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.

Initiation

  • 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.

Acknowledgement

  • 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. 

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