6 Tips to Handle Prior Authorization in Revenue Cycle Management

Aaron Garcia
August 3, 2022
 Mins Read

Even before insurance firms agree to pay for medications, procedures, or medical equipment, healthcare providers require a signoff that a particular procedure will be covered for a patient; this process is known as prior authorization (PA), or pre-certification, commonly referred to as precepts.

Prior authorization is crucial in Revenue Cycle Management (RCM) because non-approval after treatment will lead to a huge bill either for the patient or the healthcare provider. However, PA takes away precious time from healthcare providers, whose primary responsibility is patient care. Yet, any neglect of the PA process not only cripples the RCM function but also affects patient care.

Let us see how prior authorization can be made more efficient:

1. Proper Documentation

Most healthcare providers resent that lengthy prior authorization procedures eat into their professional practice time. But taking shortcuts and presenting ill-documented data, will only lead to denials. So it is better to get it right the first time–only a request that is complete in all respects will be accepted. With more and more insurance plans coming to play and more drugs getting into the ambit of PA, healthcare providers may still find it challenging to keep pace. So “precepts” originally conceived as a cost-saving measure, have now become a labor-intensive process. Many providers are hence turning to electronic PA to manage documentation better and save time.

2. Approved Preauthorization

Some insurance companies do approve specific prescriptions, procedures, and treatments beforehand. For such lines of therapy which have “approved pre-authorization” the documentation process becomes much more straightforward. This in turn renders the RCM cycle more efficient. Despite such measures, complaints about the mismatch in billing amount surface, sometimes at the patient end and at other times with the insurance company. While approval is an indication that the insurance company intends to pay, it is not a guarantee. Also, it is not necessary that 100 percent of the costs will be covered.

Correct information on co-pay (fixed amount payable at the time of doctor’s visit or lab test), deductible (initial amount payable before the insurance plan pitches in), and coinsurance (a percentage of health visit costs payable by the patient) should, therefore, be made available.

Current Prior Authorization Process

3. Patient Education

Patients play an essential role in the pre-authorization process; they need to share information and also understand the inclusion and exclusion criteria of the payer. This will give a clear picture of whether the claim submitted will be accepted and how much they need to pay upfront and how much would be paid by the insurance plan. The following points need attention.

Has the relevant patient information been collected before PA

Healthcare providers should ensure that the following information is collected correctly before initiating the PA process.

  • Patient’s medical history
  • Conditions, symptoms, and diagnosis
  • Previous treatment
  • Detailed provider notes

Does merely obtaining preauthorization mean that the procedure will be covered?

Providers need to inform patients that taking insurance or pre-authorization does not mean that the procedure or treatment claim is approved. For instance, if a patient insists on endoscopy for stomach pain when a more conventional, less expensive procedure would address the issue, patients need to be educated that the payer would not be covering the same.

Which services are covered and which are not?

Some procedures and non-emergency procedures are not covered by insurance companies and will not qualify for PA. As every insurance company has its own rules about which medical conditions and services are granted PA, every healthcare provider and patient should make it a point to cross-check the details well in advance.

What if the PA is not approved, and the patient has filed for a claim?

If PA is denied, both the patient and the healthcare provider will have to foot the bill. Best practices dictate that it is the healthcare provider who has to absorb the charges – because it is the provider, who is expected to contact and obtain PA from the insurance company.

4. Importance of Technology

Just as different healthcare verticals are evolving, even PA is getting transformed, thanks to the technology makeover. There are a lot of software applications developed to conduct PA which has access to Electronic Health Records (EHR). Such software has the ability to access and synchronize patient records, cutting down errors in PA, and decreasing the authorization time and cost burdens.

Advanced electronic PA can recognize a current procedural terminology (CPT) code or Healthcare Common Procedure Coding System (HCPCS) code; it can match it with insurance rules to determine necessity, collect data from the visit notes and send a final report for prior approval to cover diagnostic procedures. So it is important to keep abreast of technology and adopt the latest solutions.

5. Compliance and Information Security

When managing patient records and PA on an EHR platform, utmost care should be taken to maintain privacy and information security. Every stakeholder has to play a role as information security then becomes a collective responsibility. All healthcare entities should abide by HIPAA and avoid disclosure of PHI (Patient Health Information). Password controls, access controls on a need-to-know basis, access authorization to the system, network, wireless and physical controls should be in place.

6. Best Practices Recommended For RCM Partners

The RCM partner of a healthcare facility should ensure the following best practices:

  1. Review PA criteria before providing services to the patient
  2. Follow detailed procedures to document information required for PA
  3. Adopt a PA methodology that gives several options and automated solutions
  4. Constitute a specialized team to carry out specific, timely PA approval
  5. Practice a speedy and well-articulated appeal process complete with supporting clinical data in case there is a denial

Related Service: Medical billing collection services


There is a lot of activity around improving PA in the RCM industry. Reducing the number of PAs based on physicians’ performance, regular review of procedures and drugs that require PA, and adoption of electronic standards for PA will help to optimize pre-certification. Better communication with a focus on providing continuity of care for patients with ongoing treatments will also streamline the PA process. Suffice to say, hiccups in PA mean a fractured RCM that does not bode well for healthcare services. To tackle these challenges in your healthcare business, outsourcing revenue cycle management services is a better option. Outsourcing to Invensis will make you follow all the 6 tips said above to improve your revenue cycle management.

Article by
Aaron Garcia

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