Prior authorization programs have long stirred debate, with health plans seeking to ensure medical appropriateness of care, providers wanting full access to care for their patients, and patients stuck in between. Negative outcomes stemming from prior authorization programs, including administrative burden and extreme decision time have led to federal intervention, with active and proposed legislation calling for prior authorization programs to avoid impact on access to care or speed of delivery.
Specifically, in January 2024, CMS published a final ruling requiring that health plans administering Medicare, Medicaid, Children's Health Insurance Program, and exchange products respond to urgent authorization requests within 72 hours and non-urgent requests within seven days.
Then, earlier this month (6/12/24), the bipartisan Improving Seniors’ Timely Access to Care Act of 2024 was introduced in both the house and senate. Like the CMS final rule, this bill puts administrative inefficiency and delays in care in its crosshairs by requiring health plans with government-sponsored lines of business to:
- Implement electronic prior authorization systems
- Improve transparency around prior authorizations for patients and providers
- Provide reporting around prior authorization impact and outcomes
- Adhere to mandatory timeframes for electronic prior authorization requests
Health plans will be required to comply with the CMS final rule starting in 2026 and it’s expected that the new bill could pass before the end of the year. Given the government’s emphasis on improving the end-to-end prior authorization process, significant change is inevitable.
The Market Response:
In response to these new requirements, several health plans have scaled back or relaxed their prior authorization programs. This may make sense for some health plans, assuming the requirements they’re scaling back target services with the high compliance and approval rates. However, relaxing prior authorizations will not help health plans comply with the proposed federal policies, given the requirement to enable tech-forward prior authorization processes that improve speed and efficiency. Scaling back prior authorization programs also leaves health plans exposed to the potential for excess utilization.
To succeed in this shifting environment, health plans must implement solutions that comply with forthcoming federal requirements while successfully managing against excess utilization. This may be more straightforward for traditionally auth’d, high-cost/low-volume categories like specialty drugs, high-tech imaging, and elective surgeries, where health plans may only need a handful of providers to adopt tech-forward solutions. On the other hand, most health plans will require a dedicated partner to support implementation and operation of compliant prior authorization programs in more challenging high-volume, low-cost categories like DME.
Barriers to Regulatory Compliance in DME:
DME, where most items only cost a few dollars but require multiple units or recurring orders, poses a unique dilemma to health plan Utilization Management teams. The high-volume of services causes DME spend to add up quickly but low individual unit costs makes the financial prospect of prior authorization challenging.
Still, health plans have chosen to focus Utilization Management resources here given consistent excess utilization driven by product complexity, fraud, waste and abuse, and other issues. Specifically, CMS’ 2023 Supplemental Improper Payment Data report showed that over 20% of all Medicare FFS DME payments were improper due to insufficient documentation, medical necessity, or incorrect coding- all problems that well-designed prior authorization programs can solve. Given the high degree of excess utilization and improper payment, many health plans have opted to maintain significant prior authorization requirements in DME, with 99% of Medicare Advantage members requiring prior authorization for DME in 2023 according to Kaiser’s “Medicare Advantage in 2023” brief.
This difficult financial decision faced by health plans administering prior authorizations in DME will be compounded by federal requirements to implement tech-enabled systems, improve transparency, and provide extensive documentation and reporting.
Per Deloitte, 67% of prior authorizations across all categories remain fully or partially manual, as opposed to electronic. This figure is likely higher in DME, where workflows from order intake to documentation collection remain manual (phone or fax) for a majority of DME suppliers. Beyond this, health plan DME networks typically average ~500 unique suppliers, all varying in their technology and administrative capabilities. Limited technology adoption and extensive DME networks make supplier adoption another challenge to health plans’ development of compliant prior authorization programs. Finding a partner with technology to streamline the prior authorization process and scale to enable frictionless network adoption is essential.
Tomorrow Health’s Industry-Leading Solution:
Meet Tomorrow Health, a tech-enabled DME benefit manager focused on enabling DME suppliers with technology that streamlines their operations to improve member experience and drive direct cost savings for health plans. Through this solution, Tomorrow Health has the flexibility to augment health plan Utilization Management programs through 83% faster authorization case submission, auto-approvals, and decision support, or manage authorizations entirely as a delegated partner. Tomorrow Health’s technology is already used by thousands of DME suppliers today, enabling immediate activation for your health plan.
