A huge headache for the healthcare industry is “prior authorization” – the bureaucratic nightmare of getting approvals from insurers for what doctors say is needed care.

CAQH,  a non-profit Washington, DC-based alliance of health plans and trade associations, released a report last month –  detailed by Health Data Buzz  – that shows how these prior authorizations  have hamstrung the move toward using electronic records, with a resultant significant loss of clinician time and spiraling monetary costs.

That is merely the latest in a string of concerns about payer prior authorization requirements, which increases doctor practice burdens and overwhelms patients, according to multiple organizations.

Major  healthcare associations say there has been a big push the past two years to change the prior authorization system, though progress comes slowly. At this point, there are many pleas for reform and  organizations insist they are  banding together to try to make changes happen.

A HeavyWeight Outcry

Earlier this year, the American Medical Association,  Medical Group Management Association  and other groups issued  an urgent consensus statement that outlined what they termed a shared commitment to establish industry-wide improvements  to reduce the onerous prior authorization process in which approvals are needed by health plans, benefit managers, and others. Last week,  CAQH added their major concerns.

The groups  expressing dismay include other powerhouses, insurers among them:  the American Hospital Association, America’s Health Insurance Plans, American Pharmacists Association, Blue Cross Blue Shield Association, among others.

In March, an American Medical Association  survey showed that more than nine in 10 physicians reported that prior authorization programs “have a negative impact on patient clinical outcomes.”

The problems, MGMA says,  are wrapped around agreements between health plans and participating physicians in which “the insurer has the right to determine the medical necessity of surgery, imaging studies, medication and many other procedures.”

Physicians have to divert their attention from clinical and  administrative staff time – as well as resources – to work on submitting preauthorization requests for services, MGMA says.

“Health plan demands for prior approval for physician-ordered medical tests, clinical procedures, medications and medical devices ceaselessly question the judgment of physicians, resulting in less time to treat patients and needlessly drive up administrative costs for medical groups,” said MGMA’s President and CEO Halee Fischer-Wright, MD, in a statement.

Impact on Patients

According to referralmd, while many preauthorization approvals are used for  expensive drugs, generally “66% of prescriptions that get rejected at the pharmacy require prior authorization.”  It adds:  “Not only is this negative for pharmaceutical organizations, most importantly this causes frustration to patients who don’t get the medication that could best treat their condition, or who don’t get any therapy at all.”

“Strict or bureaucratic oversight programs for drug or medical treatments have delayed access to necessary care, wasted limited healthcare resources and antagonized patients and physicians alike,” AMA President Andrew W. Gurman, MD, said in a statement. “The AMA joins the other coalition organizations in urging health insurers and others to apply the reform principles and streamline requirements, lengthy assessments and inconsistent rules in current prior-authorization programs.”

The groups wanting change have outlined a set of 21  principles aimed at helping patients receive what they term timely and medically necessary care and medications and reduce the administrative burden.

Making Things Better

Among other things, they have several suggestions for improvement.

For instance, they said there can be a regular review of medical services and prescription drugs that are subject to prior authorization requirements that would more easily  identify those which may not be necessary because of “low variation in utilization or low prior authorization denial rates.”

In addition, they added:  “effective communication channels between health plans, health care providers and patients are necessary to ensure timely resolution of prior authorization requests to minimize care delays and clearly articulate prior authorization requirements, criteria, rational and program changes”

“Clearly, industry action on prior authorization is needed,” wrote CAQH in a letter last week. “Substantially improving prior authorizations on behalf of the industry ranks among our highest priorities in 2018.”

Impact on Electronic Record and Efficiencies

According to its 2017  CAQH Index adoption of the standard prior authorization transaction by health plans and providers could result in savings of $6.84 per transaction, one of the most significant per transaction opportunity areas, it said.

But the “proportion of prior authorization transactions using that standard actually declined by more than 10 percentage points” from the previous year’s Index report. According to the CAQH Index, providers conduct 77 million prior authorization transactions manually each year. It said: “Providers could save more than $3.20 per transaction and health plans could save at least $3.64 per transaction with fully electronic prior authorizations.”

The goal of the coalition is to shed a “bright light on today’s prior authorization requirements and offer tangible recommendations for improving the current process.”

Let’s see how far, with its list of principles, and the glare of the spotlight, these organizations can go to change a process that is harming many.

— Joe Cantlupe, HealthDataBuzz.

Think about it. Phones. Faxes. Even email.

A bit rusty, no?

No. This is 2018 healthcare, when it comes to physician offices  handling administrative and insurance claims transactions.

A non-profit healthcare alliance last month found in a significant study that healthcare is losing a big opportunity to save billions of dollars by its failure to switch over fully to electronic claims- related business processes among providers and insurers. The business of healthcare in the U.S. can and should be simpler, less burdensome, and, yes, perhaps most of all, less costly. And it’s not happening.

The CAQH a non-profit Washington, DC-based alliance of health plans and trade associations, uses words like “modest progress” in the transition from manual to fully electronic administrative transactions, but also  “backward,” and “no longer sufficient.” The organization also has been known as the Council for Affordable Healhcare Quality Inc.

“There are billions of dollars at stake. The electronic transactions should be more efficient and accurate and less of an administrative burden,” says Reid Kiser, interim director, CAQH Explorations, and lead researcher for the report. “They support optimized workflows for providers and the focus on the patient that health plans want to deliver and allow them to drive toward population health,” Kiser says. Kiser is an independent consultant with Kiser Healthcare Solutions, LLC.

Physician use of electronic inquiries rose by  6 percentage points for inquiries related to claim status, and 3 percentage points for eligibility and verification inquiries in 2016 compared to the previous year, according to  CAQH, which works to share initiatives to streamline costs and improve the business of healthcare. Its CAQH Index was released in June.  (In its study, CAQH also reviewed dental practices).

At a time they are trying to serve more of their patients, providers are spending up to 30 minutes on manual tasks, like making phone calls, sending faxes – faxes! – and mailing correspondence. Thirty minutes may not seem like much, but when you have only so minutes in a doctor’s office, that means a lot.

That’s a problem, Kiser says. “Once (patients) move over to a new health plan that information is essentially lost if (a patient) comes back to the health plan a few years later. From the (CAQH) perspective, it’s manual work that the provider has to do,” he says.

Beyond adoption levels, the index estimates the cost and time associated with conducting administrative transactions. On average, each manual transaction costs the industry $4.40 more than each electronic transaction and requires five more minutes of provider time.

Think of how many we’re talking about: The annual volume of administrative transactions reported by medical plans increased substantially, rising by 25 percent, from 4.8 billion in the prior year to more than 6 billion.

Going in Reverse: Or Not?

Whatever gains have been made in recent years are actually going backwards in the world of automation of claims related to business transactions. The savings potential from automating clams management increased to $11.1 billion annually in the most recent CAQH Index, with the focus on more than $7.5  billion for medical providers and $2 billion for dental providers and the remaining $1.7 billion for health plans.

That is an increase over $1.8 billion in potential savings from the previous year. The index is described as the industry source for tracking health plan and healthcare provider adoption of electronic administrative transactions for both medical and dental care.

Portals: “Accelerate or Hinder Progress?””

There’s a lot of data here, and CAQH points to one of the possible problems in evaluating the use of full electronic records, and that’s portals, the secure online websites that allows insurers, providers and patients get more involved in care.  While they are certainly helpful,  each one involves  a serious amount of work for physicians, including paper-pushing, such as clinical paperwork needed to support claims.  So it’s seen as being partially electronic in the CAQH Index and that raises all kinds of questions, including: is portal use really a bridge toward better use of electronic record use, does it hold it back: is it advancing, or not?

While the report says portals offer health plans a “highly automated solution,” some provider groups indicate that portals also create “substantial administrative burdens.”

“This is because portals require the provider to sign on and navigate a different online system for each health plan with which the provider is contracted,” the report says. “Also, portals lack advanced features common to clearinghouses and clearinghouse-integrated practice management systems, such as the ability to validate claims and check eligibility and benefits prior to patient appointments.”

That effect,  says CAQH: “may accelerate or hinder progress.”

So is the use of portals for physicians and dentists actually hurting them in using overall electronic records?

“We’re not at that point of our research to clearly understand that,” Kiser says. “Are we getting to fully electronic or are we at the point in the market just accepting all of these partially electronic, or portal transaction?”

Reid Kiser, lead researcher for CAQH report

An estimated 925 million manual transactions and nearly 14 billion electronic transactions were conducted by medical plans, a 38 percent increase over the prior year.

This is because a much higher number of administrative transactions were conducted using costlier manual transactions. This includes the portal transactions.

One study estimate with costs associated with healthcare billing and insurance-related administrative activities to reach $315 billion by this year, nearly as much as the 10 highest spending state Medicaid programs paid combined in 2016 to provide care for more than 46 million beneficiaries.

In a call to action, the CAQH Index concludes that the “ the relatively slow, incremental process reported in recent years of the transition from manual to electronic administrative transactions is no longer sufficient.”

It proposes that “industry participants strongly support provider access to robust electronic data interchange systems and expand the understanding for reasons behind increasing portal use, and urges all stakeholders to embrace the transition to fully electronic transactions.”

The research concluded that few vendors support all of the most essential electronic administrative transactions.

Adjustments Needed?

“We’ve seen tremendous cost and time savings from our investment in technology,” said Jody Meza, practice administer, Alpine Medical Group LLC in a statement. “We feel it’s important to do everything we can to deliver care as efficiently as possible for our patients, and automation of our administrative transactions is one way that we deliver on that goal.” — Joe Cantlupe

Note: The 2017 CAQH Index is the fifth annual report assessing industry progress to reduce the use of manual transactions and eliminate cost. Data was submitted from health plans covering more than half of the commercially insured U.S. population in the year studied based on enrollment reported in “AIS’s Directory of Health Plans: 2017.” Medical health plans contributing data covered 155 million lives, or approximately 51 percent of U.S.

It represents collaboration between healthcare providers and health plans. The report reflects data from participating health plans representing 112 million enrollees – almost 45 percent of the privately insured U.S. population – on more than four billion transactions. A range of healthcare facilities and provider practices participated in a day collection process conducted on behalf of CAQH by Milliman Inc.

CAQH Report’s Data:

• Claim submission had the highest overall adoption level among the electronic transactions studied, at 95 percent – a 1 percentage point increase over the prior year.
• Fully electronic coordination of benefits/crossover claim transactions increased 19 percentage points to reach 75 percent.
• Fully electronic eligibility and benefit verifications increased 3 percent over the previous year, reaching 79 percent.
• Fully electronic claim status inquiries rose 6 percentage points, from 63 percent the previous years to 69 percent. The volume of phone inquiries and the concurrent need for manual labor remained stable.
• Claim attachment, with a fully electronic adoption level at 6 percent, showed no measurable change as compared to the previous year.
• Electronic funds transfer adoption for claim payment decreased slightly, falling to 60 percent from 62 percent the previous year.
• Fully electronic remittance advice transactions increased slightly, increasing to 56 percent, one percentage point over the previous year.
• Fully electronic remittance advice transactions increased slightly in the 2017 index, rising to 56 percent, one percentage point over the previous year.
• Fully electronic prior authorization transactions declined by 11 percentage points.
• Use of partially electronic transactions rose by 10 percentage points.

A day after President Trump lambasted Pfizer on a previously announced July 1 price hike on three dozen drugs, the pharmaceutical company backed down following what  the company CEO described as an “extensive discussion” with the president.

Trump said he spoke with Ian Read, the head of Pfizer, and the Health and Human Services Secretary Alex Azar and the drug company decided it was  “rolling back price hikes” that Pfizer already put in place.

Trump has been fairly consistent on admonishing the pharmaceutical drug-makers on their extravagant pricing. For the administration, its blueprint to reduce prescription drug costs is one of its hallmark efforts. Among other things, the administration  is seeking a “more competitive pharmaceutical marketplace” and “bring down out-of-pocket costs for Americans, Trump’s plan states.  For critics, the blueprint has been too loosely defined, and not tough enough.

In the meeting with the Pfizer chairman and CEO, the blueprint apparently took center stage.

“Just talked with Pfizer CEO and @SecAzar on our drug pricing blueprint,” Trump tweeted. “Pfizer is rolling back price hikes, so American patients don’t pay any more.”

“We applaud Pfizer for this decision and hope other companies do the same,” he added in the @realDonaldTrump tweet. “Great news for the American people.”

A day earlier, Trump scolded the company, saying it should be ashamed “that they have raised drug prices for no reason.”

“They are merely taking advantage of the poor & Others unable to defend themselves while at the same time giving bargain basement prices to other countries in Europe & elsewhere. We will respond!….” Trump tweeted.

After the meeting with Trump today,  Pfizer ‘s  Read said the company would “defer the company’s price increases that were effective on July 1.” That would give the president “an opportunity to work on his blueprint to strengthen the healthcare system and provide more access for patients,” Read said.

The company said it will maintain prices on three dozen drugs to their pre-July 1 levels as soon as technically possible. And, the prices will stay in place until the president’s blueprint goes into effect or the end of the year – whichever is sooner.

“Pfizer shares the President’s concern for patients and commitment to providing affordable access to the medicines they need,” said  Read.

— Joe Cantlupe