Simplifying Prior Authorization: Key to Smoother Billing and Happier Patients

Prior authorization is a critical component in any healthcare billing practice. Prior authorization can be defined as the utilization management technique leveraged by health insurance companies. As a healthcare provider, you need to obtain prior authorization approval from a patient’s health insurance company before prescribing some specific course of treatment. The whole objective of prior authorization is to ensure the prescribed treatment, diagnosis or procedure is medically justified, safe for the patient, and reasonable in terms of cost.

Understanding Prior Authorization in Medical Billing

Imagine a patient who needs a specialized, high-cost medication for a rare autoimmune disease. The doctor prescribes the treatment, but before the pharmacy can fill the prescription, the insurance company requires prior authorization to assess coverage possibilities. This process ensures that the medication is medically necessary and covered under the patient’s health plan.

In this case, the healthcare provider must gather detailed medical records, including lab results, diagnostic reports, and a comprehensive medical history, to demonstrate the need for the medication. The provider submits this documentation to the insurance company, which then reviews it to decide whether to approve or deny the request.

Without prior authorization, the patient might face a significant delay in receiving critical treatment. However, with a streamlined prior authorization service, the healthcare provider can expedite the process, reducing delays and ensuring that the patient gets timely access to their necessary medication—this can be especially crucial when dealing with chronic or life-threatening conditions.

Health insurance companies need to obtain prior authorization for several reasons but the prime objective is to reduce healthcare costs. Before approving or rejecting a PA requested by the prior authorization service provider, the payor checks the following things-

• The treatment plan is medically necessary
• The plan is consistent and properly aligns with the best practices for treating the specific condition
• The treatment plan is economically efficient as payors do not approve a costly treatment plan if there is a cheaper alternative
• To prevent duplication of services where two practices prescribe the same course of treatment
• To ensure the treatment is effective as insurance companies do not approve a treatment plan that is not going to work for the patient

The Impact of Prior Authorization in the Revenue Cycle Management Process

Prior authorization has a direct impact on the overall revenue mechanism of a healthcare organization. When a treatment plan fails to receive PA approval, you cannot move ahead with the service. Often delays in receiving PA approvals make patients leave the treatment in the middle, thus causing revenue loss for healthcare practices.

According to an AMA survey of 1,000 doctors, almost two-thirds (64 percent) said they wait at least one business day for prior authorization decisions from insurers, while nearly a third (30 percent) wait three days or more.

Insurance companies can refuse prescribed course of treatments due to:

• Documentation errors such as incomplete documents or missing patient information
• Treatment plans that payors may find unnecessary or costly

Denied claims can again increase your administrative burden as your staff needs to follow up on denied claims and work on further information for re-appealing. In most cases, you need to hire staff to manage prior authorization and denials. Fortunately, you can avoid denials in the prior authorization process by implementing the tips mentioned below.

Building Better Pre-authorization Solutions: Tips & Tricks

1) Have an updated system:

You need to have a standardized administrative system that aligns with prior authorization requirements. Having a streamlined process enables you to identify specific treatments requiring pre-authorization. Equally, it is important to have records of treatments that are excluded of PA. The exclusion list contains the treatments that require PA by specific insurance companies. This method helps you avoid treatment plans are no longer covered by insurance companies.

2) Collaborate with payors:

You can fine-tune your PA process by collaborating with payors as it enables you to strike a balance between the costs of treatments and quality patient care. You can do this by following the tips mentioned below:

• Teaching insurers the value of different treatment plans
• Helping insurers understand medical specialties better to reduce claim denials due to confusion

3) Educate staff and patients:

1. Doctors should explain authorization rules to patients so they know their treatment options. Patients should be aware that authorization may take days or be denied. Informed patients can then decide whether to pay for treatments themselves if authorization is delayed or denied. Educating patients helps avoid delays that affect satisfaction and could reduce revenue.
2. Make sure your medical and administrative staff members know the coding rules for each insurer. Denials can happen when doctors or technicians enter data without following the correct codes. Also, administrative staff should double-check prior authorization requests before sending them to avoid mistakes.
3. Get to know the policies of insurers. Most require authorization for imaging and expensive brand-name drugs. Healthcare providers can focus on using generic drugs and create a list of those that get quick approval. This helps avoid delays since insurers often won’t approve expensive drugs when there’s a generic option. It speeds up treatment and reduces prior authorization holdups.
4. The truth is that most health insurance claims encounter denials because of PA rejections or application mistakes. However, you can streamline a perfect PA process to avoid denials by leveraging an electronic prior authorization application. You can submit a PA request via the EPA system to speed up the process.
5. We know your primary focus is patient care, and you don’t have time to think about administrative tasks because you must ensure the well-being of your patients. However, while you may be overlooking things like prior authorizations (PAs) today, tomorrow that could become a major reason for revenue loss in your practice.

   You can strike a great balance between clinical care and important operational tasks like PAs when you outsource prior authorization services. Pre-authorization experts know how to establish an efficient PA process so you can see more approvals and enjoy a strong cash flow—all without compromising patient care.

If you are planning to hire the best prior authorization company, look no other than Sunknowledge. We are a top pre-authorization company providing a range of billing services to clients all across the US. Our expert team helps healthcare providers simplify the pre-authorization process, so they can focus on delivering outstanding patient care and worry less about billing and other allied administrative tasks.

Contact us today to schedule a discovery call.