In medical billing, pre authorization is a pre-approval before providing medical service. An insurance plan requirement in which the service provider must notify the insurance company in advance about certain medical procedures or services in order for coverage to be considered.
“Authorization is getting approval from the insurer before a procedure is performed to ensure that the procedure will be covered.”
What is Referral in Medical Billing?
The term “referral” can refer to the process by which a primary care provider(PCP) refers a patient to another professional or ancillary provider for specialized medical services, prior to those services being rendered, or to the actual document authorizing the visit or service.
Why pre authorization or referral is important in medical billing?
The philosophy of managed care is to provide quality healthcare while controlling and reducing inappropriate use and costs. In keeping with this philosophy, most managed care plans require referrals and authorization for specialty services.
Precertification-
In some cases, prior to service rendered precertification is required, It is a prior approval before rendering any service. To find out that service is covered under the patient insurance plan or not.
Predetermination-
To determine before treatment the maximum dollar amount the insurance company will pay for services such as surgery consultation and post-operative care, etc.
What is retro authorization in medical billing?
In some emergency cases or accidental cases authorization is required but after services rendered so it is called retro authorization.
How precertification or prior authorization is requested in medical billing?
There are 3 way to request pre- authorization for any service.
1- Electronic Request- Provider can submit online for pre-authorization request before rendering the service.
2- Web based- There are insurance websites so utilization of a web based service allows providers to sign up online and submit request to all insurance companies.
3- Telephonic- Every insurance company’s backside of member card, telephone number is available so provider can call and request for pre-auth.
Who is responsible for Pre Authorization in Medical Billing?
If the provider is in-network, then its the provider’s responsibility to obtain pre authorization for their services.
If provider is out of network then it is patient responsibility to obtain pre authorization.
Main services that need Pre Authorization
1- Inpatient Admission
2- Outpatient Surgery
3- Diagnostic Testing
Also Read: CO 197 Denial Code - Pre-Certification or Authorization not Present
How pre authorization denial handle in AR-followup ?
In AR-follow up if we received claim denied as for absent pre-authorization (CO-197) , there are some steps to follow
1- Check the EOB (Explanation of benefit) for which CPT or service denied for authorization.
2- Check the system if any authorization number already updated in claim if not then
3- Call to insurance company and confirm the services which denied due to absent of pre-auth.
4- Request rep to check there is any auth number is present on the claim or any auth number on hospital claim of the patient available if found any then ask for auth number and effective and termination date.
5- If that number is correct for your claim then request to rep for send claim to reprocess with an updated authorization number.
6- If the authorization number is not found then ask the rep for address and fax number for sent appeal with medical records and also can request for retro auth.
Note- For point 2- if found authorization number in our system, then call to the insurance company and confirm the validity of the auth number, if everything is correct then resubmit the claim with an updated auth number.
Frequently Asked Questions:
1- If any service is authorized then it is sure that will paid?
The authorization is not a guarantee of payment, claim may be denied due to other reason as well.
Related Article:
What is HMO Plan in Health Insurance?
Explanation of Benefit Codes | EOB Codes List
CO 197 Denial Code – Pre-Certification or Authorization not Present
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