The prior-authorization problem is solvable with current technology.

The prior-authorization problem in American medicine is the most hated workflow in the system, and it is also one of the simplest problems sitting in front of the technology industry. I want to say this carefully because the gap between the simplicity of the technical problem and the apparent intractability of the actual problem is the entire point of this piece.

On its face, prior authorization is a routing and rules problem. A clinician orders something. A payer has a policy on what evidence justifies covering that something. The clinician submits the evidence. The payer matches it against the policy. The answer is yes or no, and the path forward is determined accordingly. The rules are written down. The evidence is in the chart. The policy is on the payer's website, more or less.

Computers have been good at routing-and-rules problems for forty years. The technical part of prior authorization is not where the hardness is.

What current technology actually does

I have spent enough time looking at the three companies actually shipping the technical solution to be confident this is true. Cohere Health, Rhyme (formerly PriorAuthNow), and Myndshft each run a version of the same machinery. Read the chart, extract the clinical facts that matter, look up the payer's medical policy, compare the two, and either return an approval, a denial, or a request for the one specific additional document the payer needs to make the call. The whole loop, end to end, runs in single-digit seconds when the chart has the data and the payer's policy is clean. It runs in single-digit minutes when the chart is messy and the policy is ambiguous, which is what happens most of the time. It does not need a clinician sitting in front of a portal for forty-five minutes pasting data from one window into another.

The technology these three companies are using is not exotic. It is competent NLP over the clinical record, a structured representation of the medical policy, and a routing engine. None of this is bleeding edge in 2024. None of this would have been bleeding edge in 2019. The fact that you can build this with current technology is not the news. The news is that these three companies are the only ones building it, ten years after the technology to build it became commodity.

Why the problem stays unsolved

The reason the problem stays unsolved is not technical. It is that the friction in the workflow is producing something the payer wants, and the people who would benefit from removing the friction are not the people writing the checks for the technology that removes it.

Prior authorization, as it operates today, is a soft denial mechanism. A nontrivial fraction of the requests the payer asks for never get re-submitted. Some are abandoned by the practice because the administrative cost of finishing the submission is higher than the value of the procedure to the practice. Some are abandoned by the patient who decides they do not want the thing badly enough to chase it. The end state of the abandoned request is the same as the end state of a denied request — the procedure does not happen, the payer does not pay. The friction is a feature, not a bug, on the payer's side of the system. Anybody who has worked inside a health plan's medical-management group will tell you this in plain language if you ask them after the meeting.

Which means the customer for the technology that removes the friction is not the payer. It is the provider organization, who absorbs the administrative cost of running the workflow and whose revenue depends on the procedure happening. The payer has a different calculation. The payer would happily buy a faster version of the existing workflow. The payer is not in the market for a workflow that closes the abandonment gap, because the abandonment gap is what the workflow is for.

What this means for the technology vendors

The three companies actually shipping have, to their credit, figured this out. Each of them is selling primarily to provider organizations, with payer-side relationships built as infrastructure to make the provider-side product work. Cohere sells to health systems. Rhyme sells to physician groups. Myndshft sells to specialty practices and the radiology side. None of them is trying to convince the payer that the payer wants the existing workflow gone.

That is the right move and it is also what makes this category small for as long as it stays this shape. The provider-side market is fragmented and price-sensitive in a way the payer-side market is not. The unit economics of selling PA-automation to a 500-provider system are different from the unit economics of selling clinical-decision-support to a top-five payer. The category will generate a few good companies. It will not generate a category-defining outcome unless the regulatory envelope changes, which is the only path through which the payer becomes a willing buyer.

The regulatory wedge that exists in 2024

That regulatory wedge does exist, in 2024, and it is worth naming before this piece closes. CMS has finalized rules requiring electronic prior authorization for Medicare Advantage, Medicaid managed care, and ACA marketplace plans, with a deadline that lands in 2027. The rules require payers to expose an API for PA submission and to respond inside specified time windows. The rules also require payers to publish their medical policies in machine-readable form. Both of those are the missing pieces that let the technical workflow above run without the provider doing fifteen rounds of policy lookup by hand.

The interesting question for 2024 is what the payers do with the compliance window. The cynical read is that they do the minimum — expose the API, publish the policies in the most ambiguous form the rule allows, and keep the abandonment gap intact through clever response timing inside the new windows. The optimistic read is that one or two large payers decide that the regulatory floor is high enough that they may as well compete on provider-relations, lean into the new APIs, and start using the new transparency as a marketing asset. Both reads are plausible. I expect the cynical read to dominate for the first eighteen months and the optimistic read to surface only when a payer with a market-share-loss problem on the provider side decides to use PA-automation as a wedge.

Either way, the technology is ready. It has been ready. The PA workflow is solvable. The reason it stays unsolved is the incentive structure of the entity that profits from it being unsolved, and the regulatory work that is now finally arriving to change the incentive structure. Cohere, Rhyme, and Myndshft are the three companies positioned to be the picks-and-shovels of what the regulatory wedge enables. Watch for which payer moves first. That is where the category-defining outcome lives.

—TJ