Authorization In Medical Billing

Touseef Riaz

June 29, 2022

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Getting a healthcare service(s) authorized by an insurance payer is an authorization. Pre-authorization or prior authorization are other terms for authorization.

It is a legal need to make sure that the insurance carrier pays for the precise medical service listed on the healthcare claim document. The insurance carrier can withhold payment of a patient’s healthcare treatment as a medical care insurance plan component without authorization.

The professional coder and the medical practitioner collaborate to have the medical treatment authorized. On the other hand, the medical coder is responsible for assigning the appropriate CPT code to the people’s medical procedure. Nevertheless, the medical coder should not disregard their responsibilities, as issuing the incorrect CPT code can result in denial.

The health care professional is responsible for obtaining authorization for the medical treatment. Before executing the operation, the clinician must first obtain approval. When approved, the payer issues an authorization number to the healthcare professional for future reference.

authorization in medical billing

Submission of an Authorization Request

Authorization requests can be submitted physically and online by the health care provider. A written authorization request can be submitted using both offline and online formats. An electronic authorization request is submitted by fax or mail, whereas a paper authorization request is submitted via fax or mail. Insurance companies have different standards for authorization requests. However, the preceding data tends to remain consistent when submitting authorization requests.

In the insurance authentication process, the patient’s details (name, birth date, and insurance Identification number, for example)

The Provider’s Credentials (both referring and servicing provider)

  1. Your address; 
  2. Your tax identification number
  3. Number of the Nationwide Provider Identifier (NPI)
  4. Contact information (phone and fax)

The service location: 

  1. Address 
  2. Tax ID number 
  3. NPI number 
  4. Cellphone and fax number
  • The requested treatment or medical service, as well as the appropriate CPT/HCPCS codes
  • In the case of inpatient requests, the diagnosis (matching ICD code and description) • The length of hospital stay sought

In addition to the previous, the payer may request other documents based on their needs.

Authorization Denials: How to Avoid Them

Although pre-authorization is an integral part of the insurance verification process, it does not ensure reimbursement. Here are some suggestions for avoiding claim rejection due to authorization.

  • Prior Authorization Demand Submission: It is critical to file authorization requests before treatment. Early submission aids in receiving an authorization number, which is used to calculate payment.
  • Indicate Authorization Number: Ensure to provide the authorization number while submitting claims to avoid rejection. This indicates that you have been granted permission ahead of time.
  • Check CPT/HCPCS Codes multiple times: Check CPT/HCPCS codes in the prescribed treatment numerous times to prevent claim denials.
  • Review Denial Explanations: If claims are denied for an unspecified cause, and there is no fault on your part, you should contact the payer.

Although the tips mentioned above are critical for avoiding authorization-related rejections, outsourcing insurance validation services can ensure prompt authorization of medical services without fail.

Forms of authorizations

5 Different Types of Authentication are:

  • Authentication with a password. The most frequent way of authentication is passwords.
  • Multi-factor authentication, 
  • Certificate-based authentication, and 
  • Biometric authentication 
  • Authentication based on tokens is all available options.

Pre-Authorization services in medicine

Pre-authorization facilities are part of a revenue cycle management system in healthcare. Prior Authorization in Healthcare Invoices aids the healthcare organization in obtaining adequate reimbursement for services given and lower denials and follow-up on them. This occurs following the verification of insurance eligibility. The verification process results serve as the foundation for the pre-authorization process.

Prior authorization, also known as precertification or prior approval, is a healthcare cost-control process. Physicians and other healthcare providers must acquire advance approval from a healthcare plan before providing a specific service to a patient to be reimbursed. Authorization aids the healthcare organization in obtaining adequate payment for services given and eliminating denials and follow-ups on them. Your insurance provider may ask that specific prescriptions be examined and approved before your plan covers them for various reasons. The pre-authorization process allows your insurance company to assess whether a particular drug is necessary for curing your health state.

Specific procedures necessitate prior authorization from an insurance provider. We must guarantee that we verify which services demand prior approval during the insurance criteria verification procedure. The license depends on the patient’s insurance plan. Insurance companies pre-authorize requests based on benefit terms and needed medical treatments. The insurance company will issue a pre-authorization number, which must be referenced in the final claim form, and submitted after the treatment is done.

Pre-authorization in medical billing facilitates hassle-free bill payment. Authorization does not imply that bills will be paid. On the other hand, not having a pre-approval can lead to non-payment or rejection of bills.

Pre-Authorization Difficulties

Pre-authorization relies heavily on accurate diagnosis and the use of the relevant medical codes. The key to timely pre-authorization is precise coding and documentation of the essential procedure before treatment. This is frequently a difficult task. The job and responsibilities of a coder have a significant impact on this process.

Furthermore, some processes would have been scheduled, and prior authorization could have been secured. However, depending on various aspects, such as the patient’s health status, more medical processes may be needed once the service is given to the patient. As a result, some alternative operations may be carried out without prior authorization. Due to the lack of approval, there is a very significant risk that the payment may be refused. As a result, it is preferable to obtain authorization for services that are needed for a particular patient rather than having the claim denied due to an absence of consent. When a procedure is permitted but not performed, there is no penalty.

In an emergency, therapy begins before any pre-authorization is obtained. This usually occurs due to an accident or disease that occurs on weekends or late at night. In these cases, the health care professional should approach the insurance payer as soon as possible to secure the necessary authorizations.

What Is the Impact of Medical Necessity on Pre-Authorization?

If care providers cannot obtain the requisite permissions and the provider (insurance company) refuses to pay, the hospital must decide to either bear the expense or seek reimbursement from the patients. Treatments not covered by the patient’s health plan are explicitly defined and documented during the validation process. Whenever patients get benefits or treatments that are not covered by their insurance plan, they are responsible for paying for them. When claims are rejected due to a provider’s inability to acquire permission, the provider is forced to absorb the expense, resulting in a financial loss that affects the whole revenue cycle.

In some circumstances, the patient is billed for the outstanding amount and is responsible for the payment. However, this is inaccurate and would harm the hospital’s reputation. As a result, obtaining pre-authorization at the appropriate time is crucial to receiving payment for the therapies provided.

Who is in charge of obtaining the authorization? In most circumstances, the documentation that supplies insurers with the medical details they require is managed by the physician’s office or hospital where a medication, test, or therapy was ordered.

Issues Associated with Prior Authorization

Even while insurers approve most requests, the procedure can be lengthy and contain administrative hassles such as endless documentation, constant phone calls, and increasing claim stacks, interrupting or postponing a patient’s access to critical care. Numerous medical billing organizations confront the same issue: a considerable wait time until the prior authorization is approved. According to recent research from the American Medical Association, 64% of physicians said they had waited for at least one business day, and 30% said they had stayed at least three business days. Previous authorizations cause severe or excessive administrative costs, according to 84 percent of respondents, and 85 percent stated that provider conflicts with prior authorizations have worsened in the last five years. Approximately 60% of doctors acquire a response within one working day.

Best strategies for prior authorization

Prior permission will play a critical part in ensuring that the process goes smoothly in the United States, as the scope of medical billing operations is poised to rise by leaps and bounds. 

Keep essential information on hand

It is critical to obtain all pertinent information concerning the procedures that physicians undertake regularly. This data can be entered into the contractual practice with precision. At the same time, sufficient evidence must be provided to demonstrate the medical need for a specific surgery. These two factors together will ensure that the reimbursement procedure runs smoothly.

Follow the suggested treatment guidelines

Every costly operation has its own set of therapy recommendations. Furthermore, the rules differ from one payer to the next. Physicians should be cognizant of these principles and ensure that they follow them before performing a high-cost operation on a patient. Before the treatment, a direct communication channel between the account team and the physician can assist sort out any confusion and save a lot of claim-related difficulties.

Comply with all-payer criteria

Payer criteria differ from one payer to another. The standards used by national payers differ from those used by regional and local payers. As a result, a direct understanding of payer requirements is essential. Providers that have a complete experience with payer criteria would be able to ensure that they meet all of the payer’s requirements before filing a pre-authorization request. As a result, the decks are clean for a smooth settlement of disputes.

Get pre-authorization for ordinary activities

Prior authorization for complicated procedures while neglecting the routine ones is a lousy strategy. Previous authorization agents must make sure that they obtain prior authorization for even the most everyday tasks. Imaging procedures, including magnetic resonance imaging (MRI) and computerized tomography (CT) scans and brand-name medications, are two of the most prevalent practices for which doctors must obtain pre-authorization from insurers.

Regularly check insurance carrier websites

The criteria of insurance companies are constantly changing. Even though they keep providers informed of any changes in laws or requirements, it is always good to be vigilant and check their websites. If the procedure is followed regularly, it will aid in the detection of problems. For example, any changes in laws that may affect patients should be communicated to them at the outset to discuss with their insurance company and address difficulties on their own. This can save the provider a lot of time and effort.

Agreements with insurance companies must be updated

Insurance companies regularly alter their contracts. Payer contracts detail reimbursement standards, fee schedules, and all conditions providers must follow to get a timely compensation. Providers must revise their agreements regularly to stay on top of these changes. As a result, it is beneficial to instruct prior authorization representatives and medical billers in the fundamentals of payer contracts and the contract wording.

Streamline the pre-authorization Procedure

Every provider should simplify their pre-authorization process to run smoothly. The most effective strategy is concentrating on the best ten to twenty payers. It is critical to provide detailed summaries for every payer readily available to staff to streamline the procedure. Automating recording previous permission submissions and accompanying results can be pretty beneficial in streamlining the process and reducing the reliance on manual labor.

Use different Templates

Building payer-specific and procedure-specific EHR professional templates to facilitate the collecting of relevant clinical documentation criteria is another brilliant technique to optimize the process. If the ASC X12 278 Medical Services Request feature is available, it might be beneficial for your team to file and obtain the outcomes of prior permission requests.

Perform regular audits

The prior authorization process should be audited regularly like other key medical processes. Routine audits can assist in discovering flaws and the cause of earlier authorization denials. Providers will be able to catch minor issues in the bud and maintain appropriate control over all the pre-authorization procedures. The accuracy with which the diagnostic codes have been recorded must be a priority of the audits.

What is the distinction between a Referral and Authorization?

A referral is a method of directing a patient to some other physician (for example, a specialist) for discussion or a healthcare system that the referring body considers is mandatory but for which the referring source is not ready or qualified. If your general practitioner cannot deliver the care you require, they will recommend you to a talented specialist or a medical service provider. An authorization number is not necessary for many referrals.

Authorization, sometimes referred to as precertification, assesses the healthcare necessity and acceptability of specific medical, surgical, or behavioral health services before they are provided. A judgment of whether the proposed service is a covered advantage under your compensation plan is also part of the examination. Only certain services necessitate authorizations. Authorization/precertification requests will be sent electronically, over the phone, or in writing through fax or mail by your physician. If authorized, the medical billing company generates an authorization number. If the proposed service is not permitted, the client and provider will be notified in writing, together with the exact justifications for the rejection and their opportunity to appeal.

The general practitioner issues a referral, which directs the patient to another healthcare professional for diagnosis or tests. The payer gives a prior authorization to the provider, allowing them to provide the essential service.

The following procedures do not require authorization numbers; they can be conducted with only a referral or order from your general practitioner or specialist:

  1. For localized network participating practitioners, the majority of office consultations and office-based procedures.
  2. Services performed at nearby network participating facilities by Ambulatory Surgical Centers.
  3. Ambulatory hospital processes and services, except for wound management and hyperbaric oxygen therapy, necessitate authorization at nearby participating hospitals.
  4. Ambulatory facilities at participating out-of-area professionals and services.
  5. Mammography (scanning or diagnosing) or ultrasound to diagnose breast abnormalities, including those conducted at a nearby participating hospital.
  6. Mastectomy bras and prostheses at local participating providers, as authorized underneath the member’s group benefits program.
  7. Blood and blood supplies acquired at a local outpatient healthcare institution that participates.

For the below, authorization numbers are required:

  1. Inpatient services in general
  2. Wound Care and Hyperbaric Oxygen Care in Outpatient Hospital Settings (HBO)
  3. All non-participating professionals or facilities, whether they are inside or outside of CHP’s service area
  4. Nutritional counseling if the TMH Diabetic Institute does not give it.
  5. All dental or mouth-related services
  6. Speech and language therapy
  7. All home medical care services, except hospice.
  8. Services that might have been experimental or outside the scope of standard medical care

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