AUTHORIZATION

Authorization in medical billing refers to the process of obtaining approval from a patient's insurance provider before certain medical services or procedures are performed. This approval ensures that the insurance company will cover the cost of the service, up to the limits of the patient's policy. Authorization requirements vary depending on the insurance plan and the specific procedure or service being requested. Failure to obtain proper authorization can result in the denial of payment or the patient being held responsible for the full cost of the service.

Healthcare authorization ensures necessary treatments are approved by the patients insurance before they happen. There are two main types: initial and concurrent.

Initial Authorization: This is like pre-approval for a specific treatment or service before it happens. The following are scenarios where initial authorization could be required.

• Imaging Tests: Procedures like MRIs, CT scans, or PET scans often require initial authorization. The doctor submits a request with details like:
  • Patient's medical history and current symptoms.
  • Type of imaging test planned and why it's necessary (e.g., rule out a tumor, assess ligament damage).
  • Alternative tests considered (e.g., X-ray done first for initial assessment before an MRI).
• Elective Surgery: Procedures like knee replacements or tonsillectomy removals typically require pre-approval. The doctor's request would include:
  • Diagnosis and justification for surgery (e.g., severity of arthritis, recurring tonsillitis episodes).
  • Planned surgical procedure details.
  • Doctor's qualifications and experience performing the surgery.
• Durable Medical Equipment (DME): Items like CPAP machines or wheelchairs often need authorization. The request would include:
  • Medical diagnosis and how the DME helps manage the condition (e.g., CPAP for sleep apnea, wheelchair for mobility limitations).
  • Trial period documentation if needed (e.g., trying a CPAP for a month before full authorization).
  • Expected duration of need for the DME.
• Out-of-Network Care: Seeing a specialist outside your insurance network usually requires pre-approval. The request would explain:
  • Why in-network providers aren't suitable (e.g., lack of specialists in your area, specific expertise required).
  • The out-of-network provider's qualifications and in-network alternatives explored.
  • An estimate of the expected cost for the out-of-network service.
• New Medications: Especially for expensive or specialized drugs, initial authorization might be required. The doctor's request would detail:
  • Diagnosis and why the medication is necessary.
  • Tried and failed alternative medications (if applicable).
  • Information on the new medication, including dosage and expected duration of treatment.

Example:

 Sarah needs an MRI for back pain. Her plan requires initial authorization. Her doctor submits a request explaining her symptoms and why an MRI is necessary to diagnose the cause. The insurance company reviews and approves (or denies) before the MRI is scheduled.

Concurrent Authorization: This is ongoing approval for services during a hospitalization or treatment plan. The following are scenarios where concurrent authorization could be required.

Hospital Stays: For extended hospitalizations, insurance might require concurrent authorization. The hospital would submit updates with:

• The patient's daily condition and progress.
• Justification for continued hospitalization (e.g., ongoing monitoring, recovery from complex surgery).
• Expected discharge date based on the doctor's plan.

Home Health Care: After a hospital stay, home health services like nursing care might require ongoing approval. The request would include:

• The patient's condition and specific needs for home healthcare (e.g., wound care, medication management).
• The type and frequency of home health services planned (e.g., daily nurse visits, physical therapy sessions).
• The qualifications of the home healthcare providers.

Cancer Treatment: Chemotherapy or radiation therapy often requires concurrent authorization. The doctor or oncology team would submit requests with:

• The specific cancer diagnosis and stage.
• The planned treatment regimen (type of drugs, radiation schedule).
• Expected duration and frequency of treatment cycles.

Mental Health Treatment: Inpatient or outpatient mental health treatment might require ongoing approval. The request would include:

• The patient's diagnosis and current mental health state.
• The treatment plan details (individual therapy, group therapy, medication management).
• The qualifications of the mental health providers involved.

Physical Therapy or Rehabilitation: Following an injury or surgery, physical therapy might require concurrent authorization. The request would include:

• The patient's diagnosis and limitations due to the injury/surgery.
• The planned physical therapy program (exercises, frequency of sessions).
• The expected duration of physical therapy needed for recovery.

Example: David requires knee surgery. His insurance might require concurrent authorization and might review the necessity of his hospital stay after a certain number of days. They might ask for updates from his doctor to ensure continued coverage for the hospital stay.

Key Differences:

Benefits: Both authorization types help ensure-:

• Medically necessary care: Treatments are truly needed for your condition.
• Cost management: Insurance companies manage healthcare costs.
• Informed decisions: You're aware of potential authorization needs and costs upfront.

REQUIREMENTS FOR AUTHORIZATION REQUEST

• Patient Demographic information (name, date of birth and insurance ID number).
• Information of the provider (Address, Tax ID number, National provider identifier NPI number, phone number).
• The location where the service would be performed.
• Correct CPT codes
• Diagnosis (corresponding ICD code and description).
• Length of hospital stay requested in case of inpatient request.

PROCESS

Electronic: This is the fastest and most straightforward way to do authorizations, the provider uses a secure site or a portal to do the authorization. It is mostly common with federal and state insurance.

Manual: This is done by contacting the insurance over the phone; certain patient information is required and accurate information must be provided if not you can’t do the authorization. This method takes longer to do than the electronic method. An authorization number is given to ensure that authorization was done, and the beginning and expiration dates are also clearly specified. This process is mostly used for commercial insurance.

BENEFIT OF AUTHORIZATION

• It ensures that the services or procedures provided by a patient are covered by their insurance plan.
• It helps health care providers to avoid unexpected denials of payments.
• It reduces financial burden on patients.
• It ensures providers receive timely reimbursement for their services.
• Over all helps facilitate smoother healthcare delivery and improves the financial viability of medical practices.

ROLES AUTHORIZATION PLAYS IN HEALTHCARE SECTOR

• Patient Satisfaction: By obtaining authorization and ensuring insurance coverage healthcare providers helps the patient by minimizing financial surprises and uncertainties.
• Streamlined Billing process: it streamline billing process by providing a clear documentation of services being performed and the approval from the insurance company, it also reduces billing errors.
• Compliance: Many insurance plan requires authorization for certain procedures to ensure compliance with guidelines and polices failing to obtain authorization can lead to penalty or non payment.

              WHY DO WE NEED AUTHORIZATION

1. Cost Management: Healthcare can be very expensive, and insurance companies use prior authorization to try and control their spending. By reviewing requests for services or medications beforehand, they can:
   1. Ensure the treatment is truly necessary for your condition.
   2. Explore more cost-effective alternatives, such as generic drugs instead of brand names.
   3. Avoid unnecessary procedures or tests that might not be beneficial.

1. Quality of Care: Prior authorization can also play a role in ensuring you receive appropriate care. This is because the review process allows insurers to:
   1. Identify potential misuse of medications or services.
   2. Verify if a chosen treatment aligns with established medical guidelines.
   3. Catch situations where a less invasive or risky option might be better suited for your condition.

Note: Authorization in medical billing does not guarantee payment of claims, however not having approval can result in non-payment or denials of claim.