All About Prior Authorization Process In RCM

Handling prior authorization is an important part of Revenue Cycle Management. The PA process involves a healthcare provider completing a PA form to illustrate to the insurance firm why a specific medical procedure or device or medicine that is prescribed is necessary. In this article, we describe the need and importance of the prior authorization process.

What Is Prior Authorization?

Prior Authorization (PA) is the process by which physicians and other healthcare providers must obtain advance approval from a health insurance plan before a specific procedure, service, device, or medication is delivered to the patient to qualify for coverage.

Top Benefits Of Prior Authorization Process

  • Helps control costs and manages the possibility of over prescribing.
  • Ensures that the service or drug the physician is requesting is truly medically necessary.
  • Ensures that the service isn’t being duplicated, especially in cases where multiple specialists are involved.
  • Determines whether the ongoing or recurrent service is beneficial to the patient’s care.

The Prior Authorization Process

First, a healthcare provider determines that a patient needs a specific procedure, test, medication, or device.

The onus is on the provider to then check a health plan’s policy rules or formulary to determine if a PA is required for the prescribed course of treatment. If it is required, the provider will need to formally submit a PA request form and sign it to attest that the information supporting the medical necessity claim is true and accurate.

Because clinical and healthcare billing systems are rarely integrated, provider staff will often start by manually reviewing PA rules for the specific insurance plan associated with the patient. The rules may often be found in paper documentation, PDFs, or payer web portals.

These payer rules are not standardized and differ from health plan to health plan. It is not uncommon for the rules to even differ from plan to plan within a specific payer. These payer rules also change frequently, so a provider’s administrative staff may be referencing out-of-date rules.

If the provider confirms that prior authorization is not required, it can submit the claim to the payer. This does not mean that the claim will necessarily be approved.

However, if the provider confirms that PA is required, it will need to track down more specifics about each CPT code that applies to the prescribed course of treatment. It will also need to obtain a number assigned by the payer that corresponds to the prior auth request and include it when the final claim is submitted. These steps are usually done manually, often through a cascade of phone calls, faxes, and emails between payer and provider.

The responsibility falls on the provider to continue to follow up with the insurance company until there is the resolution of the PA request — an approval, redirection, or denial. This part of the process is unstructured and often improvised, which often leads to significant wasted time and effort.


How Long Does It Take For A Prior Authorization To Be Approved?

Depending on the complexity of the PA request, the level of manual work involved, and the requirements stipulated by the payer, pre-authorization can take anywhere from one day to a month to process. The 2018 American Medical Association (AMA) Prior Authorization Physician Survey revealed that 26% of providers report waiting 3 days or more for a prior auth decision from health plans.

This delay can cause problems for both patients and the healthcare professionals attending to them. Patient adherence to medication and treatment often declines when obstacles like postponements or additional steps are introduced. However, being proactive and maintaining a very detailed communication log can help to reduce the amount of time a PA takes. Also, keeping some sort of alert/calendar so that you know when the first request was sent and following a very strict follow-up schedule will help you avoid the dreaded delay that is typically caused by pre-authorizations.


Why Do Prior Authorization Processes Get Denied?

The prior authorization process is often complicated by a combination of factors, including:

  • Lots of required steps, each introducing the potential for delays and errors.
  • Participation by both payers and providers, each of whom has different motivations, workflows, and infrastructure.
  • Lack of standards, particularly when it comes to payer rules.
  • Fluctuating payer rules need to be constantly monitored and revised.
  • Thousands of payers and health plans.
  • Manual review of prior auth requests and medical charts by clinicians.

Final Thoughts

The process of obtaining a PA is important for any healthcare practice. Consider outsourcing the prior authorization process to the best PA service provider to free up your time and to stay focused on delivering quality healthcare to your patients.

Resolve your PA burden by partnering with CapMinds.

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