Prior Authorization, The Initial Step to a Successful RCM

Taking the reader through the bylanes of the initial and original step to a successful revenue cycle management of the medicine industry, that is Prior Authorization. Starting with the definition we move on to explain the genesis, process details, challenges and ultimately tidbits about the prior authorization industry.

The definition of Prior Authorization

Prior Authorization is the first and initial step that makes sure the acceptability of the medical claim as submitted by the practice management to the payer company. The patient, payer and provider nexus is appropriately intervened by the practice in form of prior authorization, in the absence of which the revenue recovery and the compensation claim would be delayed for nothing. Thus, in order to accelerate the process and infuse financial health and stability in the medical industry, the importance of prior authorization cannot be overemphasized. The detailed process by which the insurance plan is checked to give a nod to the claim is explained below.

The genesis of the process

Prior Authorization started as a confirmation procedure form the physician’s office. The clerical staff of the doctor’s office used to follow the technical provisions and the legal procedures for creating, submitting, following up and confirming the status of the prior auth request as engineered by itself. But owing to the lack of professional expertise that would take longer time than usual, thus creating disturbances in the physician’s practice as well as his income inflow. Thus was born the idea of customized prior authorization practice management by well-trained groups. Hence the proliferation of prior auth practice offices.

The details and pre-requisites

The process of prior authorization as normally followed by agencies is as follows.

Authorization Initiation

Calling up the insurance company to know their prior auth filing protocol, turnaround time and documentation required.

Collecting the prior authorization form and other relevant medical documents from the provider to submit to the payer's office

Creation of the authorization request and submitting of the same to the payer along with the papers as gathered

Tracking the receipt of the same

Follow up

Calling and coordinating with the payer company to know the status of the request as submitted along with furnishing additional papers as asked for.

Acknowledgment

Confirming the final status of the request and the uploading of the same in the provider’s system along with important service information.

The challenges

The problems faced by prior authorization are as follows

• Missing information
• Key in errors
• Increased denial rate
• Increased TAT or turnaround time
• Limited staff leading to over-consumption of time
• Non-compliance with secondary verification
• Inconsistent follow up behind documentation collection
• Additional clerical work as extra faxing, mailing and printing
• Delayed filing
• Lack of information about the actual status
• Delayed correction and re-submission
• Loss of payment
• Backlog of work

The solutions to these are as follows. Transaction audits followed by the assignment of adequate staff, completion of secondary verification, rigorous audits, tracking mechanism, review of patient payments etc.

Trivia

In order to reduce the burden of a negative impact of excessive Prior Authorization the American Medical Association has underlined health plans to limit the indiscriminate practice of prior authorization over essential drugs. The idea is to remove the prior criteria of the initial authorization approval requirement

over extensively used medical tools and services with proven medical appropriateness.

William Smith is the master prior authorization practitioner who not only practices the process but also teaches the tactics of the same to the readers of his articles on the internet.