Prior Authorization, a Comprehensive Chronicle of The Concept

Prior Authorization is, in a nutshell, an ensuring practice by which a revenue cycle management practice checks the insurability of a particular medical service by getting it certified by the relevant payer company. Here’s summarizing the details of the practice.

What is prior authorization?

In a bid to reduce the cost of treatment and wastage of time, by checking the prescription of unnecessary drugs and therapy by medical practitioners, revenue cycle managers practice prior authorization. Prior authorization or prior auth as it is popularly called is the practice of getting a patient’s recommended medical profile verified with the relevant insurance provider in order to ensure that the treatment prescribed is covered under the particular individual’s insurance policy. There are a number of reasons or contexts against which prior authorization is done. Some such reasons include age, medical demands, need for alternative treatment, genetic requirements like allergies etc.

What is the process of prior authorization?

In the revenue cycle management chain of the patient, provider, and payer, the practice personnel plays the role of efficient mediators. They perform the protocols of verification and recovery by following the established course of action of medical billing of which prior authorization is a part. After a request comes from a medical service provider, the practice manager fills up a prior auth form, furnishing the details of the patient, policy and the treatment prescribed. The process of completion of pre-auth is different for different insurance companies. Ideally, the plea is either accepted, rejected or asked for revision and refurbishing of additional information. In many cases, an alternative practice is adopted called the ‘fail first’ or step therapy. Under that, an alternative treatment is recommended by the insurance company for being less costly or more medically safe. If that treatment fails to have the needed effect on the patient, the payer contemplates an alternate coverage.

What is the purpose and expenses associated with prior authorization?

The main purpose of prior authorization is to control indiscriminate medical prescriptions. In other words, the practice of recommending redundant treatment and expensive medicines, when economical alternatives are available, is countered by prior authorization, by checking the extent of insurance coverage of the patient. It is also useful in avoiding medications that are not safe to use for all and sundry. Apart from saving the cost and danger of unknown and ill-fated drugs, prior auth also goes a long way in saving the time of revenue recovery by filing and furnishing only those medical prescriptions which are allowed and covered under the insurance plan. However, if pre-auth is attempted by non-professionals like doctors and their staff, it can be a huge time and cost consuming affair. Hence the role of efficient medical billing practices who can afford the same at minimum cost and time.  

Important facts about prior auth

In order to do away with the shortcomings of the process and make it more effective and objective based, there have been many efforts recently. Recommendations have been for electronic pre-auth process instead of the manual one, along with instant insurance feedback and back appeal facilities. Digitalization of the process would be the mean reduction of considerable cost and time for the practice, a system that has been increasingly adopted by premier revenue management companies.

Denial management is an important part of revenue recovery and works in tandem with pre-auth services. Rejection or refusal for insurance acknowledgment often leads to repeated appeals which complicate the process. In order to avoid repetitions, the following guidelines are followed by any reputed medical billing company.

• Being abreast of the services provided, the patient and the provider
• Being in touch with the payer to certify the pre-auth request
• Being abreast of the patient’s eligibility
• Being abreast of the insurance rules before taking on pre-auth requests
• Being updated on the auth status
• Following up with the treatment details
• Updating additional information if required
• Updating the internal system with pre-auth information  

Prior Authorization goes a long way in smoothening the revenue cycle management process. It is one of the most important aspects of the revenue generation process, which when entrusted to a reliable practice, can work wonders in making medicine easy for all.