4 Ways Automation Can Reduce Prior Authorization Request Denial Rates for Medicare Advantage Plans

Medicare Advantage (MA) plans provide healthcare coverage for over 30 million Americans, more than twice the number enrolled just ten years ago. By the end of 2023, KMPG projects that over half of all Medicare beneficiaries will be enrolled in MA plans. Prior authorization (PA) requests by plan members are a required part of the Medicare Advantage process for medically necessary care, as they help ensure that patients receive the appropriate treatment at the right time as needed for specific conditions. 

It is well known that the process of submitting and receiving approval for PA requests can be cumbersome and time-consuming, often leading to high denial rates and delays in patient care. Medicare Advantage plans in particular have come under increased scrutiny for widespread and persistent problems related to inappropriate denials of PA requested services and payment.  In this article, we look at the reasons why PA denials occur, and share four ways that automating the prior authorization process can help reduce denial rates, leading to more favorable outcomes for payers, providers, and members alike.

Understanding Prior Authorization Denial Rates

In 2021, Medicare Advantage plan insurers in the U.S. made over 35 million prior authorization determinations, of which 6% percent were denied, according to the Kaiser Family Foundation. Over 80% of those who appealed their denial were later approved, which raises questions about whether the initial determination should have been approved, and indicating that the initial request possibly failed to provide the necessary or complete documentation. Regardless of the reason, the required medical care needed was delayed, and potentially led to negative health outcomes.

According to a recent study by the U.S. Department of Health and Human Services, Office of Inspector General, Medicare Advantage Organizations (MAOs) were found to at times delay or deny MA beneficiaries' access to services, even though the requests met Medicare coverage rules. MAOs were also found to deny payments to providers for certain services that met both Medicare coverage rules and MAO billing rules, often preventing or delaying beneficiaries from receiving medically necessary care and further burdening providers.  

While some of the denials studied were later reviewed and reversed, the study found that the negligence was largely the result of: 

• Inappropriate use of MAO clinical criteria in medical necessity reviews. 
• Outdated audit protocols to address use of clinical criteria and particular service types. 
• Vulnerabilities that led to manual review errors and system errors. 

Automate Prior Authorization to Reduce Denial Rates

Automated prior authorization involves the end-to-end automation of clinical documentation throughout the PA process, and has been found to be highly effective in reducing the denial rate of prior authorization requests for medical necessity. Here we present four ways in which automating prior authorization can help Medicare Advantage plans: 

1. Improved Accuracy and Completeness of Information 

   Automated prior authorization systems use algorithms to check for completeness and accuracy of information entered in the system, reducing the likelihood of errors that could lead to delays and denials. Automated prior authorization systems quickly and accurately capture and analyze patient data and medical records directly from electronic health records (EHRs) and other sources, ensuring that all necessary information is included in the request and eliminating the need for manual data entry. This reduces data entry errors and inaccuracies, which can cause delays and increase the rate of denials.  
   

2. Streamlined Processes for Faster Turnaround Time

   Automated prior authorization systems reduce the time it takes to request, review and process a prior authorization request. Automated systems can quickly identify whether prior authorization is required, check the policy and benefits and verify patient eligibility up front, and generate approval or denial letters. This helps speed up the process, making it more efficient for both payer and provider.
   

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   Download:  Health Payer Guide - Automate and Streamline the Prior Authorization Process and Promote Healthcare Data Sharing to Improve the Care Experience
   

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3. Consistent Application of Medical Necessity Criteria

   Automated prior authorization systems can be programmed to apply consistent medical necessity criteria, reducing the likelihood of denials due to variations in interpretation. When manual processes are used, there can be variability in how different staff members approach the process, which can lead to inconsistent decision making and a higher denial rate. Integrated care management can also help to ensure that medical necessity criteria are applied consistently across the care continuum, from initial diagnosis to treatment and follow-up care.
     

4. Real-Time Decision Making and Enhanced Communication

   Automated prior authorization systems can provide real-time feedback on the status of prior authorization requests, enabling payers to improve communication with care providers to make timely decisions and take appropriate action if a request is denied.  Automated systems are designed to generate responses and notifications automatically, so that  providers know in real-time the status of their request and any necessary actions they need to take. This helps ensure that providers are kept informed throughout the process, reducing the likelihood of delays or misunderstandings that can lead to denials. 

Despite the clear benefits automation can offer, only 26% of health plans used fully automated PA systems in 2021, according to CAHQ. They go on to further estimate that full adoption of automated, electronic prior authorization with a normal increase in volume would save the medical industry $437 million annually, and perhaps more importantly, save providers a full 16 minutes per transaction in manual processing time.​ By utilizing these systems, healthcare providers can provide better care to their patients and improve outcomes for all parties.  

Vital Data Technology helps Medicare Advantage plans streamline their prior authorization processes with advanced analytics and machine learning to continually suggest new rules for automation, new benefit designs, and improved operational paths that lead to better outcomes and cost savings.