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Prior Authorization

 
What is Prior Authorization?
Prior authorization in medical billing is a process used by health insurance companies to determine whether they will cover a prescribed procedure, service, or medication. It is essentially a pre-approval or pre-authorization requirement before a patient can receive certain healthcare services or treatments.



See how Authorization process works at 855mybilly

Here's how it works

  1. Requirement: For specific medical services, treatments, or medications, the healthcare provider must obtain approval from the insurance company before proceeding. These services often include expensive treatments, surgeries, or medications that are not typically covered without further review.

  2. Request: The healthcare provider (such as a doctor or hospital) submits a prior authorization request to the insurance company. This request usually includes detailed information about the patient’s medical condition, the proposed treatment plan, and the justification for why the service is necessary.

  3. Review: The insurance company reviews the request, often consulting medical guidelines and experts. They assess whether the requested service is medically necessary, appropriate, and cost-effective.

  4. Decision: After review, the insurance company either approves or denies the request. If approved, the provider and patient can proceed with the service, knowing that it will be covered. If denied, the patient or provider can appeal the decision, seek alternative treatments, or pay out-of-pocket.

  5. Impact: Without prior authorization, the insurance company may refuse to cover the costs, leaving the patient responsible for the full payment. This process helps control costs but can also delay care if approval takes time.


Overall, prior authorization is a tool used by insurers to manage costs, ensure appropriate use of healthcare resources, and prevent unnecessary treatments.

Challenges In Authorization

Important things to know below applying for Authorization.

Important things to know below applying for Authorization.


Right diagnosis and providing the correct medical codes are very crucial in authorization. Correct coding and documenting the required procedure before the treatment is the key for timely authorization. This is often a challenging task. A coder’s role and task make a huge impact in this process.  

Also, at times, certain procedures would have been planned and accordingly prior authorization would have been obtained. But, when the treatment is rendered to the patient, some other medical procedures would be required based on various factors like patient health condition. And accordingly, some alternative procedures could be undertaken without authorization. In these cases, there are very high chances for the payment to be declined as approval was not taken. Therefore, it is better to secure authorization for treatments that would be required for a particular patient than for the claim to be denied payment for not having authorization. There is no penalty when a procedure has been authorized but is not completed.  

In emergency cases, patient treatment commences before obtaining any authorization. This situation typically happens in an accident or illness that arises on weekends or during night. In these scenarios, the health care provider should contact the insurance payer at the earliest possible time, seek and obtain the required authorizations.