Prior authorization: What it is and how it can help you

What is prior authorization in healthcare?

Prior authorization is a step where a health plan approves a medical service, drug, or test before it agrees to pay for it.

• It checks that the care is needed and worth the cost.
• The process runs between the provider and the insurer.
• You can outsource it to save time and cut delays.

Before a patient can get a service, such as a drug or a procedure, the health plan often must approve it first. Only then will the plan pay for it.

In short, this step is called prior authorization. It makes sure a service is eligible for cover by the health insurer.

Finally, read on to learn the benefits, the process, and the treatments that may need prior authorization.

What is prior authorization?

Prior authorization is when a health insurer checks the need and cost of a service before it pays. The service, test, or drug is one a clinician has prescribed.

Insurers use this step to confirm that the care is truly needed and worth the cost. Only then do they decide to cover it.

Once approved, the insurer can add the service to the health plan. After all, like any business, insurers must make sure their funds go to a good cause.

How does the prior authorization process work?

The process can vary by service. Some services take longer to clear. This depends on the manual work involved and on the payer’s rules.

In general, the process breaks down into these steps.

Determine the kind of service required

First, the provider prescribes the service the patient needs for their condition. Then the healthcare provider must verify if that service needs prior authorization.

Submission of formal authorization request

If it is needed, the provider files a formal request. They sign it to confirm the service is valid.

Sometimes the provider calls the insurer directly. They then explain why they chose that service for the patient. Next, the insurer’s nurses and physicians review the request. This step often overlaps with insurance verification, which confirms the patient’s coverage.

If everything meets the plan’s rules, the insurer approves the request. Otherwise, the request is denied. In that case, the patient and provider can file an appeal with supporting documents.

Finalizing payment and specifics

Once approved, the payment details are set. For example, the bill may be split between the patient and the insurer. Sometimes the insurer covers it all.

The provider also gathers key details about the service. One example is the CPT code for that service. Accurate coding is a core part of revenue cycle management.

Benefits of prior authorization

First, one key benefit is cost relief for the patient. They do not have to cover the full bill. Instead, they can rely on the insurer to help pay.

Cost control also helps the insurer. It makes sure funds go to care that is truly needed. Prior authorization also helps insurers manage health care costs. So they pay for the drug or service that best fits the patient.

Challenges of prior authorization

The process comes with a few setbacks. It can waste time for both the patient and the provider.

First, approval can take a while. Patients who need urgent care may lose precious time waiting. As a result, delays can add complications and stress.

There is also the risk of a denial. If the insurer sees the service as not worth the cost, it may reject the request. Then the patient may have to pay the full amount.

Medical treatments that may require prior authorization

In most cases, this step is used for non-emergency care. That gives insurers more time to review.

For example, prescription drugs are the most common service that needs it. Insurers must check if a drug is truly needed and the best choice. Meanwhile, they may approve a short-term supply during the review.

An insurer may require prior authorization for drugs that:

• Have serious side effects
• Have a high risk of misuse or addiction
• Are used for cosmetic purposes instead of medical purposes
• May be harmful when taken with other medications
• Are expensive when cheaper options exist

It may also be needed for bigger, costlier procedures, such as:

• Diagnostic imaging (for example, MRIs, CT scans, or PET scans)
• Durable medical equipment (for example, oxygen tanks, wheelchairs, canes, beds, or crutches)
• Rehabilitation
• Home health services
• Non-emergency surgery (for example, elective surgery)

Meanwhile, handling this work well ties into strong claims processing and clean billing records.

Outsource prior authorization with Connext

Healthcare firms can outsource their prior authorization work to Connext. This is one part of wider healthcare outsourcing that many providers now use.

In addition, Connext has skilled prior authorization specialists. They can handle tasks such as:

• Submitting requests
• Tracking progress with insurance companies
• Performing online checks
• Verifying information via phone and fax
• Reviewing clinical data
• Requesting more documentation

Firms that also want to outsource medical billing can pair it with this service. Connect with Connext to learn more about its services and pricing.

Frequently asked questions about prior authorization

How long does prior authorization take?

In general, it varies by service and payer. Some requests clear in a day or two. Others take a week or more. Urgent cases often get a faster review.

What happens if prior authorization is denied?

The patient and provider can appeal the choice. They submit a letter and supporting documents. Then the insurer reviews the case again.

Who is responsible for getting prior authorization?

In most cases, the healthcare provider starts the request. Still, patients should confirm that it is in progress. Good communication helps avoid delays.

Why do insurers require prior authorization?

Insurers use it to control costs and cut waste. It confirms that care is needed and worth the price. So funds go to the most fitting treatment.

Can prior authorization be outsourced?

Yes. Providers like Connext handle the full process for healthcare firms. This saves staff time and helps reduce delays and denials.

Key takeaways

• Prior authorization is a health plan’s approval before it pays for care.
• It checks that a drug, test, or procedure is needed and worth the cost.
• The main drawbacks are delays and the risk of denials.
• Outsourcing to a partner like Connext can speed up the process.