Importance of Pre-Authorization in Revenue Cycle Management

07 March 2022
Importance of Pre-Authorization in Revenue Cycle Management

Pre-Authorization in Revenue Cycle Management

Before the Healthcare provider can begin the medical services for the patient, there is pre-requisite approval that needs to be obtained from the payer contract. This procedure is referred to as Pre-Authorization (PA). It is also known as pre-certification or pre-approval. It is an affirmation from the health insurer that you require the specific medical service, or treatment or medication or equipment for medical purposes is essential. Prior authorization is not an assurance that the costs are covered. Let's discuss the importamce of pre authorization in revenue cycle management.

What is Pre-authorization in Revenue Cycle Management?

The insurer often expects to acquire referrals from a primary health care doctor before scheduling an appointment with a specialist. Other than the emergency admissions, the other hospital inpatient and outpatient admissions, certain invasive procedures, specific observation services, and scans like CT, MRI, and PET need pre-authorization by the insurers. Authorization in medical billing is crucial for the healthcare provider’s billing team. It is a standard procedure whereby the payer authorizes insurance coverage of specific medical services even before they are offered to the patient. The sequence of steps involved generates an authorization number for medical billing purposes. The providers use this number on the claims they must submit for payment.

Different policies and protocols govern each provider regarding the patients' absence of referral or Pre-Authorization. Sometimes, the provider proceeds with treatment even before the preauthorization is received, whereas some providers tend to postpone the treatment until the patient gets a pre-authorization.

Pre-verification and Prior Authorization

• Receiving the Patient schedule carrying out the Insurance Eligibility Verification
• Explaining clearly about the financial commitment to the patient
• The system gets updated with the benefits data
• Validation of the Schedule by the preauthorization team
• Procuring the preauthorization from the care management
• The confirmation of schedule by reporting it to the physician office
• The medical service is provided to the patient

Steps Involved in Procuring Pre-authorization

Upon reaching the healthcare facility, the patients' insurance coverage is assessed carefully, and the benefits are checked precisely. The patient is immediately contacted in case of any missing information, and the accurate data is updated. At this point, the patient is clearly explained about the out-of-pocket costs he might have to bear. The patient scheduling gets verified by the insurance company's Pre-authorization team. Once it is done, the other team immediately gets in touch with the insurance payer to obtain the authorization code. Authorization in medical billing plays a vital role to boost the revenue cycle.

Once the code is obtained, the same is passed on to the physician's office. On receiving the confirmation of the insurance coverage for the medical services, the patient is provided with the entitled medical services.

1. As soon as the referral is received, the below steps are to be carried out in the same order.
2. First and foremost, connect with the company and pass on all the medical documents to obtain prior authorization to provide medical care.
3. Finish the provided care report and treatment plan documentation, provide the medical data with a request form for prior authorization to the insurance to get approval for future visits.
4. Keep up a rigid follow-up schedule and track the progress by setting up a calendar.
5. To streamline the healthcare facility's prior authorization service, regularly list the status of the PA whether they are pending or if denied or open every week.

Advantages of Pre-authorization In RCM

• Relatively reduced denials and increased collections
• Reduced cancellations
• Enlightens the patient about their financial commitment
• Enhances the healthcare's focus on patients
• Cost restrictions and Liability

What Could Happen If Required Pre-authorization Is Not Obtained?

If a pre-authorization is not obtained, the payer's policy determines who must bear the costs incurred. In some cases, the insurance plan makes the patient responsible for the payment, whereas the provider becomes liable in other cases. Some payers do not grant reimbursements if the patient chooses to take up the medical care but hasn't obtained the PA before the procedure. It affects the cash flows causing an unhealthy revenue cycle.

The Insurance providers follow specific exclusion lists to determine which treatment and medical care are covered and not covered as per the insurance plan.

Therefore, there are instances when a patient is denied undergoing specific medical procedures. Thereby the need arises to change over to a different treatment plan despite what was proposed by the physician.

What Is Retroactive Authorization, & When Can One Get Them?

Getting prior authorization is out of the question if the patient is unconscious. In such times, retroactive approval is granted. In such situations, the insurance providers typically need authorization for the medical services available within 14 days of the specific services offered to the patient. Such approval requests are known as retroactive authorization.

Retro authorizations come in quite handy when there is not much time to obtain prior authorization by the healthcare provider. Sometimes when a claim is denied based on the essential medical requirements.

Concisely, with our services traverse confidently to ensure a seamless Pre-authorization in medical billing.

Pre-authorization in medical billing is crucial for healthcare providers even though prior authorizations could delay medical treatment or, at times, even deprive medical care for the patients. Carefully verifying in advance by checking the primary authorization requisites saves time pursuing claims and the pending payments that could affect the cash flows. Business Integrity Services gladly assists in navigating you through the maze of these complicated and time-demanding procedures to ensure a seamless PA in medical billing and enhance your cash flow for a healthy revenue cycle management.