The hidden costs of prior auth: A deep dive into the Quadruple Aim
How prior authorization is affecting patient experience, clinical outcomes and provider satisfaction — and the path to real improvement.
Prior authorization was originally introduced to manage healthcare costs across the ecosystem and ensure appropriate care — but as this manual process introduces a nearly $25 billion per year price tag, according to the WEDI Prior Authorization Council, the real pain points are a poor member experience, suboptimal patient outcomes and provider burnout and abrasion.
To combat this, the industry must look to achieve the Quadruple Aim, a term coined in the journal The Annals of Family Medicine to include the goal of improving work life for healthcare providers as well as addressing costs, population health and patient experience.
The Quadruple Aim sets the ethical framework for what healthcare organizations are designed to achieve. A purpose, mission and vision – it implies that the accountability of the healthcare organization is to provide care, while also focusing on four key areas, discussed below.
Creating a positive patient experience
Everyone has either experienced first-hand or knows someone who has had a negative encounter with their health plan because of a prior authorization request, particularly manual ones, which can take days to rectify.
For example, a new mom, after suffering a miscarriage the year before, went into pre-term labor at 26 weeks with her twin boys. They each weighed just 1.5 pounds. Scared, and with no guarantee of either of her boys’ survival, she was told the best thing she could do for them was supply breast milk at once. This was so her underdeveloped babies could get antibodies to fight off infection, which would be instrumental to their survival. She was prescribed a hospital-grade pump, for which her insurance required prior authorization. She waited days for approval, helpless and terrified. Her insurance did eventually approve the request, but the agonizing wait for the device caused unnecessary strain and suffering to a family already overwhelmed by a medical crisis.
Hearing that story, it’s hard to rationalize why a hospital-grade pump required prior authorization, especially considering what an extended stay in the NICU related to an infection would cost. That begs the question – how are prior authorizations affecting not just the member and patient experience, but their outcomes?
Improving health
The American Medical Association (AMA) states that manual prior authorization is getting in the way of delivering effective patient care.
According to its 2022 Annual Physician Survey, 91 percent of physicians said prior authorization can lead to negative clinical outcomes for the patient, and 80 percent say it can lead to treatment abandonment. Moreover, 34 percent report that prior authorization has led to a serious adverse event for a patient in their care; some 24 percent say it has led to hospitalization.
On the flip side, 98 percent of health plans surveyed by American Health Insurance Plans said the primary objective of their prior authorization programs was to improve quality and promote evidence-based care, and 91 percent said prior authorizations had a positive impact on quality.
But, if we take the example of the mother, what would have happened had she not been able to provide enough milk before the prior authorization approval? What could have happened to the health of her twins? What about the mother’s mental and emotional well-being, which matters in this story because she’s a member and patient too?
Reducing the cost of care
Prior authorization can help reduce, or at least manage, costs by ensuring that the care provided is the lowest cost option and is not unnecessary, duplicative, overused or of low value.
That being said, according to The Journal of the American Medical Association, overtreatment or low-value care costs the industry as much as $101.2 billion per year. Additionally, administrative complexity costs the industry $265.6 billion. And 62 percent of physicians report that prior authorization has actually led to additional office visits.
In light of those numbers, what would the cost of overtreatment or low-value care be without prior authorizations? Would we notice a difference? Would it be larger or smaller? Similarly, how much of the administrative complexity could be reduced through either prior authorization automation, standardization, reimagination or all of the above?
Increasing physician satisfaction
Burnout is generally experienced when administrative activities take any provider away from direct patient care, which appears to be happening more and more.
The AMA 2022 physician survey also reports, practices complete an average of 45 prior authorizations per provider each week, representing 14 hours per week spent just on prior authorization administration. About 88 percent said the burden associated with prior authorization was high to extremely high. The country’s surgeon general, Vice Admiral Vivek Murthy, even attributed the new CMS proposed ruling on prior authorization was largely intended to address physician and clinician burnout.
The Quadruple Aim is not the end to improving the healthcare systems, but it’s one place to start. Although prior authorization was well intended, it does not fulfill three pillars of the Quadruple Aim, and it appears to be a big part of the problem when it comes to improving the member experience, patient outcomes and physician satisfaction. We’re a long way out from a world without prior authorization, but there are steps that organizations can take to soften the negative impact.
A recent study published by BMC Research Notes considers that “healthcare is battling a conflict between the Quadruple Aims and … productivity.” For the report, researchers conducted a two-week pilot study to test interventions aimed to address the Quadruple Aim while improving productivity. Concerns for physicians — such as burnout, stress, access limitation and revenue concerns — can be improved “by addressing work roles and processes through enhanced skills utilization,” according to the report. This is akin to the promises that automating the prior authorization process would provide: “Results suggest that interventions targeting clinic efficiency have the potential to foster broad improvements in outputs.”
Through a standardized automated workflow leveraging electronic health record integration and fast healthcare interoperability resource (FHIR) application programming interfaces that many health plans already have in place, health plans can further dampen adverse effects of prior authorization.
In this way, an organization can go from many workflows to one shared workflow across health plans and providers, shortening the time it takes to reach a determination and lessening the administrative burden on clinicians.
Maxim Abramsky is assistant vice president for product management and prior authorization, while Elaina McMillan is director of product marketing for Edifecs.