The Burden Imposed by Prior Authorization Requirements

‘Prior Authorizations are the bane of our existence as rheumatologists,’ says Physician Editor Bharat Kumar, MD, MME, FACP, FAAAAI, RhMSUS. ‘How bad is it, how can we manage them, and how is the ACR helping?  Read on in this month’s Editor’s Pick.’

Healthcare providers consider prior authorization (PA) a significant burden, but to different degrees according to their profession, specialty, the specific treatment and other factors, according to a recent survey of patients, providers and payers.¹ In a paper about the survey, the researchers suggest artificial intelligence (AI) may be a tool to reduce that burden. Although some provider respondents reported plans to implement AI, many—including rheumatologists—have concerns.

In the survey, billing and coding specialists reported a median of nine hours per week spent on PA, practice managers reported spending five hours per week on PA, and registered nurses reported the highest burden among clinical employees at two-and-a-half hours per week.

The paper is the latest in a multi-year series of studies of U.S. healthcare administrative challenges, says first author Nikhil R. Sahni, MBA, partner and head of the Center for U.S. Healthcare Improvement at management consulting firm McKinsey & Company’s Boston office, and a fellow in the Economics Department at Harvard University, Cambridge, Mass. He says prior authorization accounts for approximately $35 billion in total administrative healthcare spending in the U.S.

Spurred by his research group’s previous findings that each PA request costs, on average, $20–30 for providers and $40–50 for private payers,² the current paper is an attempt to examine “who is facing those challenges, what we can do about the challenges and what might be done to fix those challenges across the U.S. healthcare system,” says Mr. Sahni.

The Study

Unlike previous PA burden studies that largely focused on a specific medical specialty or group, the new survey included 1,005 patients, 1,010 provider employees from multiple medical specialties and 115 private payer employees. The large sample enabled researchers to see where PA is most and least burdensome and evaluate total resources devoted to it, including staffing, time and technology tools, the paper notes. The survey did not include a statistically significant number of respondents from rheumatology practices.

Provider organization respondents included both clinical professionals, such as physicians, nurse practitioners and registered nurses, and nonclinical employees, such as practice managers and billing and coding specialists. The researchers gathered information on each respondent’s organization type (e.g., inpatient hospital or primary care) and size. Size was determined in terms of full-time equivalent employees, patients seen monthly, monthly claims submitted, hospital affiliations and specialties. In all, provider respondents included 81% clinical and 19% nonclinical professionals across 25 specialties and 19 different types of organizations.

Mr. Sahni

Results

The perceived overall approval rate of PAs, including appeals, was 88% for patients, 70% for providers and 73% for private payers. The proportion of respondents reporting overall time to approval taking more than five days was 37% for patients, 27% for providers and 15% for private payers. Patients reported the longest perceived wait times, but also the highest perceived approval rates and lowest perceived burden. Researchers noted that patients don’t usually directly participate in PA.

Clinical provider responses were grouped by reported medical specialties. The perception that overall time to approval (including appeals) took more than five days was highest for plastic surgery providers, at 67% of  respondents, and neurosurgery, at 64%. Specialties reporting the shortest overall approval time were physical and occupational therapy at 8%, with psychiatry/behavioral health/substance abuse at 19% and cardiothoracic surgery at 21%.

The researchers also looked at perceived approval rates and times for specific types of treatments, including those requiring appeal. For infused and injected medications, which are common in rheumatology, patients reported a perceived overall approval rate of 81% vs. providers, with a perceived approval rate of 67%. The rate of perceived approvals taking more than five days was 39% for patients vs. 31% for providers.

For oral medications, patients reported a perceived overall approval rate of 84% vs. providers perception of a 68% approval rate. Patients perceived the rate of approvals taking more than five days was 42% vs. providers’ perceptions of 32%.

Among respondents, provider staffing for PA work varied, with a median of 36% of providers reporting that more than three employees and individuals work on a median of 10 different PA cases weekly. Private payer respondents similarly reported a median of three employees working on a single PA case and that individuals were involved with a median of 20 different cases per week. Provider respondents reported a trend toward staff in lower licensure roles taking on more of the PA work.

Forty-two percent of provider respondents and 13% of private payer respondents identified PA requirements as a high contributor to burnout. The specific aspect most identified by both provider and private payer respondents as contributing to burnout was followup with the other party. Among provider respondents, 92% reported that PA caused delays in patient care, and 14% reported that care was delayed longer than two weeks.

The authors noted some limitations of their work. These include the use of self-reported data prone to recall bias and human error and convenience samples of respondents recruited with monetary incentives.

Using AI

The paper’s authors have previously estimated that almost one-third of the costs to execute PAs could be saved in the next three years by using existing technology, especially AI.^3,4

AI could relieve burden on providers in multiple ways, Mr. Sahni suggested. For example, AI may be used to extract the relevant information from multiple health organization data systems and pre-populate a PA form for review by a clinician. AI may catch some errors, such as identifying ZIP codes that are missing zeros because they were copied from spreadsheets. AI may also help staff determine individual insurers that require prior authorization for specific drugs.

The survey included questions to gauge support for using AI to lower the PA burden. Eleven percent of providers and 65% of private payer respondents reported they are considering incorporating AI in the next three to five years. The top provider concerns were lack of budget and lack of trust in AI technology and tools. Top payer concerns were cybersecurity and lack of technical infrastructure.

Overall, providers saw PA as a greater burden than patients did. “There is something about perception that’s tied to how often you engage, and patients just don’t happen to engage with prior authorizations, vs. a nurse who is submitting them daily,” said Mr. Sahni.

He added that with continued nursing and physician shortages, trying to free up time to do more clinical visits “is absolutely critical to address some of our patient-access issues in this country as well.”

Reactions

Dr. Phillips

Although data about the perceptions of different stakeholders in the PA process are useful, Christopher Phillips, MD, a community rheumatologist in Paducah, Ky., questions “the idea that the whole prior authorization infrastructure is a cost saver to the healthcare system.” That’s because most PAs are ultimately approved. In his experience, “for those that are [initially] denied, especially for expensive specialty medicines, [PAs] are still usually approved, but for a different expensive specialty medicine.”

Dr. Phillips, who chairs the ACR’s Committee on Rheumatologic Care, would like to see advocacy and research on how to reduce the number of services subject to PA. He points to several AI considerations beyond those noted in the paper, most of which are detailed in a November 2023 ACR position statement on the role of AI in rheumatology. AI is a powerful tool, but it does not replace the role of the clinical judgment of rheumatology professionals, the statement says. AI can incorporate sources’ biases, and language processing programs such as ChatGPT present potential for inaccurate statements. Any healthcare data used in AI models must be kept secure, and AI programs used in healthcare should be thoroughly tested, regulated, monitored and verified for clinical use, the statement adds.

Dr. Phillips says Mr. Sahni’s paper presents interesting ideas, but noted some devil-in-the-details concerns related to electronic PA requirements and payer integration into electronic medical records (EMRs) and real-time eligibility solutions. For example, it’s unclear whether various EMRs are capable of allowing this technology and how its use could slow the workflow if additional steps are needed by a provider when they’re in the room with a patient, adds Dr. Phillips.

Ms. Ruffing

Victoria Ruffing, RN-BC, director of patient education and director of nursing at the Johns Hopkins Arthritis Center, Baltimore, questions how much AI would alleviate PA burden. In her organization, she says, peer-to-peer reviews and the appeals process take up the bulk of time spent on PAs.

Charles F. Haberkern, MBA, chief executive officer of Rheumatology Specialty Center, Willow Grove, Pa., notes PAs for infusion drugs take at least seven days in his practice, which has 18 providers and four full-time employees dedicated to prior authorization requirements. This delay prolongs pain for patients. In addition, many insurers require that physicians and patients use different drugs from what rheumatologists order. If the initial drugs do not work and another appeal is necessary, “the approval time is often months,” he says.

Mr. Haberkern

To deal with PA processes, suggests Mr. Haberkern, rheumatologists must understand each payer’s formulary and preferred medications. “Some payers actually exclude some drugs, so sending authorizations for those can be a time-consuming process often ending in a denial—and a huge waste of valuable time,” he says. Some insurers score physicians according to adherence with company best practices, so he urges practices to try to relieve physicians of PA workload and monitor physicians who may be seen as outliers.

For each insurance company, his staff has guidelines showing what needs approval and what will never be approved. Using AI to fill out forms would have a “relatively minor” benefit, Mr. Haberkern says. “The problem area is the denials, appeals and constant back and forth that takes place.”

Mr. Haberkern asked in conclusion,“Who is AI responsible to? Payers, providers or patients?”

Deborah Levenson is a writer and editor based in College Park, Md.

References

1. Sahni NR, Istvan B, Stafford C, Cutler D. Perceptions of prior authorization burden and solutions. Health Aff Sch. 2024 Sep;2(9):qxae096.
2. Sahni NR, Gupta P, Peterson M, Cutler DM. Active steps to reduce administrative spending associated with financial transactions in US health care. Health Aff Sch. 2023 Nov;1(5):qxad053.
3. Sahni NR, Carrus B, Cutler DM. Administrative simplification and the potential for saving a quarter-trillion dollars in health care. JAMA. 2021 Nov 2;326(17):1677–1678.
4. Sahni NR, Mishra P, Carrus B, Cutler DM. Administrative simplification: How to save a quarter-trillion dollars in US healthcare. McKinsey & Company. 2021 Oct 20.

Disclosure

Mr. Sahni reported receiving equity from Kyruus.