Importance of Pre-Authorization in RCM

Importance of Pre-Authorization in RCM

The payer contract must first get the prerequisite approval before the healthcare provider may start providing the patient with medical care. Pre-Authorization is the term used to describe this process (PA). Pre-approval or pre-certification are other names for it.

It is confirmation that you need the particular medical service, treatment, prescription, or equipment for medical purposes from the health insurance. Prior approval does not guarantee that the expenses are paid. Let’s talk about how crucial pre-authorization is to revenue cycle management.

What does revenue cycle management pre-authorization mean?

Before making an appointment with a specialist, the insurance frequently requires referrals from a primary care physician. Other than emergency admissions, insurance companies must pre-approve hospital inpatient and outpatient admissions, certain invasive operations, particular observation services, and scans like CT, MRI, and PET. The medical billing team of the healthcare provider relies heavily on authorization. The payer typically approves insurance coverage of particular medical services before the patient is ever offered them. The series of actions generates an authorization number for use in medical billing. This number is used by the providers on the claims they must submit to get paid.

Regarding the patients’ lack of a reference or pre-authorization, each provider is governed by a different set of policies and procedures. While some doctors prefer to delay therapy until the patient has a pre-authorization services, this isn’t always the case. Instead, the physician may start the treatment even before the patient receives a pre-authorization.

Prior Authorization and Pre-verification

  • Receiving the patient’s appointment and doing the insurance eligibility check
  • Clearly explaining to the patient the financial commitment
  • Benefits information is updated in the system.
  • The preauthorization team’s verification of the Schedule
  • Getting the care management’s preauthorization
  • Confirming the appointment by informing the doctor’s office
  • The patient receives the medical care.

Procedures for Obtaining Pre-Authorization

When a patient arrives at the medical facility, their insurance coverage is thoroughly examined, and the benefits are properly verified. In the event that any information is missing, the patient is called right away, and the accurate data is updated. The patient is now given a detailed explanation of any potential out-of-pocket expenses. The pre-authorization department of the insurance provider verifies the patient scheduling. As soon as it is finished, the other team contacts the insurance payer to get the authorization number. In medical billing, authorization is crucial to accelerating the healthcare revenue cycle solutions.

Once the code has been obtained, it is given to the doctor’s office. The patient is given the appropriate medical services after receiving confirmation that their insurance will pay for those services.

  1. The following measures must be taken in the same order as soon as the referral is received.
  2. In order to receive prior authorization to offer medical care, get in touch with the business first and send all the relevant medical documentation.
  3. Complete the documentation for the care that was delivered and the treatment plan, and then submit the medical information and a request form for prior authorization to the insurance to obtain approval for subsequent appointments.
  4. Maintain a strict follow-up programme and monitor the development by creating a calendar.
  5. Regularly state the status of the prior authorization (PA) whether it is pending, refused, or open every week to streamline the healthcare facility’s prior authorization service.

Advantages of Pre-authorization in RCM

  • Relatively lower denial rates and higher collections
  • Lower cancellation rates
  • Informs the patient of their financial obligations
  • Strengthens the focus on patients in healthcare
  • Financial constraints and liability

What Might Take Place Should the Required Pre-Authorization Not Be Obtained?

Who is responsible for paying the associated charges depends on the payer’s policy if a pre-authorization is not acquired. The insurance policy may require the patient to pay in some circumstances, while holding the provider accountable in other situations. If a patient elects to receive medical care but does not have a PA prior to the procedure, several payers will not reimburse them. It has an impact on cash flows, resulting in an unfavorable revenue cycle.

To establish which treatments and medical care are covered and not covered under the insurance plan, the insurance providers follow certain exclusion lists.

As a result, there are times when a patient is refused permission to have a certain medical procedure. As a result, it becomes necessary to switch to a new treatment strategy, notwithstanding the doctor’s first recommendation.

What Is Retroactive Authorization and When Is It Available?

If the patient is unconscious, getting prior approval is impossible. Retroactive approval is given in these circumstances. In such cases, the insurance companies normally require authorization for medical treatments that are accessible within 14 days of the patient’s specific services being provided. Such petitions for approval are referred to as retroactive authorization.

When the healthcare professional doesn’t have much time to seek prior authorization, retro authorizations might be quite helpful. On occasion, a claim is turned down because it doesn’t meet the minimum medical standards.

Even though prior authorizations could sometimes cause delays in medical care or even prevent patients from receiving it, pre-authorization in medical billing is essential for healthcare professionals. It is quicker to carefully review the primary authorization requirements in advance than to spend time pursuing claims and pending payments that might have an impact on cash flows.

The significance of pre-authorization in the submission of medical claims and bills

Medical insurance companies frequently use the term “previous authorization.” It means that, unless there is an emergency, a patient must obtain permission from the medical insurance provider before undertaking a certain medical procedure in order to be eligible for bill payment.

However, the insurance provider’s decision to approve a prior authorization is based on a number of variables, including the insurance limit, appropriateness, and medical necessity. There will be no reimbursement if you did not request prior authorization or if your insurance refused to provide you prior authorization. Contrarily, even a prior authorization that is granted does not ensure that you will receive a reimbursement from your insurance company.

Which prescription drugs or medical treatments require prior authorization or approval?

Usually, an insurance provider requests a prior authorization when:

  • There may be a low-cost therapy option available.
  • If the patient’s prior health issues make the treatment inappropriate for them.
  • Treatment is only necessary if the operation has aesthetic or cosmetic goals.

What role does prior authorization play in the approval of claims?

Prior Authorization is crucial for keeping the revenue cycle running smoothly

Insurance companies and dentists collaborate to ensure effective financial management. Although occasionally the insurance companies detect discrepancy in invoices and want Prior Authorization to avoid paying anything extra out of pocket. As a result, it’s possible that both the dentist and the patient will have to pay out of pocket.

Even when a claim has prior authorization, it may still be rejected. Therefore, it’s crucial to comprehend the importance of prior authorization in the acceptance of claims. You must take certain actions, including the following, in order to have your claim processed:

Submitting a claim do include the unique Prior Authorization Number

Mention specific Prior Authorization Number when submitting a claim. There are therefore increased chances that your application will be rejected if the Prior Authorization Number is omitted. By mentioning your Prior Authorization Number, you can simultaneously save time and money by reducing the likelihood that the claim will be denied.

Obtain your authorization number before the procedure

We are aware that obtaining a Prior Authorization Number prior to receiving treatment can be a lengthy procedure in and of itself. But obtaining the Authorization number is also necessary. Especially if the surgery is pricey and you don’t want to pay for it out of pocket. The insurer might be a little more lenient and pay the bills in an emergency, though. However, before the process in non-emergency instances, you must obtain an Authorization Number.

If only a portion of the treatment received prior approval

Patients occasionally submit claims for payment with their specific Authorization Numbers, however the claims are sometimes rejected. Ever ponder the reasons why? In most of these situations, the patients only receive consent for a single aspect of their overall treatment. Therefore, in order to use an insurance claim, the claim must be fully approved and not just partially.

Despite countless instances of meticulous work, the claim is still rejected. A correct authorization number is required for over 80% of claims that are rejected. Please make sure to obtain the Prior Authorization Number prior to receiving treatment in order to have your medical insurance claim approved. In general, the Prior Authorization plays a big part in how smoothly your insurance claim is processed.

contributor
Practolytics is a 20+ year old healthcare technology and management company. We partner with healthcare practices to provide end-to- end solutions including medical billing, healthcare consulting and practice analytics, allowing practices to eliminate revenue cycle management inefficiencies. Our diverse background in every aspect of healthcare allows us to maximize revenue and consistently deliver optimum results.

Related Articles

Leave a Reply

Your email address will not be published.