Health Plans

Prior Authorization 2.0 is coming. Are you ready?

By Seth Smeltz, and Arvind Pothula

Oct. 21, 2022 | Article | 5-minute read

Prior Authorization 2.0 is coming. Are you ready?

For health plans, prior authorization (PA) is an integral part of utilization management practice. This process helps health plans drive two of the most important operational factors: cost and quality of care. But PAs are an entanglement of manual processes that include fax, email and phone calls. These processes have a significant impact on both payer and provider productivity. Organizations across the ecosystem have tried to make the process more automated, but few have found success. Off-the-shelf solutions are often fragmented. These portals and apps offer payer-specific PA requests but lack true electronic-health-record-to-payer PA automation and integration.


Considering PA’s importance, the slow and manual interventions required by providers, members and health plans in the age of digitization is something that needs urgent scrutiny. We believe PA automation should be a common goal for all entities in health insurance. Health plans need to envision a world where all PA transactions happen electronically—without the manual processes that cause slowdowns in productivity.

New mandates will transform prior authorizations

The Centers for Medicare & Medicaid Services (CMS) has taken a first step toward automating PAs by introducing a potential mandate to exchange PA transactions using APIs based on the Fast Healthcare Interoperability Resources (FHIR) standard. In 2023, CMS announced further guidance including a firm compliance date of January 1, 2026. While the date is more than two years away, we do see some early adopters who are willing to invest in a streamlined exchange of information through FHIR.


In addition to this mandate, we’re also seeing industry leaders collaborate through HL7® Da Vinci Project’s Burden Reduction work group by introducing a series of implementation guides whose main purpose is to streamline the communication channels between health plans and providers. We believe the synergy of both initiatives will act as a catalyst in automating all the PA steps prior to a payer’s decision engine.

Healthcare is on the cusp of Prior Authorization 2.0

The automated PA process is on the cusp of transformation to PA 2.0. The transformation and shift to PA 2.0 will enable seamless, automated integration between a provider’s electronic health record (EHR) system and a payer’s decision engine, enabling real-time requests, documentation and responses. Automation will reduce costs, improve quality and accuracy of care and improve PA turnaround time. PA 2.0 ensures that the provider is empowered with real-time PA capabilities and statuses within their EHR workflow.


The ideal scenario looks like the following: After submitting an initial response to the payer requesting a PA, the provider receives an initial real-time response that includes any templates and documentation required. Documentation templates ensure all required information is present as part of the initial PA request. Including such documentation will decrease friction, reduce administrative costs and enable real-time PA automation. Once the PA is submitted, the transaction gets processed through a decision engine that makes the final determination on whether the claim is approved or denied. If an automated decision can’t be made, the PA then gets processed through a manual review queue. The final response is then sent to the provider in real time, natively within their EHR.

How health plans can prepare for Prior Authorization 2.0

Implementing a FHIR-based PA solution will reduce the physician and administrative burden. Communication can be key to getting physician buy-in to using a new PA solution. It is imperative to measure the current process performance, such as PA-decision turnaround time, to enable KPI reporting post implementation. Tactically, health plans can start their journey to PA 2.0 through the following actions:

  1. Identify a vendor or partner that offers an end-to-end FHIR-based PA solution.
  2. Clean up any existing PA rules and templates in preparation for implementation.
  3. Prepare documentation templates required for common PAs; these templates will be presented to providers at the time of PA submissions, reducing burden.
  4. Engage providers and communicate the advantages of having PA processes integrated within their existing EMR workflows.
  5. Pilot the FHIR API-based PA solution with a select set of providers to prove the value.
  6. Implement the new capabilities throughout the provider network to enable true semantic interoperability for PAs.

We believe PA 2.0 is achievable for both government and commercial health plans alike. A solution should enable health plans to meet and prepare for the upcoming CMS compliance mandate to have an FHIR-based API endpoint for PA transactions. Further, it is recommended that the solution be modeled on the Da Vinci Implementation Guide that includes a request generator, Coverage Requirements Discovery, Documentation Templates and Rules and Prior Authorization Support—all of which are critical components to having an end-to-end PA solution in a world of interconnectivity and FHIR-based APIs.

How advanced analytics can offer a competitive advantage

For health plans that position themselves ahead of the curve, there is further potential to invest in advanced analytics that enhance ease of use and suggest next best actions. For example, at the point of selecting the service for the patient, a provider can be made aware of quick alternatives that may not require PA and hence deliver faster care to the patient. Similarly, a tentative time-to-care or time-to-approval (based on historic PA requests) can be shared with the provider so they can set the right expectations with a patient and plan for bridge medications or services until PA approval.


This will ensure a better experience for the member overall. All of these enhancements will help the provider focus more on care measures rather than getting involved and confused with the administration processes of PA requests, which, again, can vary from health plan to health plan.

More than just a compliance mandate

PA 2.0 is more than just a compliance mandate, and it will not come overnight. Commercial health plans are adopting FHIR-based APIs as well in an effort to improve interoperability and the overall experience. The journey to PA 2.0 will take the health plan and provider industry time to implement, streamline and manage new PA processes. However, with the FHIR-based APIs and our recommended actions, we believe that automation of PA will bring health plans, providers and EMR vendors closer together in faster care delivery with an improved member experience and reduced physician burden.

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