Digital health’s flavor of the week was prior authorization, which has clearly been leaving a bad taste in people’s mouths.
Humata Health took center stage by adding $25M in unlabeled funding to advance its AI prior auth automation suite for payors and providers.
- CEO Dr. Jeremy Friese was president of Olive’s payor business before forming Humata to acquire the PA assets after the company was forced to wind-down, and dealt with the headaches of prior auth first-hand during his time practicing at Mayo Clinic.
- The round was led by Blue Venture Fund (representing the majority of BCBS plans) and LRVHealth (investing on behalf of nearly 30 health systems), which sends a strong signal about Humata’s ability to support both sides of the prior auth equation.
MedPAC’s annual report to Congress did a great job highlighting the prior auth inefficiencies that Humata set out to solve:
- 95% of PA determinations by Medicare Advantage plans in 2021 were “fully favorable.” In other words, the plans approved nearly all treatments deemed necessary by providers at full coverage.
- Further, after providers appealed an initial PA denial, MA plans reversed their decision and fully approved the PA request in 80% of cases. That means all of the manual labor and staff hours results in the same outcome 99% of the time.
Right on cue, the AMA put out its own physician survey on the topic, finding that the average physician fields 43 PA requests per week that require 12 hours of staff time to resolve.
- Two-thirds didn’t believe that PA decision criteria are evidence-based, and nearly all reported that PA increases burnout.
- Most physicians also agreed that PA increases overall utilization as patients are forced to pursue less effective treatments or schedule additional appointments after PA delays.
The Takeaway
You’d be hard pressed to find a single payor or provider that thinks prior authorizations are perfect in their current state, and regulators are starting to take notice. Bipartisan leaders recently reintroduced legislation to mandate electronic processes for streamlining PA, following a final rule from CMS in January with the same goal.
