Prior authorization, or preauthorization, is a utilization management procedure employed by health insurance companies. It necessitates an assessment of specific procedures, tests, and medications recommended by healthcare providers to determine their medical necessity and potential financial implications before granting approval. The rationale behind implementing prior authorization procedures is to explore less costly treatment alternatives rather than automatically opting for the most expensive option. This is particularly applicable to expensive procedures and medications, such as surgeries suitable for outpatient settings, MRIs, durable medical equipment (DME), and specialized drugs.

Pain Point: Obtaining prior authorizations is a labor-intensive process for healthcare providers, financially burdensome for healthcare practices, and can potentially harm patients. Even a simple authorization request requires 30 to 45 minutes to fulfill. This diverts your time and attention from tending to additional patients daily, thereby affecting community health and the financial performance of your facility. Please contact us to discuss how we can help with prior authorization. 

Reasons for Prior Authorization Denials

The primary objective of prior authorizations lies in the insurance company’s assessment of the medical necessity for your patient’s treatment. Their utmost concern is to ensure that the treatment you’re proposing is the most financially efficient option.

Other prevalent causes for preauthorization denials encompass:

1. Clerical errors such as misspelled names and incorrect billing codes.
2. Insufficient information regarding previously attempted treatment alternatives by the patient.
3. Incomplete details concerning the recommended treatment and the rationale behind your recommendation.
4. Lack of evidence-based clinical guideline data within the documentation.

How to prevent Prior Authorization Denials

According to a recent survey, approximately 13% of Medicare Advantage plan enrollees reported experiencing pre-authorization denials for services that should have been approved. These incorrect denials may have arisen from incomplete patient data, procedural errors, and other process-related mistakes.

To minimize the occurrence of mistaken prior authorization denials, consider the following strategies:

1. Verify billing codes meticulously.
2. Ensure accurate spelling of all names.
3. Provide comprehensive justifications for your treatment recommendations.
4. Clearly document any previously attempted and unsuccessful treatments by the patient.
5. Support your claims with evidence-based clinical guidelines.

Additionally, implementing appropriate revenue-cycle processes and utilizing suitable software can prove instrumental in effectively managing and mitigating denial challenges.