Insurance Verification vs. Insurance Authorization

by | Published on May 30, 2022 | Podcasts, Insurance Verification/ Authorizations (P) | 0 comments

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Outsource Strategies International (OSI) has extensive expertise providing insurance verification and authorization services. Our team will verify the insurance coverage details of each patient, both new and returning, before services are provided. Our support can eliminate risks of denials due to patient ineligibility and enhance practice cash flow.

In today’s podcast, Loralee Kapp, one of our Solutions Managers discusses the difference between insurance verifications and insurance authorizations.

Podcast Highlights

00:11 What is RCM?

00:29 What does RCM involve?

00:55 What is insurance verification

01:51 What details are collected before the patient’s visit

02:42 Benefits of proactive patient eligibility verification

04:00 What is insurance authorization?

05:11 Difference between insurance verification vs. insurance authorization

Read Transcript

Hey all, this is Loralee Kapp, the Solutions Manager with Managed Outsourced Solutions. Today I want to discuss with you the difference between insurance verifications and insurance authorizations.

00:11 What is RCM?

Revenue cycle management, known as RCM is the administration of financial transactions that result from the medical encounters between a patient, provider, facility and/or supplier, according to the Healthcare Business Management Association, the HBMA.

00:29 What does RCM involve?

RCM involves several processes from the time that the patient schedules an appointment to claim submission and payment collection. Insurance verification and authorization are key processes performed in the initial phase of RCM or medical billing insurance claims process. Though both aimed at preventing claim rejection and delays, insurance verifications and prior authorizations are distinct and different processes.

00:55 What is insurance verification?

But start with going over what insurance verifications are? The life cycle of a patient begins with the appointment scheduling and registration where demographic and insurance information is collected. This sets the stage for insurance verification – the process of checking the patient’s healthcare coverage and benefits prior to the encounter. The goal of this is to confirm –

  • if the patient has active insurance coverage
  • what procedures and services are or are not covered and
  • how much of each procedure the insurer will cover and the patients financial obligation

The following information is collected when the patient calls to schedule an appointment

  • the patient’s name and date of birth
  • the name of the insurance provider
  • name of primary insurance plan holder and their relationship to the patient
  • Patient’s policy number and group ID if applicable and
  • the insurance company’s phone number and address

01:51 What details are collected before the patient’s visit

A reliable insurance verification service provider will make sure that the all the required details about the insurance eligibility and benefits are collected before the patient’s visit. This includes

  • the type of plan and coverage details
  • calendar year or policy year
  • the effective date
  • plan annual maximum
  • plan deductible
  • primary and secondary insurance
  • per code coverage, if available
  • copays and deductibles
  • DME coverage
  • plan exclusions
  • referral or pre authorization requirements and
  • out of network benefits

Insurance verifications specialists will get a full breakdown of the patient’s insurance coverage and benefits by visiting payer web portals or calling the insurance carriers with the information collected from the patient during the initial phone call.

02:42 Benefits of proactive patient eligibility verification

Proactive patient eligibility verification is crucial for the success of a claim submission and medical billing:

This improves the patient experience – verifying the patient’s insurance before at the office and counter and communicating to them as to what their plan covers and doesn’t cover will ensure transparency. This will enable the patients to know about the cost of their care and can help them better prepare to pay their bills. With transparency throughout the political billing process, patients will not face any costly surprises.

This reduces claim denials – if the patient’s information is outdated and the provider uses that to submit a claim, it would result in an instant payment denial. Verifying patient eligibility upfront will ensure that claims are submitted with current and accurate data for a prompt payment. Insurance verification services minimize claim denials and save time and money that would go into working those denied claims.

This can also maximize your cash flow – proper insurance verification will ensure that claims are submitted with up to date information. Meaning, clean claims will be approved faster and speed up the medical billing cycle. With reduced denials and a larger number of clean claims submitted, this will increase a practices cash flow.

04:00 What is insurance authorization?

Now let’s go over what an authorization is. Insurance authorization or prior authorization is a health plan cost control process by which physicians and other healthcare providers must obtain advanced approval from a health plan before a specific service is delivered to the patient to qualify for payment coverage. The American Medical Association states that prior authorization is also referred to as pre- certification, pre-authorization, prior approval or pre-determinations. Insurance companies use the prior authorization process to determine if a prescribed medical treatment drug or medical equipment will be covered in full or in part.

The insurance authorization process begins when a service prescribed by a patient’s physician may not be covered by their health insurance plan. The physician’s office has to communicate with the insurance company and complete a prior authorization form along with documentation supporting the medical necessity of a specific procedure, test, medication or device and the prior authorization is a time consuming process that can delay a patient’s access to care.

05:11 Difference between insurance verification vs. insurance authorization

Now let’s go over the difference between an insurance verification vs. an insurance authorization.

The difference between insurance verification and insurance authorization are as follows –

Unlike insurance verification which is performed before the patient encounter, the prior authorization begins when a procedure, test, medication or device that the physician prescribes for patient requires pre approval from the insurer.

Insurance verification is related to the process of creating and filing medical claims and obtaining payment for patients services all prior authorizations about obtaining prior authorization for said services.

For a smooth pre authorization process, medical billing personnel need to be a knowledgeable about the CPT code for the service for which approval is requested. Insurance verification process focuses on coverage status, active/inactive status and eligibility status.

Both insurance verifications and authorizations are time consuming processes that can lead to denials. That’s why they are best handled by experts. Outsourcing these tasks to an experienced insurance verification company can go a long way toward saving time, preventing denials and delays as well as optimizing reimbursement and improving patient care and satisfaction.

Loralee Kapp

Since joining our RCM Division in October 2021, Loralee, who is HIT Certified (Health Information Technology/Health Information Management), brings her extensive expertise in medical coding and Health Information Management practices to OSI.

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