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Importance of authorization in medical billing

Importance Of Authorization In Medical Billing

Medical Billing Authorization

In medical billing, Authorization describes the process by which the payer agrees to cover the prescribed services before they are performed. Pre-authorization or prior authorization services are other terms used for authorization. It is a mandatory requirement to ensure that the insurance payer pays for the medical services listed on the medical claim form. The insurance payer can refuse payment of a patient’s healthcare treatment as part of the health care insurance policy without authorization. The healthcare professional is responsible for obtaining authorization for the medical procedure. Before performing the procedure, the provider must apply for authorization. Once approved, the payer issues an authorization number to the health care provider for future reference.

Certain procedures necessitate pre-authorization from the insurance company. Authorization is based on the patient’s insurance plan. Insurance companies pre-authorize requests based on benefit terms and required medical treatments. The insurance provider issues a pre-authorization number, which must be quoted on the final claim form and submitted after the treatment.

Authorization Submission Requests

Authorization requests can be submitted both manually and electronically by the healthcare professional. Offline and online forms are available for submitting a written authorization request, and an electronic authorization request is submitted via fax or mail.

Insurance companies have different specifications for authorization requests. However, when filing authorization requests, the following information remains consistent.

  1. Demographic information about the patient (name, date of birth, insurance ID number, etc.) throughout the insurance verification procedure
  2. Provider Specifications (both referring and servicing provider)
  3. Address, Tax ID, National Provider Identifier (NPI), Phone and fax numbers
  4. The requested procedure with appropriate CPT/HCPCS codes
  5. The diagnosis (corresponding ICD code and description)
  6. In the case of inpatient requests, recommended length of hospital stay 

Also, the payer may request additional documents based on their needs.

What Are Pre-Authorization Services?

Pre-authorization in medical billing facilitates hassle-free bill payment. Prior Authorization is essential to medical diagnosis and procedures, particularly when an insurance company resolves claims. It is the process of obtaining insurance carrier authorization to classify specific services. Getting approval from the payer ahead of time increases the chances of smooth claims settlement. The procedure involves obtaining an authorization number, which must be included in the claim during submission.

Some of the best practices in pre-authorization services to ensure a smooth procedure are:

  • Conducting a comprehensive verification process to determine the services covered to obtain pre-authorization.
  • Keeping complete documentation and a record of all relevant information.
  • Maintain cordial relations with insurance companies.
  • Clarifying the contract terms and processes of various insurance providers, as well as complying with their rules to prevent issues and denial.
  • Using benchmark templates to avoid duplicate paperwork and human errors.
  • Providing staff with the necessary training for all required procedure.
Importance Of Pre-Authorization Services 

According to the American Medical Association, Prior Authorization (PA) is the procedure by which health care providers must get advance approval from a health insurance plan before delivering a particular process, service, device, supply, or medication to the patient for coverage. You will be given a pre-authorization number once you have obtained pre-authorization from a payer. To prevent unnecessary denials, include this number in your claims. If your claims are denied due to lack of medical reason, include this pre-authorization number in your appeal letter. Errors in prior authorizations can cause treatment to be delayed and patients to discontinue treatment. Most practitioners have also had procedure requests rejected during the authorization process.

Insurers may refuse to confirm treatments for the following reasons:

  • Insufficient documents or lacking patient information. 
  • Medical reasons, such as procedures considered irrelevant or too costly by the insurer.
Required Pre-Authorization Services

Each insurance plan establishes a list of covered services, and most PPO (preferred provider organization) benefit plans require pre-certification for inpatient hospital admissions, and many of them require pre-certification for organized healthcare. Other services that typically necessitate pre-authorization include:

  • MRI/MRAs
  • CT and CTA scans
  • PET scanning
  • Durable Medical Equipment (DME)
How To Accelerate Pre-Authorization Process?

Here’s an easy way to speed up your processes:

Examine the accuracy: Always double-check the necessary prior authorization requirements. That is to ensure no delays in filling prescriptions, claim refusals or payments lost due to a lack of prior authorization necessities.

Standardize to save time on the PA process: Establishing a normal procedure for consistently recording data required for prior- authorization significantly reduces the time spent on the Authorization.

Constant follow-up: Follow up on prior authorization requests regularly to avoid delays.

Preparing an Appeal: Prepare an appeal with supporting medical records in case of denied prior -authorization.


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