How to Handle Authorizations in the Medical Billing Process

October 29, 2021

Here’s a question for you: A doctor tells a patient they need to schedule a procedure. Whose responsibility is it to get that procedure pre-approved by insurance?

Did you guess the MD?  You’re technically wrong, but in all actuality you are correct.  The patient is actually technically responsible for ensuring prior notification and approval are on file ahead of surgery.

Try telling that to your patient as you send them a bill and see what happens to your online reviews though.  The reality is the assumed responsibility for the entire authorization process lands on the provider/provider’s office…so best know how to handle it.

So What are Medical Billing Authorizations?

When a patient is told by their health care provider that they need medical treatment, a prescription drug, or a health care service, the insurance company must approve it before the patient moves forward in many cases. This is called authorization, prior authorization, prior approval, or precertification, prior notification, etc.  Oh and each carrier uses them slightly differently…because why make anything simple or easy in the land of medical billing?

Basically, the patient needs the A-OK from their insurance company that the medical request is absolutely necessary and will be covered after adjudication (fancy shmancy industry lingo for processing your claim). When insurance says “yep, all good,” the request is approved and the provider receives an authorization number.  Sometimes you get a letter, rarely you get a call and oftentimes you need to call them to remind them to communicate and they give the auth number over the phone.

⚠️#PitfallAlert#⚠️ – Covered doesn’t mean paid in full or paid at all…it doesn’t even mean the patient has active coverage!  All the payers do is look at medical necessity…that’s it.  They’ll approve cases for patients without active coverage at times, because again…why make anything logical in the land of medical billing.

Of course, the answer can be “no,” it’s not covered. The “whys” below

  • The patient isn’t covered by insurance. ← Rare, but they do actually think over there sometimes and alert you if you have an old plan

  • The wrong billing code was submitted. ← Again, rare, but for unusual cases they may require certain procedure codes (e.g., gender affirming surgery, lipectomy, etc.)

  • Information was missing on the request. ← SUPER common…and usually the information is there…this is actually the most common stall tactic you will see

  • Doesn’t meet “medical criteria” AKA medical necessity.  ← The coder, offshore RN, or if you’re lucky, pencil pushing generalist who doesn’t practice anymore will tell you that you don’t meet medical criteria for a procedure they can’t even technically render under their medical license.  #scumbags.

So going back to the who’s responsible thing:

  1. Doc has to push the request (patient ain’t doing it folks, nor can they so you best)…oh and for all you MDs reading this: KNOW YOUR MEDICAL POLICIES!  The worst thing you can do is punt it to your back office to get something approved you should know will never be approved.  Now you have a ticked off patient who has a staff member contradicting the doc, which makes for a not so fun patient experience and a lot of confusion/frustration that could be easily avoided.

  2. Patients, scratch that, the office needs to make sure they have acceptable and active insurance.  Check this SEPARATELY from the auth folks.  Frankly you should be checking it before the patient hits your front desk to be checked in for their consult.

  3. Medical coder/biller should validate the case BEFORE submitting so no one wastes anyone’s time submitting a case you know doesn’t meet criteria…and therefore will be denied.

In short: the office is responsible here in the long run.

When You Need Authorization

It’s always better to assume that a medical treatment, procedure, or prescription needs authorization. If you don’t check and your assumption was wrong…you’re not getting paid by the insurance company…and probably not your ticked off patient either.  The old “weeeeellllll…technically this is on you” thing won’t get you too far.

In the aesthetic end of medicine (plastics/derm where we live), use this rule of thumb: 

Would I ever charge my patient for this cosmetically/self-pay?

If the answer is yes, you need to check for an auth.  Period.

What if I’m on call or there’s an emergency you ask?  In the case of an emergency, no authorization is needed ahead of surgery (but do it if you can). You’ll typically get 1-2 days leeway on the back end to submit the auth…and thinking about the above rule of thumb…most patients don’t show up to the ER for an emergency breast reduction or blue light therapy.

Medicare Beware: They’re funky, because they’re the government and think they’re special.  They don’t do auths.  They just post their policies online and good luck Charlie.  If you’re not paying attention and you don’t meet criteria…they ain’t payin’.  So…read the policies…know them…have your in house team play their best crotchety insurance case reviewer and validate the case yourself. 🔎

Rule of Thumb:  If you wouldn’t put your mother/friend/son/whoever at financial risk because you’re not 100% on “this is covered,” don’t push the case.  You may be able to write off your bill in a worst case scenario, but guess who won’t…the facility.  That’s a five figure risk you’re taking for your patient.  Not worth it. 🚫

Tips and Tricks for Medical Billers

Having fun yet? Bueller? Bueller?

OK, maybe we can’t make this fun, but we have a few tips and tricks up our sleeve that help to make this process a bit easier.

  1. Use the proper Current Procedural Terminology (CPT®) when authing.  More importantly…use the #ShotgunMethod.  Does your doc give you 100% accurate codes 100% of the time?  Probably not.  So, add all the stuff they MIGHT do.  It is 100% OK to over-authorize to cover your rear if the surgical plan changes.  In the end, you will only be billing for services rendered based on the operative note.  So all that extra auth stuff is just a safety net. 🥽 It won’t make your auth harder because the codes are likely all in sequence meaning the medical policy review doesn’t change.  So no harm, no foul, no room for that capsulectomy to get denied because you authed a capsulotomy instead.

  2. Get the authorization – period: The insurance company might tell you a medical service does not need authorization. If you know it sometimes does with other payers or it is a “grey area procedure” (e.g., reduction, rhino, bleph, pannic, scar revision, etc.) – the n get one anyway! It is easier to get the authorization beforehand than to fight the denial on the back end.  Does the carrier not offer authorizations?  Then litigate that case on your own and don’t let the patient move forward if you know it won’t be covered…it is ALWAYS going to be your fault for “bad billing” or whatever they choose to call it on the back end.

  3. Invest in the right software: Decrease your workload and increase your efficiency by using a claims platform. For example:

    • Docvocate is a killer appeals platform launching an authorization engine.  It connects with your system to pull demo/coding etc., so you can kick out appeals/auths with the click of a button.  No more printing records and a form and typing out everything…one click submit plus a tracking workflow so you can kill the spreadsheets! 📃

    • Health iPass is a great platform to estimate benefits and precollect right in the office BEFORE the patient walks out of the door.  Patients pay about 60% of their medical bills and it is a lot harder to say no to your pretty face than it is to drop that statement in the trash 🗑

  4. Provide an estimate of benefits: We all like to know how much things cost right?  So crunch the numbers for your patients and PRECOLLECT IT!  See below for details friends…

The Importance of Price Transparency

Welcome to the movement folks.  This is happening and it is going to get worse/better depending on where you sit.  Consumers feel like they are getting overcharged for health care services, because they are…I blame the suits running institutionalized medicine for billing out $100 aspirin personally, but we’re not all off the hook. This past January, a new price transparency rule went into effect requiring all U.S. hospitals to post their standard charges in a user-friendly online format. The requirement is meant to help patients make more informed decisions about medical services based on cost.

As of July, less than 6% of hospitals were fully compliant with the new rule. Incompliance leads to hefty fines for hospitals and could alienate a large portion of a hospital’s customer base.

Of course, the price transparency rule creates several challenges:

  • 💲Prices for services can vary drastically by region.

  • 🏥Hospitals must determine which of their services are “shoppable” services.       

  • 🚑Many emergency services, such as heart attack or stroke, cannot be shopped for in advance.

  • 🧾️Providing the cost of service does not provide the patient with how much they owe for that service.

  • 🛒Shopping for cost might impact quality of care.

Many existing tools, such as BuildMyBod.com, help patients learn more about procedures and associated costs. Some states, like Massachusetts, and certain insurance companies have developed their own price transparency tools. This knowledge leads the patient to a more informed decision. 💯💯

Authorization this, Authorization that. How do I get paid?!

Here’s the bottom line: you are the source of truth when it comes to authorization. 

Sick of making your Patient Care Coordinator or Surgery Scheduler waste their time on this junk instead of selling and booking your schedule out?  ROI folks…let them sell and book and kick this annoying can down the road to us!  You’ll be paying us for a service, but SAVING $ by making more $$ with your team doing what they do best.

And if you still have questions, give us a holler. 📢

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