Suppose that you managed to provide exemplary patient care at your medical practice and your patients leave satisfied with the treatment received, leading to positive feedback and improved health outcomes. However, when you check to see the status of your claim submission, you might be surprised to find that your claim has been rejected or denied. The primary challenges that healthcare providers face with revenue cycle management usually arise from claim rejections or denials. This is a significant setback that not only results in financial loss for your practice, but also causes emotional distress.
Medical facilities must therefore take all the relevant steps and precautionary measures to avoid any risks of claims rejections and denials. The two pivotal processes performed during the initial RCM phase are insurance verification and insurance authorization, both equally important with the common aim of generating maximum reimbursement but serves different purposes and applications.
Outsourcing insurance verification and authorization to an insurance verification and authorization company streamlines the RCM process, minimizes claim denials, and improves the overall financial stability of a practice.
What Constitutes insurance Verification and Insurance Authorization?
Insurance verification, also called insurance eligibility verification, is the critical process that entails contacting the patient’s insurance carrier and verifying the data related to the patient’s medical history, insurance coverage and benefits prior to the date of service. This step is obligatory to ensure insurance payments for the services rendered and to prevent potential reimbursement issues in the future. Insurance verification also mitigates any miscommunication and conflicts between patients, healthcare providers and insurance payers.
A reliable insurance verification service provider will make sure that all the required details about insurance eligibility and benefits are collected before the patient visit, which include:
- Type of plan and coverage details
- Calendar year/ policy year
- Effective date
- Plan annual maximum
- Plan deductible
- Primary and secondary insurance
- Per code coverage, if available
- Co-pays and deductibles
- DME coverage
- Plan exclusions
- Referral and pre-authorization requirements
- Out of network benefits
Insurance verification specialists will obtain a full breakdown of the patients’ insurance coverage and benefits by visiting payer web portals or calling the insurance carrier with the information collected from the patient during the initial phone call.
Insurance authorization or prior authorization or pre-authorization, on the other hand, is the process in which the medical care provider seeks advanced approval from the patient’s insurance payer before the treatment is delivered to cover for specific services, procedures, medication or treatment. This step directly impacts the claim submission process as insurance companies mandate pre-authorization to verify medical necessity and coverage for the proposed treatment. Certain medical procedures, medications or treatments are expensive and high-risk, so pre-authorization ensures patients receive the necessary medical care. Lack of pre-authorization may lead to the insurance payer denying or rejecting the claim with little to no chance of appeal.
Insurance Verification vs. Insurance Authorization
While both insurance verification and insurance authorization play equally vital roles in the revenue cycle management of a medical organization, they serve distinct functions with a common objective of ensuring proper coverage and minimizing payment issues for the healthcare providers.
Now, let us consider the differences between the steps involved in these processes.
Steps Involved in Each Process
| Insurance Verification | Insurance Authorization |
|---|---|
| The first step in insurance verification is checking whether the patient has an active health plan and is eligible for insurance coverage. | Identify whether the prescribed medication or treatment is covered by the patient’s health plan; if not, initiate the pre-authorization process by submitting a request to the patient’s insurance company with all the relevant documents supporting medical necessity. |
| The next step is to identify the type of plan that the patient has to determine the level of coverage offered and to see if your practice falls under in- network status. | After filing a pre-authorization request, the insurance company will review and scrutinize your request carefully to evaluate medical necessity, whether the treatment is in line with the medical issue and whether alternate less expensive options are available which are equally effective. |
| Verifying that the date of service falls under effective date of coverage to ensure that the service will be reimbursed. | Your pre-authorization request will either be approved or denied by the insurance payer. In case it is approved, you can proceed with the treatment and in case of denial, you may appeal or explore other options. |
| Gathering details such as deductibles, co-pays and coinsurance to accurately calculate the financial responsibility of the patient. | The pre-authorization has a specific validity period within which the authorized service must be given to avoid the hassle of re-applying pre-authorization. |
| Comprehensive documentation of the patient’s insurance details such as coverage status, health records, and pre-authorization requirements to ensure compliance with standard rules and regulations for health insurance claims. |
General Differences between Insurance Verification and Insurance Authorization
| Insurance Verification | Insurance Authorization |
|---|---|
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Benefits of Insurance Eligibility Verification and Insurance Authorization
| Insurance Eligibility Verification | Insurance Authorization |
|---|---|
| Fewer claim denials | Helps with treatment planning |
| Enhanced revenue cycle management for practices with timely payments, reduced need for resubmissions and consistent cash flow | Reduced costs with insurance companies reviewing expensive procedures or treatments to explore the availability of less expensive alternatives. |
| Reduced administrative burden with insurance verification done upfront. Minimizes the need to address claim rejection, denials or cross-check insurance information. | Prior authorization helps the medical practice and patients by avoiding nonessential treatments or medications. It ensures that the service to be provided is medically necessary. |
| Helps avoid negative patient experience such as unexpected or inflated bill, by being transparent about the costs in advance. This improves patient experience and enhances their trust in your practice. | Insurance companies investigate and scrutinize every aspect of the insurance claims. The stringent rules and requirements assure quality health service, reduced adverse outcomes, and overall improved patient safety. |
Both insurance verification and authorization are time-consuming processes that can lead to denials. That’s why they are best handled by experts. Outsourcing these tasks to an experienced insurance verification company can go a long way toward saving time, preventing denials and delays, optimizing reimbursement, and improving patient care and satisfaction.
Our dedicated medical billing team can efficiently handle all technicalities of insurance verification and authorization!
Since joining our RCM Division in October 2021, Loralee, who is HIT Certified (Health Information Technology/Health Information Management), brings her extensive expertise in medical coding and Health Information Management practices to OSI.
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