The document discusses the inefficiencies and burdens of the prior authorization process that impacts payers, providers, and patients, leading to delays in care and increased costs. It analyzes the perspectives of providers and payers, highlighting the need for automation and standardization to streamline operations. The paper proposes solutions to reduce inefficiencies and improve the overall process of prior authorizations.

1. Prior authorization is among the most
cumbersome processes confronting payers,
providers and, ultimately, patients. Rife with
inefficiencies, prior authorization wastes
resources, delays services and worse. At
TransUnion, we think it’s time for a change.
In this paper we’ll discuss prior authorization
inefficiencies from both the payer and provider
perspectives; analyze the impact of the prior
authorization process on patients; review some
of the most recent initiatives undertaken to
streamline the prior authorization process;
and propose a solution that’s available today to
remove significant inefficiency from the process.
But before we begin, let’s take a look at the prior
authorization process as it stands today—from the
payer, provider and patient perspectives .
How can we improve the prior
authorization process today?
Why prior authorization costs everyone dearly—and how to fix it
“Nearly 90% of surveyed physicians reported
that prior authorization sometimes, often
or always delays access to care.”1
- “Health Care Coalition Calls for Prior Authorization Reform.”
American Medical Association.
in national operational
savings opportunity exists
for providers if electronic
transactions and
workflows were adopted.2
$323
million

2. NUMBER OF PRIOR
AUTHORIZATIONS
COMPLETED
per week per
physician.3
PHYSICIANS,
NURSES, AND
CLERICAL STAFF
TIME SPENT
ON PRIOR
AUTHORIZATION
ACTIVITIES.3
PERCENTAGE OF
PHYSICIANS WHO
DESCRIBE prior
authorization
burden as high
or extremely
high.3
PERCENTAGE
OF PHYSICIANS
WHO HAVE
STAFF WORKING
EXCLUSIVELY
ON PRIOR
AUTHORIZATIONS.3
Prior authorization
today
What is prior authorization? Simply put, an
authorization (also called “pre-authorization,”
“precertification,” or “service review”) occurs
when a healthcare provider (provider) is required
to attain permission from a health insurance
company (payer) before administering a specific
treatment, procedure or test to a patient.
Typically, prior authorization is required to
determine if services are medically necessary
under the insurance plan rules. The rules
typically look at the cost, utilization and efficacy
of the suggested procedures.
The goal? To limit unnecessary expenditure
on the part of the payer, as well as minimize
ineffective or over utilized services rendered by
the provider. For example, in many situations an
X-ray may cost less yet may be just as effective
as a more expensive CT scan.
Today, the process comprises a primarily
manual exchange of documents (most of which
vary by payer, plan and even patient) between
a payer and a provider. However, strides have
been made to streamline the process through
automation.
Figure 1. Prior authorization today
75%
of Physicians
64%
of Physicians
16.4hr
per Week
37
per Week

3. THE PROVIDER’S POINT OF
VIEW: TOO MUCH MANUAL
WORK
For healthcare providers, the prior authorization
process can be both time-consuming and
frustrating. As it stands today, prior authorization
is a predominantly manual task for providers.
Whether it’s by manually reviewing options
online through different payer proprietary
portals or calling payers only to wait on hold
for an inordinate amount of time, both can be
cumbersome and vary across payers.
Generally, the process involves gathering the
requisite information (which varies by payer and
even treatment type or disease state), faxing or
mailing that information to the payer, and then
calling to follow up every few days.
In concept, the process concludes when the
provider is given an authorization number, but
even that isn’t necessarily final.
That authorization number is a payer requirement
for payment to be made to the provider that
performed the procedure. In other words, a
physician can order the procedure, but if the
authorization is not present or things changed
clinically (which happens often), it is the hospital or
other facility that doesn’t get paid. In essence, the
hospital will have done the procedure for free.
Here’s the process from the provider’s point of view:
Determining when
prior authorization (PA)
is required
As procedures are ordered, providers determine
when, in fact, prior authorization is required for a
particular treatment, procedure or test.
Registration staff members refer to their own
prior authorization processes (developed in-
house, often kept in spreadsheets, binders and/
or sticky notes) to check if prior authorization is
required. But payers define the prior authorization
requirements, which vary by plan and are liable to
change, often without warning.
“The folks that do this in a
hospital have a really tough
job. They keep track of all
the requirements and really
own the process. They have
mounds of paper, sticky notes
and grids with procedure
codes and phone numbers
as their ‘fort’ to defend their
reimbursement.”
– Jonathan Wiik,
Principal Consultant at
TransUnion Healthcare.

4. Determining if a PA request has
already been submitted
Typically, before submitting a PA request, hospital
staff check with the payer (and/or doctor) to
determine whether a prior authorization request
has already been initiated. This occurs through
various methods, such as contacting the physician
responsible for initiating the request, calling a
payer representative or logging into the payer
portal.
Submitting
a PA request
Once a provider determines that prior
authorization is in fact necessary, they begin the
process of looking up the payer’s requirements,
securing the appropriate clinical documentation
(also referred to as “clinical indicators”) and
sending that information to the payer. Again, this
process is typically manual, which means it is
most often completed through legacy technology
such as phone, fax and snail mail.
Obtaining
PA approval
Once all the necessary documentation has been
submitted, providers wait—sometimes days—to
get a meaningful response from the payer. Often,
payers contact providers for more information,
such as additional clinical documentation.
In this case, clinical staff reach out to the
doctor and/or patient to secure the necessary
documentation. In the interest of their patients,
providers often follow up with payers to check on
the status of their prior authorization requests.
This can involve even more paperwork and,
eventually, more waiting.
Managing denials
and appeals
Each payer has a time-consuming and labor-
intensive process for appealing a denial. Typically,
the provider’s first step involves investigating
whether the payer’s rules were followed and that
proper documentation occurred. If this was the
case, the provider reaches out to the payer to
schedule an informal peer-to-peer discussion.
If that discussion fails, the doctor is generally
required to submit a letter that explains why they
feel the treatment is in fact medically necessary.
These letters often include any additional clinical
documentation the doctor deems pertinent to the
appeal.
Payers then often enlist the expertise of an
outside physician to review the case and make
a final determination. If the payer upholds the
denial, patients can then request review by the
insurance board for their state.
1
2
3
4
Up to
9hours
per week
Staff members’ time
spent on hold on the
phone per week waiting
for payer responses.4

5. THE PAYER’S POINT OF VIEW:
AN IMPORTANTWAYTO
CONTROL COSTS
Payers understand that the prior authorization
process can be burdensome for providers.
According to “Pains of prior authorization
create pressure for reform,” from AMA
Wire:
“Prior authorization ‘is a huge pain point
for us and our providers,’ said Liz Hartley-
Sommers, a registered nurse and clinical
data exchange manager at Blue Cross
Blue Shield Louisiana (BCBSLA).
“The issue also affects patients, she said,
‘because those people are having to wait
for prior authorizations to be completed
in order to get treatment.”5
That said, payers, like providers, face a
particularly difficult challenge when it comes to
prior authorization, as they need to both allow
physicians to practice medicine with minimal
disruption and curb health plan costs to keep
premiums at an affordable rate.
To that end, there must be some level of utilization
control. Prior authorizations help ensure that
providers follow evidence-based practices and
keep costs—as well as outcomes—in mind as tests
are ordered.
Once a prior
authorization request
comes in, the payer’s
process begins:
1. First the request is loaded into their system
2. Next, the review team evaluates the request
based on a standardized set of rules
3. Lastly, depending on whether a patient meets
or does not meet the standards of medical
necessity defined by the plan, the request is
either approved or denied
However, decisions are generally far from
straightforward. A payer’s review team is often
required to evaluate unique clinical circumstances
of the provider care team and patient—concerns
that exist outside of the purview of the
standardized rule sets.
Documentation can also be presented in an
incomplete and inconsistent manner, making
streamlined decisions difficult. Therefore, with
the introduction of variability and subjectivity, a
decision can be rather hard to come by.
321

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THE PATIENT’S POINT OF VIEW:
CONFUSION, DELAY, WORRY
The patient’s part in this process is simply to
wait. As previously discussed, prior authorization
is usually required for only the most costly
procedures, which also tend to be the most
critical.
Therefore, any delay in the prior authorization
process directly affects the patient experience,
and possibly her or his health. This is never the
intention, but can be an unfortunate outcome
of a saturation of plan utilization rules like prior
authorizations.
“Utilization management programs,
such as prior authorization and step
therapy, can create significant barriers
for patients by delaying the start or
continuation of necessary treatment
and negatively affecting patient health
outcomes,”6
- “Prior Authorization and
Utilization Management Reform Principles.”
American Medical Association
Beyond the wait, patients occasionally have to
contact payers themselves. Although not ideal
and used as a last resort, this usually occurs when
a provider knows that a particular procedure
typically requires PA and knows the answer will be
“no.”
In this situation, the provider advises the patient
to reach out to the payer as an advocate to see
if there is anything the payer can do. (In some
cases, a provider will supply the patient with a pre-
drafted letter to send to the payer.) Effectively,
this places a majority of the prior authorization
burden on the patient’s shoulders.
Additionally, patients must sometimes supply
medical documentation that their provider lacks,
which most often occurs when a patient has
switched providers or has had a procedure done
at an outside facility. For patients, this can involve
calling a previous provider to request medical
documentation, or taking lots of time to search
through various files to find the appropriate
medical necessity evidence.

7. PRIOR AUTHORIZATION’S
FINANCIAL IMPACT ON PAYERS
AND PROVIDERS
Primarily manual by nature, the PA process poses
a serious burden on payers and providers, and,
ultimately, puts patients at risk. But what are its
financial impacts?
According to the 2016 CAQH Index, the provider’s
average cost for prior authorization transactions
in 2015 were:
• $7.50 for per manual transaction
• But only $1.89 per electronic transaction5
As you can see, the manual nature of the PA
process can be quite costly, yet the drive toward
automation has been slow:
The Council forAffordable Healthcare
(CAQH) 2016 survey indicated that over a
third (35%) of authorization tasks remain
manual, using phone, fax or email to
precertify procedures. This is ten times
the rate of eligibility transactions, which
have only manual checks in three percent
(3%) of the cases. Adoption of electronic
prior authorizations has lagged far behind
other transactions.2
Obviously, automation is key, yet its full potential
has yet to be realized.
Next, let’s take a look at the current automation
initiatives underway in the PA process.
Goal:
Standardize transactions to automate a large part of the
prior authorization process
How itworks:
A series of three provider-initiated transactions
→→ 278x217: Request authorization from payers
→→ 278x215: Inquire on the status of an
authorization request
→→ 278x216: Notify payers when a person has been
admitted to a hospital or shares authorization/
referral information between providers and/or
payers
Roadblock:
Lower payer adoption because 1) 278x215 and 278x216
transactions are not HIPAA mandated, so payers are
reluctant to invest in them, and 2) while the 278x217
transaction is HIPAA mandated, without mandated
operating rules, payers implement it inconsistently
Goal: Simplify prior authorization processes by letting
providers input relevant data in order to receive a more
real-time response. Replaces a phone call or fax process
How itworks:
→→ Check if a procedure requires an authorization
→→ Obtain the status and retrieve the authorization
number of a previously submitted authorization
→→ Request an authorization for a procedure if one
is needed and not on file
Roadblock: Providers have to visit different
websites to check authorization for each payer
Figure 2. Current industry approaches to prior authorization
$7.50per manual
transaction
$1.89per electronic
transaction5
vs
ASCX12 278
TRANSACTIONS
AUTHORIZATION
PORTAL

8. THE ACAAND PRIOR
AUTHORIZATION
In an attempt to meet the need for a more
streamlined prior authorization process, the
Patient Protection and Affordable Care Act (ACA)
of 2010 included Section 1104, which introduced
healthcare operating rules to standardize and
automate cumbersome healthcare processes. The
ACA defines “operating rules” as “the necessary
business rules and guidelines for the electronic
exchange of information that are not defined by a
standard or its implementation specifications.”
Basically, operating rules addressed gaps in
standards, helped refine and standardize the
infrastructure that supports electronic data
exchange, and recognized interdependencies
among transactions.
CAQH CORE writes the operating rules, basing
them on a range of standards, for example,
ASCx12. HHS/CMS mandates compliance
with transactions/versions/operating rules
via regulations including compliance dates,
enforcement penalties, and so on.
The most important feature of these operating
rules is that they are vendor agnostic (or
standardized), which simplifies the prior
authorization process for everyone involved.
Regarding providers, the ACA (and particularly
the HIPAA HITECH Act) has arguably increased
the prior authorization burden. Providers are now
made to electronically report certain metrics
regarding health records or be penalized.
Additionally, adoption of the transaction is
painfully slow. For example, only 1% of surveyed
payers provide a 278 response, according to a
survey by Healthcare Administrative Technology
Association (HATA).7
Goal: Gather prior authorization information in less
time than manually searching for the same information,
without the provider having to log into multiple payer
websites
How itworks:
→→ Automated scanning of a payer’s website for
prior authorization information
→→ Commonly used to determine if a prior
authorization request has been initiated and
obtain the authorization number
Roadblock: Difficulty managing credentials and
tracking and maintaining screen scraping robots to
remain in sync with payer website changes
Goal: Help providers automate the prior authorization
process
How itworks:
→→ Identify and prepopulate payer forms with
patient’s demographic information
→→ Provide phone and fax numbers for specific prior
authorization services
→→ Monitor the prior authorization status
→→ Direct staff to a payer’s website, guide them
through the process and take screen captures to
support appeals of denied claims
Roadblock: Helps automate manual work, but it’s
not true automation
SCREEN
SCRAPING
WEB-BASED
WORKFLOW TOOLS

9. RECOMMENDATIONS: STEPS
PROVIDERS CAN TAKE NOW
TO IMPROVE THEIR PRIOR
AUTHORIZATION PROCESS
Unfortunately, the efforts made to streamline the
prior authorization process have been woefully
inadequate. Here’s what providers can do today.
Prior authorization rules library
As you know, prior authorization requirements
vary by payer, plan, procedure and service line.
What’s more, payers tend to continually update
their prior authorization requirements, often
without warning. Therefore, a prior authorization
solution that provides access to an online
centralized database that maintains, monitors and
updates prior authorization requirements across
payers will increase staff productivity.
To understand the savings opportunity, picture
the staff time spent calling payers, then waiting
on hold, only to discover that the procedure in
question doesn’t require prior authorization.
In contrast, a constantly updated prior
authorization library helps staff know which
procedures do not require prior authorization—
which lets staff avoid calling about them and
focus only on the procedures that do require it.
ASCX12 278 transactions
ASCX12 278 transactions would be a great
addition to streamlining the prior authorization
process. Unfortunately, not enough payers have
implemented them. But providers can begin
to realize the benefit of automation for the few
payers that have adopted the 278 transactions.
Exception-based workflows
While you can’t automate 100% of the process,
exception-based workflow tools will help to
manage staff workload and reduce inefficiencies.
Through the use of predefined routing decisions,
these tools can create tasks and work lists for
individual and group user roles for any exceptions
that are encountered with the prior authorization
process.
For example, if a procedure exceeds a certain
dollar threshold, exception-based workflows
would automatically task staff to follow up with
payers to validate requirements; or if a procedure
requires a prior authorization, an exception-based
workflow would create a task for staff to request
one from the payer.

10. For more information, visit
www.transunionhealthcare.com
Call 1-888-217-8928 or email hcsolutions@transunion.com.
1
“Health Care Coalition Calls for Prior Authorization Reform.” American Medical Association. January 25, 2017. Accessed March 22, 2017. https://www.ama-assn.org/health-care-coalition-calls-prior-authorization-reform.
2
“2016 CAQH INDEX.” CAQH. Accessed March 22, 2017. http://www.caqh.org/sites/default/files/explorations/index/report/2016-caqh-index-report.pdf.
3
“2016 Prior Authorization Physician Survey.” American Medical Association. 2016. Accessed March 22, 2017. https://www.ama-assn.org/sites/default/files/media-browser/public/government/advocacy/2016-pa-survey-results.pdf
4
“Fixing Healthcare’s Broken Pre-Authorization Screening & Verification Model.” HIT Consultant. June 27, 2016. Accessed March 22, 2017. http://hitconsultant.net/2016/06/27/revenue-cycle-pre-authorization-process/
5
Park, Troy. “Pains of Prior Authorization Create Pressure for Reform.” AMAWire. February 25, 2017. Accessed March 22, 2017. https://wire.ama-assn.org/practice-management/pains-prior-authorization-create-pressure-reform.
6
“Prior Authorization and Utilization Management Reform Principles.” American Medical Association. Accessed March 22, 2017. https://www.ama-assn.org/sites/default/files/media-browser/principles-with-signatory-page-for-slsc.pdf.
7
Morse, Susan. “Relieving the Pain of Prior Authorization Delays.” Healthcare Administrative Technology Association. February 21, 2017. Accessed March 22, 2017. http://m.healthcareitnews.com/news/relieving-pain-prior-authorization-delays.
TRANSUNION’S PRIOR AUTH LIBRARYSM
TransUnion’s Prior Auth Library screens whether an authorization is required for medical procedures
prior to service. Registration staff no longer needs to track these complicated prior authorization
requirements in multiple spreadsheets, binders or sticky notes.
The solution delivers:
A comprehensive
rules library
—with more than 1.5 million payer-
specific prior authorization rules for
more than 16,000 procedure codes
Continually updated prior
authorization rules
—from all major payers, covering
92% of insured lives in the U.S.
Immediate
response
—as to whether an authorization is
required for a specific procedure,
enabling fast decision-making
Seamless
integration
—into TransUnion ClearIQ Patient Payment
Estimation, simplifying patient access workflow
with exception-based work queues