The Ultimate Guide to Prior Authorization – Myndshft

the ultimate guide to prior authorization

prior authorization involves many moving parts that affect providers, payers, and patients. there are accepted guidelines in some subjects and blurred lines in others. We’ve written this guide to demystify prior authorization and quickly answer some of the most common questions people have about it.

what is prior authorization?

Prior authorization, also known as preauthorization, is a utilization management practice used by health insurance companies that requires that certain procedures, tests, and medications prescribed by health care physicians be first evaluated to assess the need for medical and cost of care. branches before they are authorized.

The reasoning behind prior authorization requirements is that a less expensive treatment option may suffice rather than simply opting for the more expensive option. this is especially true for high-cost procedures and medications, such as surgeries that can safely occur in an outpatient setting, mris, durable medical equipment (dme), and specialty medications.

Reading: How long does insurance preauthorization take

For medical services, health plans can refer patients to lower-cost doctors or places of care.

for drugs, especially high-priced specialty drugs, pharmacy benefit managers (pbms) often require a step-therapy approach that dictates starting with less expensive options before moving on to more expensive drugs.


A health insurance payer’s decision to approve or deny a prescribed course of treatment based on the results of a prior authorization review will affect whether and, if so, whether a provider or pharmacy will be reimbursed for a claim. the refund will be for a total or partial amount.

what is the difference between prior authorization and prior authorization?

prior authorization and prior authorization are often used interchangeably and refer to the same thing, as are terms like prior notice and prior review.

what is the difference between a prior authorization and a referral?

A referral occurs when a referring provider refers a patient to another provider for care, often in another specialty. this requires the ordering provider to submit documentation to authorize the appointment.

How long does a prior authorization take?

Depending on the complexity of the pre-authorization request, the level of manual work involved, and the requirements stipulated by the payer, a pre-authorization can take anywhere from a day to a month to process. The 2018 American Medical Association (AMA) Prior Authorization Physician Survey found that 26% of providers reported waiting 3 days or more to get a prior authorization decision from health plans.

This delay can cause problems for both patients and healthcare professionals caring for them. Patient adherence to medication and treatment often declines when obstacles such as deferrals or additional steps are introduced. it also diverts time from physicians, and the revenue cycle team that supports them, that could be better spent on patient care. As an unintended side effect of delayed care while a prior authorization is reviewed, some patients will seek treatment in an emergency room; a decision that will often result in them receiving a large, unexpected bill that is not covered by their health plan.

how does prior authorization work?

The current pre-authorization process typically resembles the following flow:

  • First, a health care provider determines that a patient needs a specific procedure, test, drug, or device.
  • It is the provider’s responsibility to check a health plan’s formulary or policy rules to determine if prior authorization is required for prescribed treatment. If necessary, the provider must formally submit a prior authorization request form and sign it to certify that the information supporting the claim of medical necessity is true and accurate.
  • Because healthcare and clinical billing systems are rarely integrated, provider staff will often begin by manually reviewing prior authorization rules for the specific insurance plan associated with the patient. the rules can often be found in paper documentation, pdf files, or payer web portals.
  • These payer rules are not standardized and differ from one health plan to another. It’s not uncommon for the rules to even differ from plan to plan within a specific payer. these payer rules also change frequently, so a provider’s administrative staff may be referencing outdated rules.
  • If the provider confirms that prior authorization is not required, you may submit the claim to the payer. this does not mean that the claim will necessarily be approved.
  • However, if the provider confirms that prior authorization is required, you will need to seek further details regarding each cpt code that is applicable to the prescribed course of treatment. You will also need to obtain a payer-assigned number that corresponds to the prior authorization request and include it when submitting the final claim. these steps are usually done manually, often through a cascade of phone calls, faxes, and emails between the payer and the provider.
  • The responsibility rests with the provider to continue follow-up with the insurance company until the prior authorization request is resolved: an approval, redirection, or denial. this part of the process is unstructured and often improvised, often leading to significant wasted time and effort.
  • current lab ordering process

    Current Lab Order Prior Authorization Process

    why is prior authorization so complex?

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    The prior authorization process is often complicated by a combination of factors, including:

    • many necessary steps, each of which introduces the possibility of delays and errors.
    • involvement of both payers and providers, each with different motivations, workflows, and infrastructure.
    • lack of standards, particularly regarding payer rules.
    • fluctuating payment rules that need to be constantly monitored and reviewed.
    • thousands of payers and health plans.
    • manual review of prior authorization requests and medical records by physicians.
    • is it possible to expedite prior authorization?

      One of the main reasons prior authorizations take so long to resolve is that incomplete or incorrect information is sent to the health plan, leading to a denial and a lot of manual rework by the provider.

      Any error contained in the prior authorization form, from blatant to innocuous, you can flag it for denial. a number can be transposed on a patient’s health identification card. a middle initial may be entered incorrectly. an address may be incomplete.

      Mistakes often arise because the pre-authorization process can be overly complicated and often involves many manual steps and stakeholders, which can lead to errors. information about the patient, the ordering provider, the requested service, and the medical scenario is required, and if any of these are wrong, it will precipitate a denial. once a denial has been filed, it is difficult to reverse.

      Even when there are no errors, the lengthy medical reviews associated with prior authorization can delay care and introduce uncertainty into the process for both providers and patients. this is especially true when benefits administrators are involved.

      Automating the end-to-end pre-authorization process as early in the revenue cycle as possible reduces the likelihood of errors, decreases the amount of manual work wasted on tedious tasks, and speeds up patient care.

      read: why automation is the key to fixing prior authorization

      who is responsible for obtaining prior authorization?

      Usually, the health care provider is responsible for initiating the prior authorization by submitting a request form to the patient’s insurance provider. as mentioned in “how does prior authorization work?” in the previous section, this will often lead to a time-consuming back-and-forth between provider and payer. in many cases, the licensed provider is required to sign the order, referral, or application before the payer will accept the authorization request.

      It is also up to patients to understand if prior authorization is required and has been approved before services are provided.

      what is the difference between a processing provider and an order provider? Who is responsible for submitting the prior authorization?

      A service provider is a person or facility that actually performs the care. a requesting provider is a physician who refers some type of care to be performed by the providing provider.

      In many cases, the processing and ordering provider may be the same. however, there are exceptions where ordering and processing providers differ, such as some alternative care sites.

      A good example of this dynamic is the common practice of directing providers to send diagnostic tests (blood, tissue, urine, etc.) to the laboratories that provide the service.

      Who decides the outcome of a prior authorization request?

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      The final decision on a prior authorization request rests with a physician (doctor or nurse practitioner) who works for the health plan to which the request was submitted. all final denials or redirections are usually decided by an insurance company physician.

      Do all medical services performed require prior authorization?


      Prior authorizations are generally only required for more expensive, complicated treatments where an alternative is available. For example, if a doctor prescribes an invasive procedure like orthopedic surgery, he or she may require prior authorization. an alternative therapy, such as injecting the patient with cortisone to reduce pain and inflammation, is less likely to require payer review.

      Is the occurrence of prior authorization increasing?


      The volume of medical procedures and prescription drugs that require prior authorization is increasing significantly. This is largely driven by insurance companies looking for ways to control spiraling health care costs, especially those associated with innovative new specialty drugs or emerging technologies. While these drugs or services can demonstrably improve patient outcomes, they often come with inordinate costs and are often too new to have a proven track record. this is especially true of specialty pharmacy drugs that are protected by patents.

      The American Medical Association (AMA) has projected that the use of prior authorization for prescription drugs will increase by 20% per year.

      Can doctors charge for prior authorizations?

      Doctors and other health care providers do not usually charge for prior authorizations. Even if they wanted to, most contracts between providers and payers prohibit such practices.

      However, there are some instances, such as when a patient is out-of-network, where it may be appropriate to charge for a prior authorization. In this scenario, the doctor would not have a contract with the patient’s health plan and could theoretically charge for preauthorization.

      what are the different results of a prior authorization request?

      There are three different possible outcomes:

      1. a negation.
      2. a redirect. this can occur when a prescribed treatment is denied from a care site, such as a hospital surgery center, and redirected to a lower-acuity outpatient care site.
      3. a withdrawal of prior authorization from the provider who placed the order.
      4. what is a denial of requested services due to a medical necessity review versus an administrative denial?

        If a treatment requested by a provider on behalf of a patient is not considered medically necessary, the health plan will deny it on those grounds. however, if the reason for the denial is due to incomplete clinical information or member benefits, it may result in an administrative denial.

        what are the different channels that can be used to submit a prior authorization?

        Traditional channels for submitting prior authorization requests have been by phone, fax, or a web portal.

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