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Why is Pre-Authorization Vital in Medical Billing Management?

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Health insurance needs to be checked for pre-authorization requirement

What is pre-authorization?

Pre-authorization is the procedure of obtaining prior approval from payors before medical services are rendered to patients. It indicates that the payor confirms the medical necessity of the service, treatment plan, prescription drug, or durable medical equipment being offered/prescribed.

In the case of medications, the types that need pre-authorization are

  • Drugs that may be unsafe when combined with other medications
  • Have lower-cost, equally effective alternatives available
  • Should only be used for specific health conditions
  • They are often misused or abused
  • Drugs frequently used for cosmetic purposes

Medications that require approval will only be covered by the insurance plan if the physician requests and receives pre-authorization from the payor.

Reasons for pre-authorization

There are several reasons why payors require pre-authorization; the most important is that it contains medical costs. The payor wants to ensure that

  • The service or drug being requested is medically necessary.
  • The service or drug is commensurate with the up-to-date recommendations for the medical problem.
  • The drug is the most cost-effective treatment option available for a medical condition.
  • The service is not being duplicated.
  • The service, whether ongoing or recurrent, is actually helping the patient.

The rationale behind the procedure of pre-authorization is to make sure that healthcare is cost-effective, safe, necessary and appropriate for each patient. The other side of the coin is that pre-authorization can often delay treatment and the kind of treatment patients need. It also places more administrative burdens on providers.

Role of the provider’s office

The medical provider’s back-office team is responsible for getting the pre-authorization. Once the patient appointment is scheduled, the following steps will ensure a smooth process in getting approval.

  • Collecting patient demographic details accurately at the time of appointment scheduling is essential.
  • Contact the payor and submit all the clinical documentation along with the pre-authorization request form to start the delivery of care.
  • Follow-up with payors should be rigorous. A routine may be devised for this, duly keeping the patient informed of the progress as patients may sometimes need to bear out-of-pocket expenses.
  • The practice may institute a habit of listing the status of all pre-authorization requests to streamline this aspect of billing management.
  • The coding team should ensure that correct CPT codes are entered in the form.
  • In case of emergency admissions, payors must be informed without delay.

From the point of view of practices, the advantages of pre-authorization are

1) Reduction in denials

2) Reduction in write-offs

3) Increased collections

4) Patients know their financial responsibility

Bristol Healthcare can help with pre-authorization

Despite increased paperwork for providers and delays in patient care, it is prudent to have a system that ensures a smooth pre-authorization process. If such a process is proving burdensome for you, Bristol Healthcare Services is always there for you.

Our billing and coding team will become an extension of your workplace fixated on your bottom line and reducing your operational expenses. This makes us an ideal partner for our clients. Whether it be a single service or the entire RCM, we provide intelligent outsourcing solutions to healthcare professionals. We optimize our client’s revenue cycle management by leveraging our people, processes and technology to reduce operating and capital expenses, recover revenue, improve patient outcomes, and increase productivity.

Let us help you to eliminate your headaches over paperwork!

Talk to an expert today!

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