What Hospitals Need to Know About Prior Authorization in 2023: Industry Updates

January 13, 2023

Prior authorization (PA), or precertification, continues to be a hot topic across the trifecta of payers, providers, and patients—and for a good reason. While prior authorization was intended to decrease costs and further value-based care initiatives for payers, it has led to significant administrative burdens for providers and increased care delays (and harm) for patients.

According to a recent survey from the American Hospital Association, 95% of hospitals reported increases in staff time spent seeking prior authorization approval. Furthermore, of all CAQH Index-tracked administrative transactions, prior authorization is one of the highest-cost transactions.

Regarding its impact on patients, the American Medical Association reported that 93% of physicians say prior authorization requirements negatively impact patient clinical outcomes, and 34% reported that it has led to a serious adverse event for a patient in their care.

In recent years, there has been a push for reform of the prior authorization process. Some of the specific types of reform that have been proposed or implemented include streamlining the process, reducing the number of services and medications that require prior authorization, and using technology to automate and improve the prior authorization process.

Here’s a quick overview of these regulations and industry initiatives and the key takeaways for hospitals.

1. New Proposed Rule: Advancing Interoperability and Improving Prior Authorization Processes CMS-0057-P

The new proposed prior authorization rule, if finalized, will likely have a big impact on hospitals. In short, the Centers for Medicare & Medicaid Services (CMS) developed a new rule to “streamline processes related to prior authorization for medical items and services” through an API-based electronic prior authorization process using the HL7 FHIR (Fast Healthcare Interoperability Resources) standards. CMS estimates it will save providers more than $15 billion over ten years.

Key points of the proposed prior authorization rule:

• Hospitals (and physicians) will be incentivized to adopt electronic prior authorization processes. In order to be eligible to receive incentives, MIPS-eligible clinicians, eligible hospitals, and critical access hospitals (CAHs) would need to meet a newly proposed quality measure in Medicare whereby a prior authorization must be requested electronically from a PARDD (Prior Authorization Requirements, Documentation, and Decision) API using data from certified EHR technology (CEHRT). Providers will be able to use this API to “determine whether a prior authorization is required, identify prior authorization information and documentation requirements, as well as facilitate the exchange of prior authorization requests and decisions from their electronic health records (EHRs).” (Note: The PARDD API is “suggested” to be aligned with the Da Vinci project standards mentioned below.)
• New requirements would take effect in 2026 for the following government programs: Medicare Advantage (MA) organizations, state Medicaid and CHIP Fee-for-Service (FFS) programs, Medicaid managed care plans, and Children’s Health Insurance Program (CHIP) managed care entities, and Qualified Health Plan (QHP) issuers on the Federally Facilitated Exchanges (FFEs).
• Additional requirements for payers will benefit providers. For example, denial reason codes will be required from impacted payers regardless of the method used for sending the prior authorization decision, and prior authorization decisions will require shorter turnaround times.

Key takeaway: Although not final yet, hospitals will need to begin planning soon to be up and running with an electronic/automated solution before the 2026 deadline. This will enable them to receive electronic prior authorization communications with payers and be eligible for incentive payments.

2. Gold Carding and State Programs

A gold card for prior authorization is a special designation that a hospital may receive from a payer indicating that the hospital has demonstrated a high level of efficiency and effectiveness in the prior authorization process.

Having a gold card for prior authorization can be a significant advantage for a hospital, as it can lead to faster and more streamlined processing of prior authorization requests. This can help reduce delays in care and improve the overall patient experience. Additionally, being designated as a gold-card hospital can improve the hospital’s reputation and attract more patients.

The state of Texas was the first to pass the “gold card” law, which went into effect on October 1, 2022. Under this law, physicians who have obtained a 90% approval rate for prior authorization requests for certain services over a six-month period are exempt from the requirement to obtain prior authorization for those services. Gold cards are granted for specific insurance plans and procedures, and providers and physicians do not need to apply. Instead, insurance plans will evaluate whether providers meet the 90% threshold and notify the provider if they are eligible for a gold card.

In Michigan, a coalition of physicians, patients, health professionals, and advocacy associations started Health Can’t Wait over three years ago to advocate for legislation that would prioritize the healthcare needs of Michigan patients and improve access to vital health services. This legislation includes shortening the timeline for prior authorization approval to seven calendar days (or 72 hours for urgent requests) and ensuring that emergency care is provided without prior approval. Due to the efforts of the coalition, on March 23, 2022, the Michigan House of Representatives passed Senate Bill 247 with strong support. The Bill aims to standardize the prior authorization process in order to reduce wait times, streamline communication between providers and payers, and ultimately improve patient access to care.

Key takeaways: Gold carding and state programs may start expanding to other areas. In regards to gold carding, hospitals may be able to obtain a gold card through various methods, such as demonstrating a high level of accuracy and timeliness in the prior authorization process or implementing technology solutions to streamline the process. In order to maintain their gold card status, hospitals would need to continue demonstrating a commitment to excellence in the prior authorization process.

3. HL7 Da Vinci Project

The HL7 Da Vinci Project is a public-private partnership focused on improving interoperability and data exchange in the healthcare industry. One of the key areas of focus for the Da Vinci Project is prior authorization automation.

The HL7 Da Vinci Project aims to address the challenges of a manual prior authorization process by developing and promoting the use of standardized data elements and exchange formats for prior authorization. This will allow for the automation of the process, enabling healthcare providers to submit prior authorization requests electronically and receive quick, consistent responses from payers.

In addition to streamlining the prior authorization process, the HL7 Da Vinci Project also aims to improve the quality, consistency, and accuracy of the data used in prior authorization decisions. This will help ensure that the services and medications requested are medically necessary and meet the criteria set by the payer.

Overall, the HL7 Da Vinci Project has the potential to significantly improve the efficiency and effectiveness of the prior authorization process, benefiting both healthcare providers and payers. It is an important step towards a more interoperable and data-driven healthcare system.

Key takeaways: Through the HL7 Da Vinci Project, hospitals will be better able to submit prior authorization requests electronically and receive quick, consistent responses from payers. Since the HL7 Da Vinci Project is focused on improving the quality and accuracy of the data used in prior authorization decisions, it will help to ensure that the services and medications requested by hospitals are medically necessary and meet the criteria set by payers. This, in turn, can reduce the risk of denied claims and improve the financial stability of hospitals.

All Roads Lead to Automation

To varying extents, automation is a common theme of all of these initiatives. Automating prior authorization refers to the use of technology to streamline the process of obtaining approval from insurance providers for certain medical procedures or treatments. This can include using electronic prior authorization (ePA) systems, which allow healthcare providers to submit authorization requests and track their progress online, as well as using artificial intelligence (AI) and machine learning to assist with the review and approval process.

A recent 2022 Industry Survey on Prior Authorization and Gold Carding by AHIP affirms electronic prior authorization/automation as an opportunity for improvement. According to the survey, a significant percentage of PA requests are still submitted manually by providers – 39% of prescriptions and 60% of medical services. Furthermore, providers not using electronic health records (EHRs) enabled for electronic prior authorization is a primary barrier to automation.

Automating prior authorization has the potential to bring significant benefits in terms of time and cost savings, as well as improved patient care. Automation can also help improve the accuracy of authorization decisions and help providers more easily and quickly identify and resolve any issues that may arise during the authorization process, such as missing information or incorrect codes.

The future of prior authorization lies in automation. The industry is readying itself, and you should be, too.

About SSI Prior Authorization

SSI Prior Authorization is a hospital enterprise-wide solution with 700+ real-time payer connections that covers anything under medical benefits, including infusion, physical, occupational and speech therapies. To see how it can help you reduce the complexity, costs, and time crunch of the manual PA or pre-certification process, learn more here or schedule a demo.