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preauthorization role

Role of Preauthorization in Medical Billing Services

In healthcare, preauthorization service is an integral part of the RCM process. This entails the verification of insurance eligibility. The output of the verification process serves as the foundation for the reimbursement of the provider’s services. Preauthorization in Medical Billing assists health organizations in collecting appropriate reimbursement for services, minimizing rejections, and following up on the denials.

Authorization in Medical Billing

In medical billing, authorization is the process through which the payer accepts to cover the recommended treatments before they are administered or performed. As the term, “preauthorization” implies, confirmation from the insurance payer is required for the planned treatment or services to take place.

Certain planned procedures require prior approval from the insurance provider in order for them to be reimbursed. Usually, a patient’s insurance coverage is used to determine the approval. Insurance companies preauthorize the requests based on the benefit parameters required for medical treatment. When the treatment or service is performed, the claim form should include the preauthorization number, which the insurance company has provided at the time of preauthorization.

Why Are Preauthorization Services Crucial in RCM?

Preauthorization in medical billing facilitates hassle-free billing of claims. While preauthorization does not guarantee reimbursement of the services provided, failing to obtain a preauthorization guarantees non-payment or rejection of the bills.

Difficulties With Preauthorization

Proper diagnosis and delivery of the correct medical codes are crucial in preauthorization. The secret to obtaining preauthorization quickly is proper coding and documentation of the necessary process before the treatment. This is usually a difficult process. The role and responsibility of a coder are crucial to this process.

In addition, certain operations would have been planned and preauthorization is acquired accordingly. However, once the treatment is delivered to the patient, other medical treatments may be required based on various aspects such as the patient’s health status. As a result, some alternate operations may be performed without prior approval.  In certain cases, the payment is very likely to be rejected since approval was not obtained. Hence it is highly recommended to obtain approval for the treatments that are necessary for a patient instead of having the claim denied due to a lack of preauthorization. Also, there is no penalty if a treatment is preauthorized but not performed.

During a medical emergency, such as on a weekend or late-night accident or sickness, patient care begins before obtaining preauthorization. In these situations, the provider of health care should call the insurer as quickly as possible to request and obtain the necessary authorizations.

What Effect Does Medical Necessity Have on Preauthorization?

When health care providers fail to obtain the proper authorization and the payer (insurance company) denies payment, the healthcare organization must decide whether to bear the expense or claim it from the patients. Procedures not covered by the patient’s health plan are clearly specified and acknowledged during the verification process. When a patient receives benefits or services that are not covered by their insurance plan, they must pay for the services. When claims are denied as a result of the provider’s inability to obtain approval, they are obligated to pay for the expense themselves, resulting in a revenue loss that affects the entire revenue cycle.

In some situations, the unpaid amount is invoiced to the patient, and financial obligation is shifted to the patient. However, doing so would be unethical and damaging to the facility’s reputation. That’s why getting preauthorization at the correct time is crucial in receiving reimbursement for the services provided.

Some of the guiding principles in medical billing preauthorization services to guarantee a smooth process are:

  • Performing a detailed verification process to identify the treatments are covered in order to acquire preauthorization.
  • Keeping thorough documentation and a record of all pertinent information.
  • Understanding the terms of the contract and processes of different health insurers, as well as complying with their regulations, which will help to reduce delays and denials.
  • Employing standard templates help reduce duplicate documents and human errors.
  • Providing staff with proper training for all necessary processes.
  • Maintaining cordial connections with insurance companies.

Final Thoughts

The success of every medical practice is determined by how successfully its preauthorization processes are handled. The preauthorization affects your healthcare practice’s revenue cycle and overall operations in almost every way.

Outsourcing your preauthorization operations will help you increase your profit margins, claims to process, and reimbursements. We specialize in next-generation RCM services including preauthorization, to help medical practices improve cash flow and streamline their medical billing processes. Please contact us at [email protected]  to learn more about how we may assist you.contract-negotiation-services-ebrochure

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