Authorization In Medical Billing And Its Types

Authorization is key in healthcare. It helps patients get the care they need while following insurance rules and regulations. This article gives an overview of authorization, its types, its importance, and a step-by-step guide on how it works.

What is Authorization in Healthcare?

Authorization, or prior authorization and pre-authorization, is when healthcare providers get approval from a patient’s insurance company. They do this before providing certain services, treatments, or medications. This step makes sure the care is medically necessary and covered by the patient’s insurance plan..

Why is Authorization Important?

Types of Authorization

1. Prior Authorization:
   • Required before certain services, procedures, or medications are provided.
   • Common for expensive treatments, surgeries, or specialty drugs.
2. Retrospective Authorization:
   • Requested after emergency or urgent care has been provided.
   • Ensures that the care delivered will still be covered by insurance.
3. Concurrent Authorization:
   • Required for ongoing treatments, such as hospital stays or extended therapies.
   • Ensures continued coverage beyond the initial approval period.
4. Precertification:
   • Similar to prior authorization but often used for diagnostic tests or outpatient procedures.
   • Confirms that the service is medically necessary and covered.

Step-by-Step Process of Authorization

Step 1: Identification of Need

1. The healthcare provider decides the patient needs a certain service, treatment, or medication.
2. The provider checks the patient’s insurance plan to confirm whether prior authorization is needed.

Step 2: Gathering Required Information

1. The provider collects all necessary documentation, including:
   • Patient’s medical history
   • Diagnostic test results
   • Clinical notes justifying the need for the service
   • Details of the proposed treatment or medication

Step 3: Submitting the Authorization Request

1. The provider submits the request to the insurance company, either electronically, via fax, or through an online portal.
2. The request includes all supporting documentation to demonstrate medical necessity.

Step 4: Insurance Company Review

1. The insurance company reviews the request to determine if the service meets their criteria for coverage.
2. This may involve:
   • Evaluating the patient’s medical records
   • Consulting clinical guidelines
   • Communicating with the provider for additional information

Step 5: Approval or Denial

1. The insurance company issues a decision:
   • Approval: The service is authorized, and the provider can proceed with the treatment.
   • Denial: The service is not approved, often with a reason provided (e.g., lack of medical necessity, not covered under the plan).

Step 6: Appeals Process (if Denied)

1. If the request is denied, the provider or patient can appeal the decision.
2. The appeal process may involve:
   • Submitting additional documentation
   • Requesting a peer-to-peer review with a medical professional at the insurance company
   • Filing a formal appeal with the insurer or regulatory body

Step 7: Delivering the Authorized Care

1. Once approved, the provider delivers the authorized service or treatment.
2. The provider ensures that all details match the authorization to avoid claim denials later.

Step 8: Billing and Follow-Up

1. The provider submits the claim to the insurance company for reimbursement.
2. The insurance company processes the claim based on the approved authorization.

Challenges in the Authorization Process

1. Time-Consuming: The process can delay care, especially for urgent treatments.
2. Administrative Burden: Requires significant paperwork and coordination between providers and insurers.
3. Denials and Appeals: Denials can lead to additional work for providers and delays for patients.
4. Complexity: Varying requirements across insurance plans can make the process confusing.

Best Practices for Streamlining Authorization

1. Use Technology: Use electronic health records (EHRs) and authorization software. They help automate and track requests.
2. Verify Insurance Early: Confirm authorization requirements during patient registration or scheduling.
3. Train Staff: Ensure administrative staff understand the authorization process and insurance requirements.
4. Maintain Clear Documentation: Provide detailed and accurate information to support authorization requests.
5. Communicate with Patients: Keep patients informed about the authorization process and potential delays.

Example Scenario

A patient with chronic back pain is recommended for an MRI by their PCP. The PCP’s office checks the patient’s insurance plan and determines that prior authorization is required. They send a request to the insurance company.

This includes the patient’s medical history, test results, and a letter stating medical necessity. The insurance company reviews the request and approves it within 48 hours. The MRI is scheduled, performed, and billed to the insurance company without issues.

Conclusion

Authorization is key in healthcare. It ensures patients get the right care at a good cost. This process can be complex and take time. However, knowing the steps and using best practices helps both providers and patients. Streamlining authorization makes it easier for everyone. It can boost patient outcomes, reduce admin tasks, and ensure healthcare systems follow insurance rules and regulations.