Prior Authorization, The Essential Component Of Revenue Cycle ManagementPrior Authorization, The Essential Component Of Revenue Cycle Management

Understanding prior authorization, the inevitable and essential component of revenue cycle management. A look into the different sides of it including the beginning, usage and process comprising a comprehensive profile of the same.

Prior Authorization, the concept

In the process of revenue cycle management, one of the initial steps lies in the verification of the eligibility of the patient and his insurance policy. Revenue recovery practice acts as a mediator between the patients, provider and the payer, performing a variety of functions which accelerates the revenue recovery process. One of such functions is prior authorization, which precisely confirms the insurability of the medical services provided to the patient by the providing company. Thus prior authorization means checking with the insurance company whether the particular goods and/or medical services availed from the provider are covered under the clauses of the insurance contract for reimbursement or compensation by the insurance payer.   

The reasons and utility

The main reason behind the concept of prior authorization is saving cost and time. Pre confirming the insurability of medical services with the insurance company ensures avoiding indiscriminate prescription of medicines and therapy which can be dangerous, costly or not required for the particular patient. Checking the insurance policy to confirm whether the prescribed treatment is allowed for reimbursement or not is an useful way to stop irrelevant services from being availed or rendered. Further, once the pre auth done and then the treatment administered, the process of recovering the revenue becomes easy as chances of denial, cross contesting the same and then waiting for clam adjudication is reduced to a large extent.

However, the original intention of the practice notwithstanding, it has later been tarnished as a complicated, time taking and often expensive affair for the medical practitioners to follow, owing to the regulatory mandates that have to been complied and kept updated with. As it often becomes difficult for the doctors or their clerical staff and nursing staff to meet the demands of the process, due to the huge time and formalities involved in between, it is imperative and advisable to entrust the revenue management responsibility to a professional medical billing practice.

The process

Prior Authorization involves a number of steps which vary from one practice management to the other.  Considering a cross section of the practices, it can be generally summed up as follows.


  • Communicating with the insurance company regarding the authorization procedure and the turnaround time
  • Acquiring the relevant documents including the pre auth form and medical papers from the provider company
  • Creating the claim and submitting the same, along with the required documents to the payer company
  • Taking account of the receipt of the claim

Follow Up

  • It means coordinating and communicating the payer regarding the status of the claim as par the turnaround time of the payer and also furnishing the additional documents asked for if any. In case of denial, editing the claim and re-contesting it for approval.


  • Once the claim is met, updating that information along with following the other adjudication details in the provider’s system by the practice aided by the beginning and ending date of the claim processing, approval, service and provider information.
by Willam Smith
References and Bibliography

William Smith specializes in the prior authorizationPrior Authorization for DME and shares his experience. 

Rated:NR/0 Votes
Add To My Article Reading List
Add To My Article Reading List
Print Article
More Article By Willam Smith
More Article by Willam Smith
More Articles From Medicine
More Articles From Medicine
Related Articles and Readings
Prior Authorization Challenges With Denied Payments and Write-offs By: Willam Smith
On an estimate, it has been found out that 868.9 million hours are been spent on an annual basis to just obtain prior authorization according to the Kaiser Family Foundation. ...
Prior Authorization, The Ultimate Tool to Successful RCM By: Willam Smith
Prior Authorization is the basic step that is taken to ensure a successful compensation of medical expenses incurred by a provider of medical goods and/or services. ...
Authorization Letters How to Legally Authorize Something By: Robert Noyes
Authorization Letters authorize someone to do tasks for you that normally require your presence to get them done. These tasks are more than picking up dry cleaning. They are used to authorize someone else to make important decisions for you. Take writing these letters very seriously. ...
Cleaner Teeth Can Mean Quicker Treatment, Say Prior Lake Orthodontists Experts By: Jennifer Eisenhuth
LAKEVILLE, SAVAGE AND PRIOR LAKE, MINNESOTA - The first question many patients ask when they get braces typically is, "When will they come off" Orthodontists can predict a timeframe, but Savage and Prior Lake ...
Braces Can Help Prevent Trauma, Says Prior Lake Orthodontist By: Jennifer Eisenhuth
PRIOR LAKE, ST PAUL AND MINNEAPOLIS, MINNESOTA - The primary reason for getting braces is to align teeth and promote improved oral health, but the staff at Cosmopolitan Orthodontics, a Prior Lake, MN orthodontics office, have learned some ...
The information provided in this article and/or the comments is the sole responsibility of their respective authors and does not necessarily reflect the opinion of  does not endorse any article and/or comments published by our web users unless otherwise noted. 

Member Panel

login to submit articles and more


  • » Active Categories: 419
  • » Active Articles:252609
  • » Active Authors:31915
  • » Active Members: 38222
  • » Statistics Updated:
    - Thu May 7th, 2020 12:50AM EST