Beyond treating patients, healthcare professionals often find themselves spending time with administrative, billing and credentialing issues. This step seems trivial, but it is a vital piece of any medical practice’s revenue cycle. If prior or preauthorizations are not done by a provider, medical billing problems will likely occur.
What are Prior or Preauthorizations (PA):
Prior authorizations (PA) are one of the tools used by insurance companies in order to control overall health care costs. Preauthorizations, also called prior approval or precertification, is a decision by a health insurance provider or insurance plan to verify that a specific healthcare service, treatment plan, prescription drug or durable medical equipment is medically necessary.
According to the American Medical Association (AMA), prior authorizations is a verification process by which physicians and other healthcare professionals need to obtain advance approval from a health insurance plan before a specific procedure, service, device, supply or medication is delivered to a patient.
Otherwise, the procedure or device may not qualify for insurance coverage and reimbursement. Other terms used by health insurance plans for this verification process include prior approval, prior notification, prospective review and prior review.
Health insurance plans may require prior authorization for certain services before a patient receives them, except in an emergency. However, preauthorization of a medical service or treatment by an insurance provider is not a promise of payment. Prior authorization does not guarantee coverage.
Prior or preauthorizations are primarily used for the following three reasons:
- Is the treatment or medication requested for the patient medically necessary?
- Is the requested treatment or medication the most economical option available for the condition?
- Are the dates of medical service up-to-date, correct and not being duplicated?
However, for whatever the reason a healthcare insurance plan requires physicians and other healthcare providers to preapprove treatments – prior authorizations are seen as obstacles. Healthcare providers may view prior authorizations as a barrier that prevents patients from receiving necessary medical treatments. Some healthcare professionals also see the verification process as an unnecessary questioning of their medical judgment and clinical expertise.
What If Prior Authorizations Are Delayed or Ignored?
Some healthcare providers may not want any disruptions in practice workflow. These disruptions can create inefficiencies and a reduction in healthcare professionals actually providing care to their patients. However, if a PA is not performed, patient access to some medically necessary therapies is delayed. Back in 2010, the AMA survey of 2,400 physicians found that two-thirds of them reported waiting several days to receive PA for drugs, while 10 percent waited more than a week.
In other cases, a medical office can find out that insurance providers will not pay for certain healthcare services that were administered by the healthcare professional. This is due to the fact that the requirements listed in a PA may not be identified by a doctor’s office, until after a patient has already received medical treatment.
In this situation, the physicians and other healthcare providers were uncompensated for their work since unauthorized services are not reimbursed by insurance plans. Occurrences like this can leave financially stressed with a practice’s cash flow severely disrupted.
Prior Authorization For Ohio Healthcare Providers:
The insurance provider Aetna Better Health of Ohio requires prior authorization for select acute outpatient services and planned hospital admissions. However, a PA is not required for emergency services. Aetna states that if covered services and other treatments requiring prior authorization change, healthcare providers will receive at least 60 days’ advance notice through a newsletter, e-mail, updates on the Aetna website, letter, telephone call or office visit.
The Ohio Department of Medicaid (ODM) sees the PA process as a way to obtain additional information from the prescriber of a procedure, medication or service. ODM does not want to restrict access to treatments, but they want to ensure eligibility, benefits coverage, medical necessity, location and appropriateness of services.
The insurance provider Molina Healthcare points out that not all services require prior authorization. PAs are not required for visits to a primary care provider, emergency room (ER) or for many other covered services. If a PA is denied by the insurance provider, the Medical practitioner can ask for a review of the request through a process known as reconsideration.
In Ohio, a healthcare provider has up to 30 days to ask for the reconsideration of a denied PA. If the reconsideration is denied, the medical practitioner can submit an appeal to the insurance company. However, in order to minimize the occurrence of reconsideration and appeals, most insurance companies provide a list of services that require prior authorization.
Ohio Prior Authorization Reform Act:
In June 2016, the State of Ohio passed the Prior Authorization Reform Act. When this act was a bill, it had received strong support from the Ohio Academy of Family Physicians. The act adopts the NCPDP SCRIPT Standard as the methodology for processing prescription prior authorizations (PA). It requires health insurance plans to provide faster responses to medical and prescription drug coverage decisions.
The act requires insurance companies providing health coverage in Ohio to adhere to the 5 following points:
- Health plans and pharmacy benefit managers (PBMs) shall accept prior authorization requests through a secure electronic transmission using the NCPDP SCRIPT Standard on any policies issued on or after Jan. 1, 2018.
- Faxes are not considered secure electronic transmissions and proprietary payer portals are not considered secure transactions unless they use the NCPDP SCRIPT Standard.
- Prescribers and health plans can enter into a contractual agreement foregoing this process if an undue hardship exists.
- Health plans MUST respond within 48 hours for urgent care or 10 days for non-urgent requests. If a PA is incomplete due to additional information being needed to complete the request, the prescriber shall provide additional information to the insurer within 72 hours of the request.
- For any health policies issued on or after January 1, 2017, as well as for chronic conditions; the health plan shall honor a PA approval for an approved drug for the lesser of 12 months or the last day of the covered person’s eligibility of the policy, contract or agreement.
Incidentally, a similar law is under debate in neighboring Pennsylvania. State lawmakers have introduced legislation that would require insurance companies to use a standardized prior authorization approach. The bill is supported by medical groups and associations like the Pennsylvania Orthopedic Society.
Pennsylvania doctors argue that the present PA model is excessive, inconsistent and unnecessary. They state that the use of prior authorization by insurance companies has created a system that delays or denies patient care.
Who We Are:
Even after following proper prior authorization policies, a physician’s staff is not a guarantee of payment. This is why healthcare providers need backoffice specialists on their side. For help with revenue cycle management and insurance reimbursement issues, contact Advanced Billing & Consulting Services. As an Ohio-based company, they provide experienced medical billing, credentialing, healthcare-focused marketing as well as billing services for I-DD agencies.
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