Pre Authorization OR Prior Authorization is the process of obtaining prior approval from the payer (insurance company) before a healthcare provider provides services to a patient; also known as prior approval or pre-certification, it is the health insurer’s confirmation that a health care service, treatment plan, prescription drug, or durable medical equipment is medically necessary. However, PA does not guarantee that the cost will be covered. Cash transactions for drugs and procedures are unaffected. It comes into play only when medical billing is done through insurance.
A recent report from American Medical Association found that
64% of providers reported waiting for at least 1 business day
30% reported at least 3 business days
84% reported that prior authorizations lead to high or extremely high administrative costs
85% agreed that provider issues with prior authorizations increased in the last five years
60% doctors said it took at least one business day to receive a reply
Why is Prior Authorization process so important?
The Prior Authorization Process is a very important phase of the revenue cycle management as payers need to confirm whether a particular medication or procedure will be approved.
- If insurance companies refuse to approve specific operations or medical equipment, healthcare practitioners should wait or contact the insurance providers for approval before proceeding with the procedure.
- An unapproved authorization interrupts the patient treatment process due to unsanctioned procedures, missing patient information, or incomplete medical documentation.
- At the same time, disapproval can also be in a patient’s best interests due to expense, dangerous side effects, treatment efficacy, or whether or not there is a genuine requirement
Pre authorization in medical billing helps in hassle free claim of bills. Authorization does not imply that bills will be paid. Not having a pre-approval, on the other hand, can result in non-payment or denial of bills. Prior authorization services in medical billing are therefore critical for faster claims and a stronger financial position of the organization.
What are the Challenges faced in Prior Authorizations?
Prior Authorization relies heavily on accurate diagnosis and the use of the relevant medical codes. The key to timely Prior Authorization is accurate coding and documentation of the essential procedure prior to treatment. This is frequently a difficult task. The job and responsibilities of a coder have a significant impact on this process.
Furthermore, some procedures would have been planned and prior authorization would have been secured as a result. However, depending on numerous aspects such as the patient’s health status, more medical procedures may be required when the treatment is given to the patient. As a result, some alternative operations may be carried out without prior authorization. Due to the lack of authorization, there is a very significant risk that the payment may be refused. As a result, it is preferable to obtain authorization for treatments that are required for a specific patient rather than having the claim refused payment due to a lack of authorization. When a procedure is permitted but not performed, there is no penalty.
In an emergency, treatment begins before any Prior Authorization is obtained. This usually occurs as a result of an accident or illness that occurs on weekends or late at night. In these cases, the health care provider should contact the insurance payer as soon as possible to secure the necessary authorizations.
REMEMBER: Although you are the coder in charge of assigning the appropriate codes, the burden of obtaining necessary authorizations is largely on the provider, because it’s the provider who’ll be denied payment as expected. Getting preauthorization can save countless hours on the back end trying to chase claim payments. Preauthorization also results in faster claims processing and prompt payments.
When you don’t get the necessary preauthorization, the determination as to who is responsible is often defined by the patient’s insurance plan.
⇒ If the plan benefits outline specific services that are not covered and the patient seeks those services, the responsibility for payment falls to the patient. If a provider fails to obtain prior authorization for treatment before giving services to a patient and the insurance company denies payment, the provider may be required to absorb the cost of treatment, with no payment due from the patient.
Even if the inability to obtain preauthorization was due to a mistake, many payers refuse to provide retro authorizations. Some may overturn a denial on appeal, but they’re under no obligation to make payment if the proper process was not followed.
(Retroactive authorizations are given when the patient is in a state (unconscious) where necessary medical information cannot be obtained for preauthorization. In such cases, many insurance providers require authorization for services within 14 days of services provided to the patient. These approval requests are called as retroactive authorizations- the provider submits the claims, and then the payer responds as per a standard set of guidelines, to reimburse the claims.)
⇒ Some payers may hold the patient fully responsible for a procedure that did not have the required reauthorization.
In this instance, the practitioner must decide whether or not to pursue the patient for payment. Some people are able to bear the loss. Others may mail an unpaid bill to the patient, but this is unethical. Patients are both unaware of the procedure and unable to determine which CPT code should be given to the insurance company.
You can come across a circumstance where the patient’s coverage was validated prior to treatment, but the patient’s company terminated benefits retroactively. This typically occurs when a termination of employment is challenged in court or when an employer discovers that a covered employee violated his or her contract while on the job. The patient is accountable for the medical expenditures in these tragic circumstances.
The scale of medical billing processes is set to grow by leaps and bounds in the US and so Prior Authorization will have a key role to play in ensuring the process runs on track. Below, we enlist some of the best practices for pre-authorization: Below, we enlist some of the best practices for pre-authorization:
♦ Keep Necessary Information Ready
♦ Follow Recommended Treatment Guidelines
♦ Meet All Payer Criteria
♦ Get Preauthorization For Mundane Procedures
♦ Monitor Insurance Carrier Websites Regularly
♦ Update Contracts With Insurance Companies
♦ Streamline Pre-Authorization Process
♦ Build payer specific and procedure specific EHR clinical templates to simplify the capture of necessary clinical documentation guidelines
♦ Have Process-Driven And Proactive Policies
♦ Review and Analyze
♦ Communicate And Educate staff regarding the updated PA guidelines
♦ Conduct Regular Audits
♦ Outsource Prior Authorization to Viaante
Why Outsourcing Prior-Authorization Is The Best Option?
For a variety of reasons, outsourcing prior authorization services to third-party partners is always the best solution. Because adopting best practises for prior authorization could take years and includes several, complex procedures, sophisticated technologies such as in-house automation may not be able to enhance workflow efficiencies as efficiently. Outsourcing used to be largely used as a cost-cutting approach. However, the cost savings have been replaced by operational efficiencies and sustained growth over the past year. Modern third-party vendors ensure this through strategic thinking and complicated process innovations, allowing providers to focus on their core services and compete more successfully in a rapidly changing market.
When providers and top medical billing companies use outsourced pre-authorization services, they are relying on a third-party to function as an enabler between their practice and the payer. The partner gathers relevant data from the provider before approaching the carrier for Prior Authorization of outpatient and inpatient procedures, as well as pre-certifications for treatment admissions.
Who We Are and What Makes Us an Expert?
This article is brought to you by Viaante Business Solutions, one of the leading medical billing companies in the US. We’ve worked with a variety of major and small healthcare providers to help them optimise their billing processes and make them more consistent and trustworthy. We’ve worked with solitary practitioners, hospitals and medical centres, physical therapy firms, MRI facilities, laboratories, nursing homes, durable medical equipment companies, radiology centres, home healthcare companies, and ambulance services over the years. Our medical billing services have helped our clients improve the responsiveness and productivity of their revenue cycle processes.
Viaante’s leadership team has over 2 decades of experience in providing world class solutions in the space of Healthcare and IT. We are an ISO 9001-2015, ISO 27001 and Soc2 Type 2 certified organization and comply with HIPPA and PHI requirements.
Connect with us on firstname.lastname@example.org and we would be happy to workout a strategic partnership model with your firm to deliver high cost savings along with superior quality.