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Want to rid healthcare of fax machines? First, standardize prior authorization

Providers conduct 77 million prior authorizations a year, and getting payers and providers to use one standard could also save $6.84 per transaction.

Susan Morse, Managing Editor

Centers for Medicare and Medicaid Services Administrator Seema Verma just this week threw down the challenge of eliminating fax machines from physician offices by 2020 and replacing them with digital health information.

A physician still can't see the electronic health record of a patient discharged from a hospital across the street because the records are faxed, said Senate Committee Chairman Lamar Alexander in a recent Health, Education, Labor & Pensions hearing on the administrative burden of healthcare.

An area in need of automation is the prior authorization process, in which 90 percent of communications between provider and payer are still done by phone or fax, according to the nonprofit Council for Affordable Quality Healthcare, or CAQH, which has been working to automate and standardize the process.

Providers conduct an estimated 77 million prior authorizations manually each year, CAQH 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, according to CAQH CORE (the Committee on Operating Rules for Information Exchange) Director Bob Bowman. The average provider is submitting 50 to 60 prior authorizations a day, he said. 

Prior authorization is a pre-approval process that a clinician or a hospital must receive from an insurance provider before a patient receives the care or service. Prior authorization is applied to selected medical procedures, services or treatments.

While prior authorization applies to less than 15 percent of covered services, simplifying the processes requires moving away from paper transactions to electronic, said Matt Eyles, president and CEO of America's Health Insurance Plans to the Senate HELP committee.

Since 2005, CAQH CORE has developed and issued four phases of operating rules that support standards, accelerate interoperability and align fee-for-service administrative activities among providers, payers and consumers. 

CAQH is a coalition of national and regional stakeholders including large plans such as UnitedHealthcare and Anthem, small plans such as BCBS of Kansas City and providers and provider associations and others.

Its first operating rule laid the groundwork for the technical infrastructure needed. To get CORE certification, which is voluntary, insurers must prove their systems are interoperable.

In Phase I, health plans invested money in IT systems. In every case they were able to recoup the cost in less than 12 months, Bowman said.

"With the work we've done we've seen huge savings," Bowman said.

Two to three years ago, CAQH turned its attention to standardizing preauthorization.

The biggest obstacle is the lack of uniformity. Many plans have built sophisticated web portals but it becomes easier for a provider to call rather than logging into the different websites for 15 to 20 health plans in a day, Bowman said.

"It's very fractured in the back end for prior authorization," Bowman said. "All of that data is somewhere in the back end and it's fractured."

With different standards for attachments and various terminology, he said, the system needs to be automated and standardized.

"We have seen small regional plans on the pathway to do that," Bowman said. "Harvard Pilgrim put in an amazing system for provider work rules."

Rhonda Starkey, director eBusiness Services for Harvard Pilgrim Health Care said over a year ago the insurer implemented the operating standard for EDI 278, the transaction in which a provider requests prior authorization from a payer.

Adoption of this standard prior authorization transaction is expected to result in savings of $6.84 per transaction, according to CAQH.

Harvard Pilgrim is still analyzing the savings, but Starkey said, "It saves us money and time by having a nationalized standard."

The 278 is a mandated transaction that payers need to do and perform because it's a HIPAA standard. Once that standard is created, it should be able to be used by anyone, whether a clearinghouse, a provider, or a practice system vendor.

"It's the standard way to connect between parties," she said.

The technology is not in use for all prior authorization transactions. Providers may still use portals, paper and phone calls.

"Reducing paper, call and Fax machine use is a tough nut for all of us in the industry to crack," Starkey said.

But the baseline is there to reduce the overall cost of healthcare, she said.

Harvard Pilgrim understands prior authorization is part of the clinical workflow and continues to review its internal rules to make changes to reduce the burden when possible, she said.

CAQH's next project is working with FHIR, the standard for health information exchange, and the technology for moving data. HL7 members have an advisor on the CORE board.

Recently, organizations such as the American Hospital Association, AHIP and the American Medical Association released a consensus statement on the prior authorization process.

CAQH sent back an open letter on July 26 agreeing on a continuation of the work, including the adoption of the operating rules to promote greater automation. The letter highlights specific areas where CAQH CORE and the organizations that authored the consensus statement have clear, shared goals such as improved transparency and communications, continuity of patient care and greater automation and efficiency.

But the proportion of prior authorization transactions conducted using the operating standard actually declined by more than 10 percent in comparison to two years ago. There's more work to do CAQH said.

"We are greatly appreciative of the consensus statement authors' commitment to this critical issue," said Robin Thomashauer, president of CAQH. "CAQH CORE participating organizations have spent considerable time developing ways to promote greater automation in the prior authorization process. We agree wholeheartedly with the consensus statement, and are eager to work together to make a difference."

Twitter: @SusanJMorse
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