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.