Prior Authorization in Medical Billing

Every healthcare provider always wants to make their patient care a priority. However, the complexities of insurance policies can sometimes create roadblocks. One such guideline that needs to be taken care of is prior authorization.   

Healthcare providers are required by insurance companies to carry out prior authorization for specific medical procedures and failure to do so will result in insurance claim denial. This additional process must be done before healthcare providers give medications and treatments for specific health issues. 

In this blog, we will discuss the importance of prior authorization in medical billing and how it will skyrocket your practice revenue.

What is Pre-Authorization in Medical Billing? 

Prior authorization is the process of getting a medical service(s) authorized by an insurance company. It establishes a legal responsibility that shows the insurance company will pay for the medical service mentioned in the prior authorization form.  

Prior authorization is done for the following: 

- Medications that include specialty drugs 

- Expensive medical procedures such as heart transplants 

- Durable medical equipment such as oxygen equipment, crutches and wheelchairs 

- Diagnostic tests such as Magnetic Resonance Imaging scans 

Once approved, the healthcare provider is given a unique authorization number to seal the approval. 

The Role of Prior Authorization in Medical Billing 

Prior Authorization in Medical BillingPrior authorization may sometimes be confusing for many patients because they feel whether their insurance policy will cover their medical services or don’t. However, that is never the case with insurance policies. 

Insurance companies use prior authorization to control how they pay healthcare providers and also ensure the treatment is necessary and the best option for the patient. With that said, some medical services can be covered if approved through prior authorization.  

Here are some of the roles of prior authorization in medical billing. 

Quality Control 

With pre-authorization, insurance companies are able to verify if the medical procedures and treatments align with guidelines established by the healthcare industry.   

Cost Management 

Insurance companies use pre-authorization as a cost control measure to reduce the payment for expensive procedures that might not be medically necessary. It also allows insurance companies to verify if the plan the patient pays for covers the treatment. 

Minimize Fraud  

Pre-authorization minimizes fraud against healthcare providers that want to use fraudulent practices to extort money from insurance companies and patients. By verifying the legitimacy of the treatment, insurance companies prevent excessive medical billing. 

Patient Safety 

With pre-authorization, medical treatment plans are carefully examined to avoid potential risks or harmful procedures. 

Understanding How Prior Authorization Works

When patients understand how prior authorization works, it helps them navigate their medical procedures and ensure they receive the right treatments without emptying their pockets. 

Here is a step-by-step process of patient prior authorization. 

Evaluation of Patient  

The first step is the evaluation of the patient by the healthcare provider and establishing whether their medical issue requires a specific procedure, test, medication, or medical device.  

Insurance Eligibility Verification 

The patient’s insurance plan is verified to ensure they are eligible for such treatment or procedure with prior authorization. 

Pre-Authorization Submission  

The healthcare provider prepares all the required medical records and documentation that shows the patients need the treatment. It is then sent with a pre-authorization form to the patient’s insurance company. The forms also explain all the medical procedures or treatment and estimated costs.  

Review and Decision by Insurance Company 

After receiving the prior authorization form, the insurance company reviews the patient's medical record, treatments, documentation and coverage eligibility before making a final decision.  

Pre-authorization Approval or Denial  

If the prior authorization is approved, the insurance company will send a unique authorization number to confirm the healthcare provider should go on with the procedure. If it is denied, the provider can appeal the decision or use other treatment options.

Avoid Claim Denials Before and After Pre-Authorization

How to Avoid Claim Denials Before and After Pre-Authorization  

Pre-authorization is one of the most important steps in insurance verification when treating patients with certain expensive procedures. However, submitting a prior authorization form does not mean automatic approval and reimbursement.  

Here are a few tips to take into consideration to avoid claim denial due to authorization. 

Submit Authorization Request Early 

The first step to avoid denial is by submitting your prior authorization at the right time. With a long process that often takes days or weeks, you do not want to keep your patient's health in danger due to submitting their prior authorization form late. 

Include the Authorization Number 

When filling out your medical claim after prior authorization, you must include the authorization number to prevent claims rejection. The authorization number is the confirmation that the insurance company approves the procedure or treatment. So, without the number, you cannot confirm their approval. 

Use Accurate Codes 

Check carefully to ensure your CPT and HCPCS codes are accurate to the treatment you provide. Any error in your coding automatically leads to claim denial by the insurance company. 

The Bottom Line 

Pre-authorization is a very important process but can be extremely long and frustrating. Therefore, prior authorization submissions should be done by professionals with experience in medical billing. 

Unify Medicraft is the best medical billing software for simplifying your prior authorization and other medical billing processes. The software makes your billing process accurate and easy, so you don't have to worry about your revenue.