Purpose of Prior Authorization is to verify and obtain advance approval from the payer if a patient requires a specific service before it is performed. This process helps to ensure that necessary services are not denied to patients. Prior Authorization is an essential component in revenue cycle management and medical billing; this also follows the procedure of determining insurance eligibility, proper payment collection for the provided services, and simultaneously lowering denials and A/R follow-up.
This article discusses the role of prior authorization in medical billing, its importance, the difficulties associated with prior authorization, and what impact specific treatments have on prior authorization.
Purpose of Prior Authorization in Medical Billing
Purpose of Prior Authorization in medical billing is to ensure that the billed services are provided and that the appropriate payments are made; before prescribed treatments are delivered or carried out, the payer must first authorize payment for the provider.
This process is known as Authorization in medical billing. For example: if you have a pre-existing condition, you may be eligible for prior Authorization of medical services. This means that the hospital or doctor may require the approval of a health insurance company or payer to begin any medical procedures or treatments, and usually, such approval is used for reimbursements.
Importance of Prior Authorization:
Revenue Cycle Management is maintaining all revenue generating activities of a health care organization. This includes managing the flow of patient data through the entire healthcare system, claims processing, collection, denial management, payment posting, coding, and more. Implementing a prior authorization program is a crucial step in revenue cycle management (RCM).
It ensures that necessary payments are made promptly, and that billing and collection processes are followed correctly. Without prior authorization patient payments may not be made, and collections may not be conducted on time. Therefore, prior Authorization should be implemented to maximize reimbursement.
Difficulties Associated with the Purpose of Prior Authorization:
Prior Authorization depends on accurate diagnosis, proper medical coding procedures, and documentation of the required steps taken before the procedure. Usually, this is a challenging process, and the responsibility of a medical biller is essential to this process.
However, there are several difficulties associated with the prior authorization process. One of the main problems associated is the need for more transparency and its time consuming nature. This means patients must wait for an extended period before receiving treatment or until payments are approved for reimbursement.
Prior Authorization can be a pain for many healthcare providers because they must ask patients for permission to perform certain procedures. In addition, the healthcare provider has to wait for approval from the payer before starting the treatment, increasing the chances of patient denial. There may be situations where the doctor needs to know what the payer will require before the treatment is performed.
Pre authorization is not required when a medical emergency arises, such as on a weekend accident or illness that occurs late at night. In these circumstances, the healthcare provider should contact the insurance immediately to request and acquire the needed authorizations.
Impact of Specific Treatment on Prior Authorization
Specific treatments may impact prior Authorization if it alters the patient’s clinical course. Additionally, specific treatments may impact prior Authorization if it is a new treatment that the payer does not currently approve. This is because of the time taken by the payers to assess the need for prior Authorization.
When medical practices fail to secure the required Authorization from insurance companies or payers, medical practices must determine whether to cover the cost out of pocket or bill the patients. For this reason, the authorization process makes detailed notes of and acknowledges any procedures the patient’s health plan does not cover.
However, patients are responsible for paying for any benefits or services they obtain that are not covered by their insurance policy. A revenue loss that impacts the entire revenue cycle occurs when insurance claims are rejected because the provider could not secure permission, forcing them to cover the cost themselves.
In response to this problem, many private practices have started outsourcing their front desk support to medical billing companies to handle their prior authorization and verification efficiently. Such companies are responsible for verifying prior Authorization so medical practices can communicate directly with medical billing companies regarding their patient’s insurance coverage.
To ensure a seamless procedure, some precepts for medical billing prior authorization services are as follows:
- Make sure that all services and fees are clearly stated and that there are no surprises.
- Provide a means of payment and a contact number for the patient to call in case of billing questions.
- Maintaining complete records of all necessary information and documentation and verifying them with the payer.
- Have a transparent process for appeal of denied claims.
- Provide an easy way to access and retrieve information regarding the prior authorization process.
- Communicate clearly and promptly with the payer regarding the prior authorization status of the patient.
- Provide proper training to the staff for all critical processes.
Final Thoughts
Purpose of Prior Authorization in the Medical Billing process has become increasingly necessary in the healthcare industry. However, prior Authorization requires a lot of work and attention to detail, and each provider must implement the best possible systems to improve the overall process. Prior Authorization is a part of the medical billing services, and it should be carried out correctly to avoid any inconvenience to the patient or the medical practitioner.
There are many things to consider when setting up a prior authorization program, but the most important thing is to ensure that your billing team is capable of meeting the demand for this service. The implementation of a program should begin at the top level of the organization. At the very least, it is critical to ensure that a dedicated person is constantly tasked with monitoring the process. This person will be the ultimate decision maker and must work closely with the medical team to achieve the program’s goals.
FAQs:
Q1. What is the purpose of prior authorization?
Ans: Prior authorization is a health plan cost-control mechanism that requires doctors and other health care providers to acquire prior approval from a health plan before delivering a particular service to a patient for that treatment to be covered by the payment.
Q2. What happens if you still need to get prior authorization?
Ans: If you are subject to a prior-authorization requirement, also known as a pre-authorization requirement, you must get approval from your health plan before receiving the required healthcare service or medication. You need to acquire authorization from your health plan to cover the procedure.
Q3. Can patients complete their prior authorization?
Ans: Some plans let individuals submit their prior authorizations; however, the physician’s office often begins this procedure. Typically, your doctor will know whether this additional step is likely necessary for the treatment you seek.
Q4. How long does a prior authorization process take?
Ans: Most network providers will submit an authorization request on your behalf. Nonetheless, it is always prudent to confirm with your physician or a Personal Health Guide if a certain surgery or service is covered. Typically, prior authorization takes 7–14 business days.
Q5. What triggers a prior authorization?
Ans: The prior authorization procedure starts when their health insurance does not cover a service ordered by a patient’s doctor. Prior permission must be handled via communication between the physician’s office and the insurance company.