Revised Billing Updates for Prior Authorization

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Revised Role of Prior Authorization

So far insurance carriers have been using prior authorization as a tool to control spending and promote cost-effective care. But in changing billing scenarios role of prior authorizations has changed drastically. There is little information about how often prior authorization is used and for what treatments, how often authorization is denied, or how reviews affect patient care and costs. As per the 2021 American Medical Association survey, almost 88 percent of providers characterized administrative burdens from this process as high or extremely high. Doctors also indicated that prior authorization often delays the care patients receive and results in negative clinical outcomes.  Another independent 2019 study concluded that research to date has not provided enough evidence to make any conclusions about the health impacts nor the net economic impact of prior authorization generally. In this blog, we’ll explore the Revised Billing Updates for Prior Authorization that help healthcare providers overcome day-to-day challenges.

What is Prior Authorization?

Prior authorization/ preauthorization/ precertification refers to a requirement by health plans for patients to obtain approval for a health care service or medication before the care is provided. The basic motive is to confirm whether care is medically necessary and covered under the patient’s healthcare plan. The process for obtaining prior authorization also varies for every insurance carrier but involves the submission of administrative and clinical information by the treating physician, and sometimes the patient.

Billing Updates for Prior Authorization

• The Affordable Care Act prohibits the use of prior authorization related to emergency care.
• California state now prohibits healthcare plans from using their own clinical criteria for medical necessity decisions, requiring commercial insurers to instead use criteria that are consistent with generally accepted standards of care and are data from the relevant clinical specialty. 
• The Mental Health Parity and Addiction Equity Act (MHPAEA) requires commercial insurers, employer-sponsored plans, and certain Medicaid plans to document the use of prior authorization for both medical and behavioral health care-covered services. Plans must provide a comparative analysis that includes the rationale and evidence for applying prior authorization, as well as all other nonquantitative coverage limits. 
• As per the rule H.R. 3173, with 306 cosponsors, would require Medicare Advantage insurers to report to HHS on the types of treatment that require prior authorization, and the percentage of prior authorization claims approved, denied, and appealed. 
• Some states have moved to ban prior authorization for certain behavioral health care. For example, New York prohibits the use of prior authorization during the first days of inpatient admission for a mental health condition for children.
• Michigan recently passed a law requiring the use of standardized prior authorization methods and new transparency reporting.
• Several states have adopted or are considering ‘gold card’ laws that would require health plans to waive prior authorization for services ordered by providers with a track record of prior authorization approval.
• In the year 2021, CMS finalized a regulation to streamline the prior authorization process for Medicaid and private health plans through new electronic standards and other changes. While the rule was later withdrawn, similar changes may still be forthcoming from HHS.  H.R. 3173 would require CMS to implement an electronic prior authorization program for Medicare Advantage plans with the capacity to make real-time decisions.