What is Prior Authorization? When is it Needed and Not?

by | Published on Jan 1, 2016 | Insurance Verification and Authorizations

Prior Authorization
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There are certain services that require pre-certification, pre-notification or pre-authorization from the insurance company. You need to make sure whether a particular service requires pre-authorization during the insurance verification process. Most healthcare plans specify the services that require pre-authorization in advance through their Medical Benefits Chart. So, what is exactly pre-authorization, why is it required and which are the services that need that?

Prior authorization is a process required for the providers to determine coverage and obtain approval or authorization from an insurance carrier to pay for a proposed treatment or service. This approval is based on medical necessity, medical appropriateness and benefit limits. For example, if an ordering physician has to obtain pre-authorization from an insurance company for the use of a particular drug, the physician must send a pre-authorization request so that the insurer can determine whether the drug is medically appropriate and safe to use before agreeing to pay. The time required for obtaining a pre-authorization from an insurance company depends upon the requirements of the health plan. Generally, it takes five to thirty days for approval.

Significance of Pre-authorization

Though pre-authorization does not guarantee reimbursement, the absence of pre-authorization can surely result in claim denials or non-reimbursement. Once you acquire pre-authorization from a payer, you will get a pre-authorization number. This number must be included in your claims to avoid unnecessary denials. If your claims are denied based on the lack of medical necessity, you should append this pre-authorization number while preparing an appeal letter.

Submission of Pre-authorization Request

You submit your pre-authorization request by mail or fax. Many authorization companies provide Prior Authorization Request Form (both offline and online) to submit written pre-authorization. Every insurance company has its own requirements for pre-authorization request. However, you should include the following information in all types of requests.

  • Demographic information of the patient (name, date of birth, insurance ID number and more)
  • Provider information (both referring and servicing provider)
    • Tax ID number
    • National Provider Identifier (NPI) number
    • Address where services are being provided
    • Phone and fax number
  • Requested service/procedure along with specific CPT/HCPCS codes
  • Diagnosis (corresponding ICD code and description)
  • Location where the service will be performed
    • Tax ID number
    • NPI number
    • Address
    • Phone and fax number
  • Length of stay requested in case of inpatient requests

It is required to submit medical notes along with it. If the insurer asks for additional information, you must submit other documentation such as details regarding previous treatment and clarification regarding the type of service provided.

Services That Require Pre-authorization

Each insurance plan determines a set of covered services that require pre-authorization. However, risky and expensive services require pre-authorization in most of the cases. Most PPO (preferred provider organization) benefit plans require the provider to pre-certify inpatient hospital admissions (acute care, inpatient rehab, etc.) while many of them require pre-certification for coordinated healthcare (skilled nursing visits, home infusion therapy, etc.). The other services that typically require pre-authorization are as follows:

  • MRI/MRAs
  • CT/CTA scans
  • PET scans
  • Durable Medical Equipment (DME)
  • Medications and so on

No pre-authorization is required for outpatient emergency services as well as Post-stabilization Care Services (services that the treating physician views as medically necessary after the emergency medical condition has been stabilized to maintain the patient’s stabilized condition) provided in any Emergency Department.

You need to obtain pre-authorizations as quickly as possible to provide the necessary treatment at the right time. So, special attention must be given to the authorization process to avoid denial and receive approval quickly. Consider obtaining reliable insurance authorization services if you are too busy to give proper attention to this task. This will reduce the risk of claim denial and save your valuable time.

Julie Clements

Julie Clements, OSI’s Vice President of Operations, brings a diverse background in healthcare staffing and a robust six-year tenure as the Director of Sales and Marketing at a prestigious 4-star resort.

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