes. However, the urgency of addressing these challenges must be addressed. As legislative efforts are in progress and payers work to reduce the list of procedures prior authorization, including considering gold card programs, healthcare providers should proactively adopt automated prior authorization processes. This approach will not only prepare healthcare providers for the evolving healthcare landscape but also help reduce administrative burdens now. Automation offers a practical solution, improving operational efficiency, patient care, and resilience against the complexities of the current prior authorization paradigm. 

Notes:

1. AMA. 2022 AMA prior authorization (PA) physician survey. 2023. Available from: https://bit.ly/3t8zdt0.
2. Ibid.
3. Ibid.
4. CMS. “2024 Medicare Advantage and Part D Final Rule (CMS-4201-F). April 5, 2023. Available from: https://bit.ly/41sdcSR.
5. CMS. “Advancing Interoperability and Improving Prior Authorization Processes Proposed Rule CMS-0057-P: Fact Sheet.” Dec. 6, 2022. Available from: https://bit.ly/48paiAz.
6. Office of Congresswoman Suzan DelBene. “House Unanimously Passes Bill to Improve Care for 28M Seniors, Cut Red Tape.” Sept. 14, 2022. Available from: https://bit.ly/4889IXs.
7. Office of Congressman Michael C. Burgess, MD. “Burgess and Gonzalez Work to Streamline Quality Care for American Patients.” July 31, 2023. Available from: https://bit.ly/3NiTVNz.
8. O’Reilly KB. “Bills in 30 states show momentum to fix prior authorization.” AMA. May 10, 2023. Available from: https://bit.ly/3GyZXpw.
9. Lehmann C. “States Move to Curb Insurers’ Prior Authorization Requirements as Federal Reforms Lag.” Medscape. May 26, 2023. Available from: https://bit.ly/3uUoO4w.
10. Ibid.
11. Ibid.
12. Ibid.
13. Rucker P, Miller M, Armstrong D. “How Cigna Saves Millions by Having Its Doctors Reject Claims Without Reading Them.” ProPublica. March 25, 2023. Available from: https://bit.ly/4a6gb77.
14. Notable Health. “Care New England reports a 55% reduction in authorization-related write-offs since automating radiology prior authorization and notice of admissions.” Available from: https://bit.ly/3v0acAA.
15. Notable Health. “Fort HealthCare automates prior authorizations with 91% success rate.” Available from: https://bit.ly/3NiOSwP.
16. Turchi P. “Laying the foundation: Avoid common pitfalls when deploying new tech.” Health Tech Talk/LinkedIn. Aug. 22, 2023. Available from: https://bit.ly/47OTAdJ.
17. Kapadia P. “Our commitment to patient safety, trust, and responsible healthcare technology.” Notable Health. Nov. 29, 2023. Available from: https://bit.ly/41uPkxX.