HIT Perspectives: The Time Is Right for Electronic Medical Prior Authorization

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HIT Perspectives – September 2018


The Time is Right for Medical Electronic Prior Authorization



By Michael Solomon, PhD, MBA, Senior Consultant and Jocelyn Keegan, Payer Practice Lead


To be sure, prior authorization (PA) is a pain point for payers, providers and patients. The process of obtaining permission from an insurance company before a covered drug, procedure or device can be provided is complex, involving the exchange of voluminous medical and other information between the patient’s insurance company and the provider. Until recently, nearly all PA required paper submissions by phone and fax. This delayed speed to therapy and frustrated everyone involved.

Medical Electronic Prior AuthorizationThis is changing for drugs covered under a patient’s pharmacy benefit with the advent of an electronic, standards-based process called electronic PA (ePA). With it, handling PA requests can be done as part of the electronic prescribing (ePrescribing) process at the point of care through the electronic health record (EHR). However, this is not the case for the hundreds of drugs, devices and procedures covered under the patient’s medical benefit. They include:

  • Drugs covered under Medicare Part B
  • Procedures such as radiology, magnetic resonance imaging, endoscopy and chemotherapy
  • Devices such as pacemakers, nebulizers, glucometers and infusion pumps

Prior authorization for these drugs, devices and procedures is still mired in the time-consuming, antiquated paper-phone-fax processes. It is time to bring PA for them into the digital age.

The need for mPA. A number of factors are converging to stimulate the development and adoption of electronic medical prior authorization (mPA). They include:

  • The chronic disease crisis. The prevalence of chronic diseases is rising at an alarming rate. According to the federal government, half of the American population will have at least one chronic disease by 2025. One in four adults currently has multiple chronic conditions. Treatments for chronic conditions often are complex and may require expensive specialty medications.
  • The growing demand for specialty medications. Due to the rise in complex, chronic illnesses, there is a growing need for expensive specialty medications, most of which require PA. Specialty is the fastest growing segment of medications.
  • Administrative burdens. Three-quarters of physicians (specialists and primary care) report the burden of PA is high. According to the American Medical Association, doctors spend the equivalent of 40% of their time navigating PA. Because this administrative burden is so great, about a third of physicians maintain staff members who exclusively deal with PAs. It usually takes days — or even weeks — for an insurance company to decide whether it will approve a PA request. Needless to say, this leads to delays in therapy and frustration for both patients and providers. These factors are increasing the demand by provider associations for an mPA solution.
  • The shift to value-based care. Health plans and integrated delivery networks are entering into a growing number of value-based care arrangements. These increases the focus on evidence-based guidelines and utilization management. PA becomes a shared tool to support both provider and payer cost and quality goals. As the volume and complexity of PAs increase, pressure is growing to reduce the administrative burden with automation.
  • State legislation. States recognize the burden PA places on providers and are responding by working to improve the quality and use of medical PA. Nine states have passed mPA legislation and more are expected to do so. That said, these laws are a patchwork of requirements. This lack of uniformity leads to adoption challenges by users and EHR developers.
  • Federal legislation. The House recently passed a bundle of 50 bills (H.R. 6) aimed at addressing the opioid epidemic. One is H.R. 5773, the Preventing Addiction for Susceptible Seniors Act of 2018. It contains provisions to require ePA for drugs covered under Medicare Part D.
  • Interest by Medicare. Medicare, the nation’s largest payer, is becoming interested in mPA. For example, all durable medical equipment Medicare administrative contractors  now accept PA requests electronically through esMD, the Electronic Submission of Medical Documentation program. This starting point is likely to lead to mPA requirements for other devices and procedures covered by Medicare. In addition, adoption of mPA by Medicare is likely to spur private payers to follow suit.

The current state of mPA. Electronic medical prior authorization is still in its early phases. There are many challenges that must be addressed. For example:

  • In contrast to ePA, PAs for drugs covered under the medical benefit still rely heavily on phone calls and faxes for the documentation to support a PA request. Use of unstructured data is commonplace. Providers must use more than one channel — that is, phone, fax and portal — to complete most mPA submissions. Requests for specialty medications are especially paper intensive. Not only are portals outside of the prescriber’s workflow, they inhibit the automated extraction of clinical data that reside in the EHR and are required for many mPA submissions.
  • Many proprietary solutions for mPA have developed due to deficiencies in the current ASC X12N 278/279 standards and the lack of a claims attachment standard. Although mandated by the Health Insurance Portability and Accountability Act (HIPAA), the ASC X12N 278/279 standards fall short of stakeholders’ current needs. A standardized attachment of structured clinical data would be helpful. HIPAA has also mandated the creation of a claims attachment standard; however, there does not seem to be any desire on the part of the government or industry to produce one as no action has been taken for decades.
  • Payers’ systems are limited when it comes to supporting benefit and PA checks. They also have deficiencies in handling the voluminous documentation that often is required.
  • There is no standard for how best to transport the supporting clinical data for mPA that is needed. It will have to be embraced by stakeholders — Medicare and system vendors in particular.
  • EHR systems today are just beginning to grapple with workflows to support electronic mPA. In addition, there is virtually no support for PA attachments, either using the ASC X12N 275 transaction or alternative formats. These deficiencies and information gaps in existing EHR workflows are related to similar issues involving lack of computerization for specialty medications.
  • There is a lack of empirical evidence of return on investment on mPA workflow investments for both payers and providers.
  • Significant portions of today’s manual workflows rely on utilization managers’ knowledge and expertise, which are not codified in a single place in payers’ systems.

Looking to the future. While it may seem like a daunting task to address the complexities of computerizing mPA, there are lessons learned and opportunities that can be leveraged. For example:

  • Computerization of specialty medication processes will accelerate, as will their seamless integration into EHRs.
  • Medicare and Medicaid will increasingly require ePA for drugs covered under the pharmacy and medical benefits. These will continue to drive progress.

While realization of the benefits of integrated medical/pharmacy benefit management will take time, there is huge potential on the horizon to avoid suboptimal care and improve the patient’s experience. ​Those health systems and payers that can make good on this potential can dramatically improve the health outcomes/cost equation and become established market leaders in the new era of value-based care.

Point-of-Care Partners (POCP) is heavily involved in various aspects of mPA development. We are monitoring growth in this technology and soon will be unveiling a value model based on adoption horizons. Our Regulatory Resource Center is tracking mPA legislation and regulations at the state and federal levels. Send the staff an email (regulatory@pocp.com) for a consultation.

POCP is uniquely positioned to help your organization better understand mPA and make it work for you. Let us know how we can help. Reach out to us: michael.solomon@pocp.com and jocelyn.keegan@pocp.com.