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.
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:
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:
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.