Need of Pre-Authorization in Revenue Cycle Management

Pre-authorization is when the insurance company gives permission for the provider to offer treatments to the patient. This means the insurance provider agrees that the healthcare procedure, care plan, drug, or treatment is necessary and will be paid for. Now, let's look at why the PA process is important by considering different situations.

Why Pre-authorization is Important in RCM

Preauthorization is crucial in Revenue Cycle Management because insurance companies must check if they will cover a particular service or treatment.

If an insurance provider doesn't approve a specific treatment, item, or service, doctors must wait for approval or talk to the insurance company before offering the service.

PA aims to reduce duplicate services and costs for the insurance company. For example, After authorization, doctors find that the insurance company does not provide coverage for the specific treatment, which can disrupt the patient's treatment process. In addition, the claims only get reimbursed if the patient information is complete.

For example:

•  A pulmonologist may prescribe a chest CT scan for a client, although a cardiologist may have prescribed the same scan a few weeks prior. The insurance company will only authorize the current CT request if it is evident that the prior scan was already evaluated and that an additional scan is required. 

• Suppose a patient has been getting physiotherapy for a month and got a prescription for additional three months of identical therapy. In that case, the insurance provider will determine whether the treatment was effective. If the patient responds positively, the extension may be granted; otherwise, the insurance provider will not. 

• Certain operations do not require PA and are exempted in emergency situations, and in cases when treatment is provided, healthcare practitioners request retroactive authorization.

The Steps To Get Preauthorization:

1. When patients arrive at a healthcare facility, the staff checks their medical insurance and confirms their benefits. The staff members might ask the patients for more details if any information is missing. 

2. The medical (PA) software data is updated if any changes occur.

3. The PA team checks the patient's schedule and contacts the payer's backend team to get the relevant code.

4. PA team sends these codes to the Primary Care Clinic to ensure the health insurance covers the treatment and the patient gets the entitled treatments.

Remember, after receiving a referral, the following steps need to be taken:

1. Contact the insurance provider and provide all clinical documents to get initial authorization for the treatment.

2. Providers must then complete the initial start of care document and care plan paperwork. They send the clinical data and the authorization request form to the insurance provider to get authorization for future visits.

3. Regularly keep track of the status of all verification requests, whether they are open, pending, or rejected. This helps with reporting and supervision.

Benefits Of Pre-authorization

Pre-authorization has several advantages:

• Minimize rejections and increase collections. 

• Reduces write-offs.

• Helps patients understand their financial responsibilities.

• Supports healthcare practitioners in giving more attention to patients.

• Offers accountable and cost-cutting solutions.

How is smooth Pre-authorization possible?

Healthcare providers face issues during the authorization process. Here are some effective practices to reduce disruptions in the process.

1. Provide accurate documentation and follow up regularly.

2. Inform insurance providers about emergency patient admissions.

3. Regularly communicate with the payer and the provider.

4. Sync pre-registration data with the verification technique to streamline the process.

5. Use the correct CPT codes for billing entries.

What happens if you still need to get pre-authorization?

If you don't get pre-authorization, the payer policies determine who will pay the bill. Some health plans hold the doctor responsible, while others put all the responsibility on the patient. Some payers only cover the cost if a patient has surgery with pre-authorization.

Insurance companies have exclusion lists that specify which drugs and treatments the patient will get. 

As a result, patients are denied surgeries, which can sometimes lead to changes in treatment plans against the doctor's advice. Many people think that their recommended medication or therapy will be paid for if they have medical insurance. They only learn about the excluded treatments when their payer informs them that the surgery is no longer covered.

What is Retroactive Authorization?

Retroactive authorization means getting permission after an emergency procedure. When a patient has urgent treatment, the healthcare provider requests authorization within 14 days. This request is called retroactive authorization. The doctor submits the claims, and the payer pays based on specific rules.

Final Thoughts

Although preauthorization can delay treatment and deny patients medical services, healthcare providers must still obtain it. Similarly, despite patients facing a heavy load of paperwork and long wait times, seeking PA to manage costs and ensure access to the best possible care is recommended.