Pre-authorization(PA) is the procedure of obtaining prior approval from the payer(insurance company) before the healthcare provider offers services to the patient; Also called prior approval or pre-certification, it is a confirmation by your health insurer that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. PA is not a guarantee that the cost will be covered though. It does not affect cash transactions for medications and procedures. It comes into play only when medical billing is done through insurance.
Let us discuss in detail how critical the PA process is, keeping in mind different scenarios:
The PA process is a very important phase of the RCM Management services as payers need to confirm whether a particular medication or procedure will be approved.
If the insurance firms do not approve certain procedures and medical equipment, healthcare providers should wait or contact the insurance providers for approval and then perform the necessary 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 the best interests of a patient owing to the cost, dangerous side-effects, the efficacy of a drug, or whether there is a real requirement.
Once the patient reaches the healthcare facility, his insurance cover is accessed, and his benefits verified. If there is some information missing, the patient is contacted for more details. At this juncture, the patient is also told about the cost he may have to bear. If there are any changes, the details are updated in the healthcare PA software. The PA team at the insurance company verifies the patient schedule and contacts the backend team at the insurance provider to obtain the preauthorization code.
They report the codes to the physician's office and confirm the insurance cover for the service, and the patient receives the services that he is entitled to.Remember, that once a referral has been accepted, the following steps should be completed in sequence:
✔ Reduction of denials and enhanced collections
✔ Reduction in write-offs
✔ Helping the patient know their financial obligation
✔ Healthcare providers can focus on patients
✔ Accountability and cost containment
Healthcare providers invariably face problems in the preauthorization procedure; the following are some best practices to avoid major disruptions in the PA process
In situations where preauthorization is not granted, the payer policies determine who bears the cost. Some health plans fix the responsibility on the patient, while others make the provider accountable. A few payers deny reimbursement if a patient undergoes a procedure without prior authorization.
Insurance providers use exclusion lists to determine which medications and procedures are covered under the Plan and which are not.
As a result, patients are denied procedures; at times, this prompts them to switch to new treatment plans, in spite of what the doctor originally recommended. Many individuals think that as long as they have health insurance, their prescribed medication or treatment will be reimbursed. They are not aware of the new additions to exclusion lists until their payer informs them that the procedure is no longer included.
Remember, each payer has his own exclusion and inclusion list.
Some payers may have procedures like selective/emergent/urgent medical procedures, surgical inpatient admissions, skilled nursing facility services, inpatient rehabilitation procedures, subacute admission procedures, and transplants under inclusions. So they need pre-authorization. Usually, expensive radiology services like ultrasounds, CAT scans, and MRIs, require pre-authorization.
However, procedures like the Screening Test (ST)/ Outpatient Treatment (OT)/Physical Therapy (PT) and initial evaluation do not require prior authorization. There is no PA required for ST for the first 12 visits or hours within a calendar year. Some medications are also not covered; hence, healthcare providers are advised not to prescribe or bill such drugs.
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.
Retroactive authorizations also come to the rescue when the healthcare provider does not have sufficient time to obtain prior authorization or when there is a denial based on medical necessity.
Even though prior authorization can lead to treatment delays and deprive patients of medical care, it is critical for healthcare providers to pursue PA. Similarly, though patients may be burdened with a lot of documentation and long waiting periods, it is better to seek PA in the interest of cost containment and to access the most suitable treatment.