Pre-authorization or prior-authorization is a legal requirement to make certain that the insurance payer pays for the treatments and medications specified on the medical claim form. The insurance payer is free to refuse payment of a patient’s medical service as part of the health care insurance plan without authorization. Prior authorization for prescription drugs is intended to ensure that patients have access to safe, effective, and affordable prescription drugs. Companies that provide medical billing services collaborate closely with physicians to ensure a more efficient process for approving prior authorization requests. If a patient is prescribed a medication that necessitates prior approval for medical necessity and such approval is not obtained, the patient may be forced to pay the full cost.
What kinds of drugs need prior authorization?
The following drugs may necessitate a prior authorization request:
- Having dangerous side effects
- Harmful when combined with other drugs
- Used only for certain health conditions
- Often misused or abused
- Less expensive drugs might work better
Prior Authorization Request Submission Process
The physician is responsible for obtaining authorization for the prescription drugs. Before performing the procedure, the provider must apply for authorization. Once approved, the payer issues an authorization number to the physician for future reference.
Authorization requests can be submitted both manually and electronically by the physician. There are both offline and online forms available for submitting a written authorization request. An electronic authorization request is submitted via fax or mail.
Insurance authorization company have different requirements for authorization requests. However, when submitting authorization requests, the following information tends to remain consistent:
- Demographic information of the patient, such as- Name, Date of Birth and Insurance ID number
- Provider’s information- Address, Tax ID Number, National Provider Identifier (NPI) number, Phone and fax number
- The service location- Address, Tax ID Number, National Provider Identifier (NPI) number, Phone and fax number
- Requested procedure/medical service with appropriate CPT/HCPCS codes
- Diagnosis (corresponding ICD code and description)
- In the case of inpatient requests, the length of hospital stay requested
In addition to the above, the payer may request additional documents based on their needs.
Importance of Pre Authorization
Pre authorization is an important step in the medical billing process. It guarantees that the procedure will be covered by the insurance company and that the physician will be reimbursed. Here are some of the main advantages of pre-authorization:
- Helps to control costs and manages the risk of over prescription.
- Ensures that the service or drug requested by the physician is truly medically necessary.
- Ensures that the service is not duplicated, particularly when multiple specialists are involved.
- Determines whether the recurring or ongoing service is actually beneficial to the patient’s care.
- Promotes patient safety.
- Lower healthcare costs.
- Aids in the improvement of care quality and the promotion of evidence-based care.
- Reduces unnecessary procedures and health care costs, for example, health plans require preauthorization for painkillers that are susceptible to misuse and monitor their use.
Prior Authorization – Is there a Downside?
In response to rising drug costs, insurers have expanded the use of prior authorization requirements, according to a 2021 report from The Journalist’s Resource. Prior authorizations were required for approximately 24% of drugs covered by the insurer-run Medicare pharmacy programme (Part D plans) in 2019, up from 8% in 2007.
When an insurance company requires preauthorization for a specific medication, it can be inconvenient for both providers and patients. Patients would have to wait a certain amount of time before their prescription is filled, and they would also have to pay for it if the insurance company denied the request for coverage. Prior authorization can also be a barrier for physicians in providing timely, patient-centered care.
Lower Burden with Outsource Prior Authorization for Prescription Drugs
Prior authorization can take several days to process, depending on the medication prescribed by the doctor and the insurance company’s requirements. Prior authorizations are a time-consuming and labor-intensive task for physicians.
Both pharmacies and physicians must put in a lot of administrative time, paperwork, and phone calls. According to an AMA survey, 40% of physicians use staff whose sole responsibility is to work on prior authorizations, and they spend approximately 13 hours per week doing so. Approximately 44% of physicians reported that PA requests “often or always” impede care, with 26% reporting average wait times of three business days or more to receive PA decisions from health plans.
Partnering with a medical billing outsourcing company such as 24/7 Medical Billing Services can make the process easier for physicians. We have experts on staff who will collaborate with the provider to submit prior authorization requests as soon as possible. Errors will be reduced by their streamlined, centralized processes. As insurance verification specialists, we have worked with all government and private insurers and can ensure that Prior Authorization for Prescription Drugs requests are submitted in accordance with the needs of various plans.
See also: A Detailed Guide On Pharmacy Billing