Prior authorization (PA) involves getting timely approval from a patient’s insurance firm before providing any service or medication. Navigating through the challenges and administrative burden of this process is easier said than done. According to AMA prior authorization physician survey, 95 percent of physicians reported that PA somewhat or significantly increases physician burnout.
This guide has been particularly curated to demystify prior authorization procedures and to answer some of the frequently asked questions on this subject.
What Is Prior Authorization?
Prior authorization, also known as insurance prior authorization and pre-authorization, is the process wherein healthcare payers check certain treatments or prescriptions prescribed by clinicians to understand the medical necessity and associated cost before they are authorized.
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Why Is Prior Authorization Process Important?
Pre-authorization in medical billing was put in place to ensure that the treatments that members receive are necessary and meet all standards of policies and reimbursement requirements. This way, payers have a clear picture of how members use the coverage and possibly what treatments they have already received, thereby avoiding unnecessary treatments.
Why Is Insurance Pre-Authorization Complicated?
The reasons why this process is usually considered one of the most complex operations in medical billing and coding are:
Diverse Requirements:
Different insurance companies have different rules and varied criteria regarding authorization. Even the rules may also differ not only between the various insurers but also between different plans by the same insurer.
Changing Medical Practices:
Since knowledge and treatments in the medical field are continuously developing, so must the requirements for pre-authorization. The continuous changes often create miscommunications between the provider and the insurer.
Volume of Requests:
It is no news that healthcare providers juggle with large volumes of PA requests including different documentations and different processes. This, in turn, results in errors and denials along the way.
Lack of Standardization:
There is no one unified system of submission of PA requests among all the insurers, which typically leads to inefficiency and raises administrative work.
Frequent Denials and Appeals:
Many providers often face rejections on first time submissions, resulting in time-consuming appeal processes. This problem not just makes the whole process more complex but also affects the patient care.
How Does Prior Authorization Work?
The steps involved in the prior authorization of insurance are as follows:
Firstly, a health care provider determines that the individual requires a certain procedure, test, medicine, or device.
The insurance company is responsible for looking at the policy rules or formulary of the health plan to understand if the course of treatment requires pre-authorization. If it does, the provider will be required to formally submit the prior authorization request form and sign it, attesting that the information supporting the claim of medical necessity is true and accurate.
Given that clinical and healthcare billing systems are not always integrated, the staff often reviews prior authorization rules manually for the insurance plan of a particular patient. These rules are mostly found in paper documentation, PDFs, or even payer web portals.
These are not set rules, and they even vary from health plan to health plan. These rules also change quite frequently, and the provider’s administrative staff refers to these rules before taking the next step.
Once the documentation is complete, the claim is submitted to the payer for prior authorization.
In the final step, the provider is responsible to follow up with the insurance company until they get a resolution of the PA request comes, i.e., an approval, a re-direction, or a denial. It goes without saying that this is one of the most time-consuming steps in the entire process.
Why Is It Important to Streamline Prior Authorization in Medical Billing?
Streamlining the process of insurance authorization can reap the following benefits:
Improved Patient Care:
Faster pre-authorization processes allow the patient to receive much-needed treatments or medications more quickly. Faster access to care may translate into better health outcomes. The sooner the interventions, the smaller the chances of deterioration of the condition and the more obvious the prospects for faster recovery.
Reduced Administrative Burden:
Seamless authorization processes greatly reduce the time and resources healthcare providers dedicate to administration. This frees up more time for doctors and other medical professionals to devote to the care of their patients, thus enhancing general efficiency. Less paperwork means more time is devoted to patient consultations, examinations, and treatment planning.
Reduced Cost:
Seamless PA can significantly reduce administrative costs for healthcare providers. Less paperwork, fewer staff hours utilized over authorization duties, and less delay all add up to increased savings in the longer run.
Improved Provider Satisfaction:
A seamless PA process can also effectively reduce frustration and burnout among healthcare providers. As a result, medical professionals will always be their most productive selves and equally satisfied, possibly leading to better retention. Moreover, improving provider well-being is also important for ensuring high quality patient care.
Enhanced Revenue Cycle Management:
Faster prior insurance authorization simply means quicker submissions of claims and their respective payoffs, adding to the financial health of healthcare organizations. This improved liquidity helps in better resource allocation, investment in technology for improved patient care, and financial stability for healthcare organizations.
How Does Legislation Impact Pre-Authorization?
This process is typically influenced by laws and regulations at both federal and state levels. These legislations primarily focus on optimizing PA process, minimizing administrative burden, and most importantly, enhancing patient care access.
However, laws affecting pre-authorization can change in each jurisdiction, resulting in a rather complex landscape through which healthcare providers and insurers must navigate.
How to Simplify Prior Authorization?
With the right strategies in place, the process can be simplified:
Implement Electronic Systems:
Electronic prior authorization systems can reduce this process to the minimum and save a lot of paperwork and ease the decision-making process. These digital platforms allow real-time submission and tracking of PA requests, automated data collection, and faster collaboration between providers and insurers. This modernization reduces the time of processing significantly while minimizing the errors resulting from manual data entry.
Utilize Artificial Intelligence:
AI and machine learning (ML) can transform PA predicting which treatments are likely to be approved. In some cases, they can also automate some crucial PA decisions. By processing large volumes of historical data, these technologies can examine trends in approval rates and flag cases for human review, thereby streamlining resource utilization.
Outsource The Process:
Outsourcing the process to revenue cycle management (RCM) services providers can cut down the administrative burden on healthcare providers. These professionals are experienced in handling the multitude of insurance requirements, and they follow a smoother PA process. In this way, medical staff can focus more on their patients, while making sure a higher success rate of authorizations.
Update Contracts with Insurance Companies:
Periodical review and updating of agreements with the insurance providers helps to stay abreast on the changes in reimbursement requirements, fee schedules, and conditions necessary for prompt reimbursement. This proactive approach helps the providers to stay aligned with insurer expectations, thereby reducing disputes or delays in the PA process.
Conduct Regular Audits:
It is equally important to monitor the process for recurring issues and reasons for denials through routine audits. These reviews can expose patterns in rejected requests, showing areas that need to be improved in submission practices or staff training. Regular audits also offer an opportunity to stay ahead of ever-changing regulations and insurance policy changes, thus gradually working toward a more effective PA process.
Parting Thoughts
Prior authorization, though complex, remains important to ensure proper care and cost management. But, with modern technologies like AI and ML integrated, these procedures can be simplified. Also, the strategies in this guide are crucial to optimizing pre-authorization and should be implemented without any further delay to ensure increased efficiency and better patient outcomes. Do not wait for tomorrow as today is the right time to act with the right strategies for a seamless PA process and healthier tomorrow for all.
