The Executive Suite: How much do prior authorizations cost you?

In this article I share how much income prior authorizations (prior auths) are costing you annually. Be forewarned: it’s a lot of money.

Background

I live with Long Covid. It sucks. However, it gives me rare nights when I am wide awake at 2:00 a.m., in the zone, and laser-focused. One of those nights, I calculated how much income prior auths cost the average physician annually.

My exercise, or challenge if you will, involved pulling together disparate data from the American Medical Association (AMA), the Medical Group Management Association (MGMA), and the Coalition for Affordable Quality Healthcare (CAQH). Claire Ernst, MGMA’s Director of Government Affairs, vetted my extrapolations and calculations, so I feel pretty good with my effort.

The bottom line

Prior auths reduce your personal bottom line by an estimated $11,046.67 annually.

Let’s extrapolate. It’s important to include nurse practitioners, physician assistants and other clinicians seeing patients in the office, as they generate prior auths as well.

10 clinicians: $110,466.70 annually

25 clinicians: $276,166.75 annually

50 clinicians: $552,333.50 annually

Want to know something scary? Those expenses do not factor in appeals of prior auth denials. Appeals increase the expense quickly because appeals involve your time as well.

I looked at 2,000 upper endoscopy prior auths over 18 months with one payor. Our first pass success rate was 97.3%, but it cost us $9,740 in employee expense. We appealed the residual 54 denials and got all but 8 overturned.The cost of these appeals in lost clinician time? $9,450 over and above the $9,740 spent in employee time.

What you should do

Prior auths are overhead. They take money out of your pocket.

1. Refer to testing and infusion centers that do the prior auths for you. Let them spend their employee time on the auths.

2. Whether you refer to places that do them for you or your office does the prior auths, get your documentation and ICD-10 codes right the first time. Know what is needed by the payor, and get it right the first time. It will save you time and money, and it will get your patients the care they need sooner.

3. Consider gold carding* with guardrails. You don’t need blanket gold carding that covers anything you could conceivably order, and no payor will grant it. Instead, you want to ask that you be given a gold card for certain procedures/tests you order frequently so that you don’t need to go through the prior authorization process for them.

In the aforementioned upper endoscopy example, I used my documented 97.3% first pass and 99.6% second pass success rates in my gold card request. I did not ask for gold carding for things gastroenterologists don’t normally do or order; I kept the focus tight to succeed in my request.

4. Change never happens for the better when we stand on the sidelines. Make your voices known legislatively. I use ‘voices’ rather than ‘voice’ because prior auth delays impact your patients (care delays) and your employees (more expenses means less money for raises). Via e-mails, flyers in exam rooms, and the like, each of them can take 2-3 minutes to make their voices heard and thereby make a difference. Here are the things to include in the ask:

Automate the prior authorization process. Practices pay employees thousands upon thousands of dollars annually to wait on hold for payers.
Standardize the prior authorization guidelines and processes across payers, including step therapies.
Adopt reasonable and achievable gold carding thresholds for procedures/tests.
Finally, it is important to know your numbers to put things in perspective. Sharing my upper endoscopy statistics, including care delay time frames, makes it real. And if I can share how the care delay impacted the care of a patient, it makes it human. A little work on the front end is needed to bear fruit on the back end.

Does it seem like you're doing more prior auths than ever?

If it does, you are right. I have estimated the volume of prior auths is up 23.9% over pre-pandemic levels. That’s scary. If first-pass prior auths cost your practice $100,000 in 2019, it is costing you $123,900 this year. And that errantly assumes you are paying your staff what you did in 2019; your actual overhead increase is much higher.

In a subsequent article, I will get into the math that went into my calculations. I will share the reasons I believe prior authorizations are increasing.

For now, I ask that you focus on reducing your prior auth overhead. Refer to those who do the prior auths for you, fine-tune your documentation, track your numbers, and make your legislative voices known.

* Gold carding is the term used when a payor permits a clinician to forego the prior authorization process for a procedure, test, or group of either.