The hidden costs of prior authorization
In healthcare, Prior Authorization (PA) mandates approval from insurers before administering specific treatments, aiming to control costs. However, this process incurs hidden expenses, overwhelming providers with administrative complexities, delaying patient care, and increasing financial burden. Let’s expose the hidden cost of PA with PharmBills’ guide https://pharmbills.com/blog/the-ultimate-step-by-step-guide-to-prior-authorization.
Direct costs associated with prior authorization
Direct cost in PA refers to immediate operational expenses, which can be classified as follows:
1. Administrative expenses
- According to a Workgroup for Electronic Data Interchange (WEDI) study, the healthcare industry spends nearly $25 billion yearly on prior authorization. This cost is mainly due to the manual PA process, which involves a lot of paperwork and documentation.
- The administrative expenses associated with PA can be reduced by automating the process using electronic prior authorization (ePA) systems.
2. Time is money: The man-hour metrics
- Physicians complete an average of 41 PAs per physician per week, according to a survey by the American Medical Association (AMA). This workload translates to almost two business days of physician time per week.
- The burden associated with prior authorization is high to extremely high, according to 88% of physicians surveyed by the AMA.
3. The expense of technology and software solutions
- The cost of the system, e.g., hardware, software, and maintenance, can vary depending on the size of the healthcare organization.
- However, administrative expenses and staff time savings can offset the cost of implementing an ePA system.
- In addition, ePA systems can improve the accuracy and efficiency of the PA process, leading to better patient outcomes.
Indirect costs impacting healthcare providers
Indirect costs arise from reducing or ceasing work, which affects productivity. It’s important to note that the examples mentioned below are just a few indirect costs that can impact healthcare providers.
Opportunity costs: The unseen sacrifices
Healthcare providers face tough decisions, such as spending more time with patients for better care or seeing more patients to meet financial targets. Opportunity cost is the value of benefits from the best alternative not chosen.
Delays in patient care: Quantifying the consequences
Delays in medical care can seriously harm patients and healthcare providers. Such delays can lead to extended hospital stays, higher healthcare expenses, and even mortality.
Staff burnout and turnover rates
Burnout can lead to reduced job satisfaction, decreased productivity, and increased staff turnover. High staff turnover rates can be costly for healthcare providers, as they may need time and resources to recruit and train new staff.
Hidden costs borne by patients
Please note that these are just a few examples of hidden cost burdens on patients that can arise in the healthcare industry, and they may vary depending on the specific context and circumstances.
The emotional tax of waiting
Manual PA requests can take days, causing strain and suffering to patients. For example, a new mother with pre-term labor waited days for approval of a hospital-grade pump, adding to her distress.
From delays to denials: The cost of compromised care
Patient care delays can lead to more extended hospital stays, higher healthcare costs, and increased stress on providers. Delayed PA can result in compromised care, affecting patients.
The domino effect: Financial strain beyond authorization
PA can cause financial burdens for patients, including out-of-pocket expenses for uncovered medications or procedures. It can also increase healthcare costs by requiring additional tests or procedures for PA approval.
Conclusion
The PA process incurs hidden expenses that burden providers with administrative complexities, delay patient care, and increase operational expenses. Ask Pharmbills.com about automating the PA process to mitigate these costs.
