Payer and Provider Interoperability with FHIR Can Improve Prior Authorization—to Everyone’s Benefit

Author: Smile CDR

Prior Authorization has long been a process primed for improvement and innovation, yet it continues to be burdensome for all parties involved. As shown in the seventh annual Index Report from the Council for Affordable Quality Healthcare (CAQH), adoption of fully electronic PA transactions isn’t growing fast enough to cover the rising costs of manual prior authorizations.

In 2019, providers spent $11 per manual PA, up from $6.61 the year prior—a 66% increase. Though it’s estimated that the industry could save $454 million a year by moving to fully electronic PA transactions, the adoption of electronic PA transactions increased just 1% from 2018 to 2019. And astonishingly, 51% of healthcare organizations in the US were still handling PAs manually.

The typical process for providers to receive PA from payers involves a patchwork of phone calls, faxes, emails and web portals. Alongside the administrative cost and burden, this manual process hampers communication and collaboration between payers and providers, lacks transparency, and all too often creates unnecessary delays that lead to patients receiving suboptimal care or abandoning treatment plans altogether. 

As the industry transitions to more patient-centred and value-based care, PA processes present an obvious opportunity for payer and provider CIOs to reduce costs and create value, both for their patients and their organizations, by leveraging FHIR data standards and interoperable platforms. 

Payers Are Improving Prior Authorization Processes and Moving Toward Strategic Compliance 

The case for payers to move toward fully electronic and automated PA processes is in part driven by policy. Though the CMS Interoperability and Patient Access final rule enforcement has been delayed until July of 2021 and the more robust set of proposed rules for improving PA processes won’t come into effect until January of 2023, there’s a good reason for payers to create and maintain a standardized set of health APIs. 

In a recent AHIP FHIR-side chat Hayes Abrams, the executive director of Network Strategy & Implementation at Blue Cross and Blue Shield of Illinois, and Duncan Weatherston, the CEO of Smile CDR, spoke about the need for payers to move beyond mere compliance and instead to focus on strategic initiatives that will propel the healthcare industry forward and yield far greater value and ROI. 

By more openly embracing the FHIR standard, payers can not only reduce their own administrative burden, but also create an enterprise asset and single source of truth that allows them to avoid costly point solutions, improve NPS scores, and differentiate themselves in the market by more seamlessly connecting with provider systems. By creating an interoperable data source that integrates with their EHRs, payers can put more information into the hands of both clinicians and patients—leading to better outcomes. 

Taking a strategic approach will enable forward-looking payer CIOs to get ahead of regulations and build better applications without instantly creating legacy systems and taking on technical debt. With improved transparency and seamless data sharing, payers can foster greater trust with providers, provide patients with easier access to information, and lay the foundations for settling value-based contracts. 

Providers Are Leveraging FHIR to Reduce Their Administrative Burden 

Though to some extent providers must rely on payers to make the first move toward more fully electronic and automated PA processes, the case for providers is in fact much more straightforward. 

Currently, providers bear the brunt of the administrative burden, often having to hire staff specifically devoted to handling PAs. As such, providers, and especially Integrated Delivery Networks, have the most to gain from the transition to FHIR data standards and the automation they’ll enable. 

As stated in a Gartner research report titled Healthcare Collaboration Point for CIOs: Prior Authorizations, “...providers have been caught between the complexity of their customized EHRs and payers’ hesitance to invest in interoperability that will span multiple EHRs.” The report further states: 

“You can kick-start the process by advancing interoperability in your organization. Seek real-time consumer eligibility and prior authorization information from payers first, and integrate it into your EHR. Employ APIs to tightly integrate systems used to arrange for care, and focus on cross-functional and cross-organizational workflows.”

By creating a FHIR repository that integrates with their EHR, providers can make full use of the standard that is quickly becoming the healthcare industry’s API of choice. This sets up providers to extend the functionality of their EHR via SMART on FHIR apps while laying the groundwork for current and future integration efforts. Considering the rapid adoption of FHIR in the payer industry (and of the Da Vinci IG for PA) and by major EHR and technology vendors, supporting a thorough implementation of FHIR puts provider organizations on a solid foundation to support accelerated and cost-effective integration with internal and external systems. This benefits providers by freeing up clinicians’ time, unifying their systems, and providing a more seamless patient experience across their own network. As FHIR adoption in the industry grows, this improved experience for the patient will extend to touchpoints with payers and other providers as well, who will all benefit from increased patient/member satisfaction. 

Patients Will Benefit From Better PA Processes

In a survey conducted by the American Medical Association, 92% of doctors said manual PA processes negatively impacted clinical outcomes and 78% reported that PAs can sometimes lead to abandoned treatment.

The frequent delays and unnecessary uncertainty in receiving prior authorization creates stress and anxiety for patients, while frequently leaving them without timely access to the medication they need and procedures that could help them. 

As payers and providers transition to more seamless data sharing and greater interoperability, patients will have easier access to their own health information, greater certainty about which medication and procedures will be covered by their medical plan, and a better, less fragmented patient experience. 

The Importance of FHIR to Prior Authorization

Open standards have a clear role to play in facilitating better prior authorization processes, and more generally in better data sharing between payers and providers. The Gartner report Healthcare Collaboration Point for CIOs: Prior Authorizations states: 

“Health Level Seven International (HL7) FHIR will ease payer-provider interactions even more by making clinical and administrative data fully portable. While still an emerging standard, Gartner believes you must figure FHIR into your technology plans. Use fluid clinical and administrative data to both speed current interactions and transform care management by pushing health interventions to consumers’ providers, mobile devices and community resources.” 

Improving prior authorizations is a key piece of making value-based care work for payers, providers and patients. Interoperability driven by FHIR will help improve the coordination between payers and providers necessary for more timely and cost effective prior authorizations.