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Myndshft Blog

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October 27, 2023

Unlocking Savings and Efficiency: The Financial Advantages of Automating Prior Authorization in Pharma Benefits

by Susan Lawson-Dawson | Healthcare Technology, Prior Authorization

What is the biggest bottleneck in healthcare delivery? Over the years, prior authorization has earned its reputation as a barrier to care. Despite being intended as a measure to ensure the most effective and cost-efficient treatment, the typical manual prior authorization process often has the opposite effect. 

A recent Mayo Clinic article, for example, looks at the impact of the prior authorization process on gastroenterologists and patients with inflammatory bowel disease (IBD). Research findings suggest that savings evaporate in the face of care delays that contribute to declining health and subsequently more utilization. One of the study’s co-authors, Dr. Francis A. Farraye, notes, “In this high-risk patient population, step therapy requirements and the failure of payers to recognize updated IBD treatment pathways can cause treatment delays or denial of care. And treatment delays and denial can lead to a recurrence of symptoms, disease progression and increased costs.”  

Even with proposed “fixes” for the prior authorization dilemma, medication access could still suffer. Legislative efforts like H.R. 4968 would allow physicians to receive “gold cards” exempting them from Medicare Advantage plan prior authorization requirements if 90% of the physician’s prior authorization requests were approved in the preceding 12 months. Unfortunately, The Getting Over Lengthy Delays in Care as Required by Doctors Act of 2023, AKA the Gold Card Act, would only apply to services and medical devices. Drugs remain excluded, so if and when the legislation passes, providers will still need to wrangle prior authorizations for medications under either medical or pharma benefits

The cost of manual prior authorization

Manual prior authorization processing not only consumes the time of your medical staff but also introduces administrative costs that add up quickly. Additional labor hours are often needed to complete paperwork, follow up with pharmacy benefit managers (PBMs), and maintain records. Such tasks divert valuable resources away from patient care, creating inefficiencies and increasing overall healthcare costs. The more concerning cost, however, is the toll that delays take on patient health and, consequently, on healthcare expenditures.

Why automation is the future

For more than a decade, the CAQH Index has tracked adoption of automation across a range of healthcare transactions. In its most recently published findings, it noted accelerating adoption of electronic prior authorizations, pointing out that it has quadrupled since 2014. That doesn’t mean, however, that there’s no room for improvement. In fact, the most recent CAQH Index provides more incentives to automate. First of all, the volume of prior authorizations keeps increasing. As COVID-19 restrictions lifted, prior authorization volume skyrocketed 61%, largely due to the resumption of elective procedures. This revival in activity led to a 47% spike in spending on prior authorizations, as they remain a time-consuming process for healthcare providers. They take approximately 20 minutes manually—and that’s IF you’re able to quickly determine prior auth requirements. If not, you can plan on extended phone tag with payers just to get the ball rolling.  

Dividends add up with automated prior authorization

Streamlining administrative hurdles in healthcare is the need of the hour. Automation can significantly expedite approval processes by reducing preventable errors and delivering exactly the information the PBM or payer needs to make a determination quickly.  In turn, this enables clear benefits for providers, payers and patients alike. How? 

Automating prior authorization can significantly reduce demands on your clinicians and staff. It takes over menial tasks like paperwork, figuring out what documentation to provide, processing, tracking, and follow-up. This reduces the overhead tied to these activities, delivering financial benefits. Prior authorization software lowers operational costs, freeing existing staff for higher value tasks. The reduction in preventable errors like missing or erroneous information also helps you avoid the costs associated with reworking claims. 

Plus, as we all know, the cycle of hiring and replacing staff comes at a high price too. An ADP study found that employers spend an average of $4,129 and 42 days to fill a regular open position. For specialized healthcare roles, the hiring process stretches to an average of 89 days. And that doesn’t take into account the additional time and expense of onboarding and training for new hires. 

Prior auth software helps you remain compliant with emerging regulations

As legislators at both the federal and state levels attempt to rein in healthcare costs and ensure Americans have access to the right care at the right time, guidelines and regulations will evolve. Automated prior authorization software has been developed to meet current and emerging standards for interoperability and security, helping you avoid non-compliance issues that could damage your reputation and your bottom line.  

Automating prior authorization for both medical and pharmaceutical benefits provides healthcare providers with a range of financial advantages. These benefits range from immediate cost savings on administrative tasks to long-term improvements in patient outcomes. In today’s increasingly complex healthcare landscape, embracing technology solutions to boost efficiency and cut costs has become a necessity, not just an option. Is it time for your organization to consider automating prior authorization?

Take the first step today!  Connect with Myndshft to learn more.