How Blue Shield of California Is Reimagining Prior Authorization

For the past several weeks, Healthcare Innovation has been putting a spotlight on the progress that health plans and providers are making to comply with the CMS Interoperability and Prior Authorization Final Rule in order to boost transparency and efficiency. We are also looking at some of the ways AI is impacting the prior auth interactions. In an e-mail Q&A, Tracy Alvarez, vice president of Medical Care Solutions for Blue Shield of California, described the organization’s effort to reduce provider and member abrasion around prior authorization. The nonprofit organization has 6 million members, over 6,500 employees and more than $27 billion in annual revenue.

Healthcare Innovation: In a recent WEDI survey about the challenges of meeting CMS interoperability requirements around the use of FHIR application programming interfaces (APIs) for prior authorization, health plans respondents said their top concerns are digitizing policies, meeting compliance timelines, and delegated third parties facing challenges with different systems. Would Blue Shield say those concerns mentioned in the WEDI survey align with the issues it sees as top of mind? For instance, do you have a solution for digitizing all your policies for prior auth? Or are there other issues you are working through? 

Alvarez: Plans that haven’t begun planning or implementing the digitization of policies may indeed be pressed to comply by 1/1/27. At Blue Shield of California, our goal is to reduce provider and member abrasion around prior authorization. This is not a simple task, and we’ve had several pivots in our approach along the way.

We’ve been designing our mature and scalable solution to digitize all medical policies, including prior authorization policies, for several months. Our centralized medical policy repository will capture all policies in a machine-readable format as opposed to PDFs so we have a single source of truth that can be consistently interpreted across platforms. Digitization will also increase automation for those treatments that need review, resulting in faster answers for members and providers.

Another opportunity is to make interoperability solutions more valuable for providers. We’re prioritizing data engineering work behind the scenes that will let providers know exactly when an authorization is needed and also guide and support them through their prior authorization requests.

HCI: Blue Shield announced it was going to work with Salesforce on a prior authorization solution. Can you describe the progress so far on standardizing this electronic prior auth platform? What issues have to be worked through before its launch?


Alvarez: We have completed development work with Salesforce, which will serve as our prior authorization interoperability hub to connect providers, payers, and specialty healthcare services. We are also about to launch our digital front door to a select group of providers, which will support them in submitting prior authorizations within their existing workflows. We want to meet providers where they are, so we are taking what we learn with this group and applying it as we scale to more providers.

HCI: Is there a role for AI in automating some of the process?

Alvarez: There is a role for artificial intelligence to automate some manual prior authorization processes to speed time to care. Blue Shield’s solution intends to support human clinical reviews by creating decision trees that automatically authorize care when all the necessary data is present. Blue Shield is only enabling artificial intelligence-powered capabilities to approve care, route prior authorization requests for clinician review, and present all of the relevant clinical information to a physician or licensed clinical professional to make an evidence-based care determination. We will never let artificial intelligence technology deny care. It’s California law that artificial intelligence technology cannot be used to automatically deny, delay, or modify care, and we also believe it’s the right thing to do.

HCI: Does Blue Shield have a project team and/or a provider partner that it is working with on the FHIR API development and testing?

Alvarez: Blue Shield began our journey in mid-2024 to create a comprehensive prior authorization platform solution because we recognized the importance of ensuring our members receive evidence-based care in a timely manner. We created a dedicated team of numerous leaders, technical leads, technology partners, and other clinical stakeholder groups who have been diligently developing Prior Authorization Reimagined for our providers and members with FHIR APIs. We have also partnered closely with a major provider in California throughout our portal development and testing phases to ensure what we are building works seamlessly within the provider workflow. At this point in our development, we are confident that we will be compliant with the CMS mandate for 1/1/27.

HCI: On the provider side, do the EHR vendors have to make changes to their systems for the prior auth APIs on the payer side to be put to good use? 

Alvarez: EHR vendors are in a position to greatly improve the provider experience by enabling authorization requests to access and leverage clinical notes within the providers’ workflow. Such improvements would ensure Blue Shield and other payers receive the data we need to make a prior authorization determination, while minimizing administrative burden for the provider so they can focus on patient care. Recognizing some providers’ EHRs may not have this functionality, Blue Shield also accepts prior authorizations through provider portals and other channels in order to meet providers where they are.

HCI: Anything else you would like to say about your expectations for how these tech and policy solutions will smooth the prior auth processes?

Alvarez: We believe that to smooth prior authorization processes, payers need to prioritize more than just compliance activities. The future of prior authorization is accuracy, efficiency, and approval of evidence-based care on the first try.

In developing Prior Authorization Reimagined, we learned that removing existing manual processes from prior authorizations requires a highly complex solution. As is the case when creating new solutions, each iteration of delivery and testing provides opportunities and ideas for how to operationalize a new system for prior authorizations, so members consistently receive care in a timely manner.

Once we have our foundation, we can then focus on delivering a more personalized, high-tech and high-touch prior authorization experience for our members that includes various communication technologies and connect members to additional health care and services.

HCI: Are there ways that greater interoperability between payers and providers can be used for other use cases around member identification, engagement and payment? Or for value-based care programs? 

Alvarez: In the future, greater data sharing between payers and providers could improve identification and resolution of suspected care gaps, transparency of reimbursement policies and out-of-pocket costs for members and ultimately serve as a foundational capability for the future vision of real-time claims fulfillment.

HCI: In 2025, Blue Shield made some commitments around prior authorization. Could you provide any updates or greater detail about any of the following? The first is standardizing provider submissions for electronic prior authorization, giving doctors more time for patients by lessening administrative burden.

Alvarez: Blue Shield of California is committed to streamlining prior authorization workflows to ensure a more efficient and transparent process, while maintaining important evidence-based care standards for members. We announced our intentions in October 2024. In 2025, we signed on to the AHIP commitments with other Blue Cross Blue Shield Association plans. We believe realizing these commitments  will result in significantly improved prior authorization experiences for our members.

HCI: The second is further reducing the use of prior authorization for certain in-network medical services by 2026.

Alvarez: While we certainly aim to reduce the volume of prior authorizations, we really see a greater opportunity to increase the automation of manual prior authorization processes and make more prior authorization determinations in real time, which will ensure our members have access to timely, evidence-based care when they need it.

This year, Blue Shield of California will also continue to advance what we have already done to reduce requirements for prior authorizations for members with established, ongoing needs related to chronic conditions.

HCI: The third is ensuring a seamless process for members who switch health insurance companies by honoring their previous health insurance company’s prior authorization approvals for benefit-equivalent in-network services as part of a 90-day transition period, by 2026.  

Alvarez: Blue Shield of California’s Continuity and Coordination of Care Program is designed, in part, to promote continuous and appropriate care and provide timely review and authorization for members needing ongoing treatment, when care disruptions may otherwise occur.

Our program ensures that members with complex, chronic, or acute needs, as well as those requiring maternity, pediatric, or specialized equipment/services, experience seamless transitions and uninterrupted care during provider or plan changes, and fully adheres to all state and federal requirements for continuity of care.

HCI: Another goal is making the process more transparent by ensuring communications to members about prior authorization are clear and contain personalized information, including what is needed to support approval, next steps and available appeal processes.

Alvarez: Transparency in communications to members about prior authorization is a cornerstone of Blue Shield’s approach. We aim to empower members to more efficiently navigate next steps in care by providing clear, individualized, and consumer-friendly notices about prior authorization decisions. By making the reasons for any non-approval clear and actionable, our approach is designed to accelerate clinical follow-up. We also regularly update clinical guidelines and prior authorization lists on provider portals and public websites, so our members, providers, and partners are aware of current prior authorization requirements.

HCI: Another is fast-tracking responses for electronic prior authorization requests by committing to answering at least 80% of requests in near real-time in 2027.  

Alvarez: Blue Shield’s Prior Authorization Reimagined initiative aims to streamline the prior authorization process for providers and members. This 80% metric is key to reducing abrasion in the system and requires the successful completion of many activities. We currently have the foundation in place that checks if an authorization is required by parsing in real-time: prior authorizations on the requested treatment, member eligibility, business rules, and digital intake automation. To get us to the 80% auto approval rate, we are working with industry partners to develop and deploy additional decision tree (DTR) capabilities. We have already coded a significant number of medical policies as part of this effort.

HCI: The final one is affirming that licensed physicians personally lead reviews of unapproved prior authorization requests.

Alvarez: Blue Shield only has qualified licensed professionals (QLPs) review provider requests for health care services. Furthermore, QLPs evaluate those clinical issues that align with their clinical area of expertise. When necessary, specialty peer review evaluations may be requested and returned to the Medical Director for review and final determination.