Medical billing companies play a vital role in helping physicians reduce claim denials and enhance the patient experience through strategies such as insurance verification, preauthorization, and retro authorization services. Health plans use prior authorization to decide if a prescribed product or service will be covered, making it a critical step in the billing process. An insurance verification and authorization company assists physicians by verifying patient coverage and obtaining preauthorization from health plans before a service is delivered.
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When pre-authorization was not obtained, healthcare providers face challenges that can affect their ability to deliver optimal care. Retro authorization or retroactive services come into play where authorization was not secured in advance and ensures that necessary approvals are sought after the patient received the healthcare services, especially in emergencies or unforeseen circumstances. Retroactive authorization in medical billing helps providers maximize reimbursement by applying health plan policies that would have approved the service if authorization had been obtained beforehand. This helps patients receive timely care while minimizing administrative hurdles and financial setbacks.
Retro-Authorization Explained
Prior or pre-authorization involves obtaining approval for the patient’s services prior to rendering them. Many insurers require that authorization for services be obtained prior to or within 14 calendar days of services rendered.
What if the provider could not obtain a pre-authorization before services are delivered? In rare exceptions and emergencies when preauthorization is not possible, retro authorization approval requests will come into play.
Retroactive authorization is used to secure approval for services already provided. It refers to requests made to the insurance company for approval after patient’s treatment has been provided and the specified period of time has ended. It is typically used when a service is provided without prior authorization due to an emergency and other unique circumstances, such as:
- The patient is unconscious or in an emergency situation that prevents the healthcare provider from obtaining necessary medical information for preauthorization.
- The healthcare provider doesn’t have enough time to obtain prior authorization.
- The patient is transferring between health plans and services are provided during that transition period where coverage status is not clear.
- The provider misinterpreted the patient’s coverage and provides the service, believing it did not need prior auth, when it actually did.
- The provider made diligent attempts to obtain prior authorization.
Retro authorization serves as an essential safeguard if prior auth was not obtained, ensuring providers receive appropriate reimbursement for the services rendered.
Significance of Retro Authorization in Medical Billing
Retro authorization is crucial for ensuring healthcare providers receive proper reimbursement for their services. Without it, providers may not be paid for services that were not pre-authorized, which can create significant financial strain and affect their ability to deliver quality care. The benefits of retro authorization include:
- Financial stability: helps protect the financial stability of healthcare providers by securing payment for services already provided.
- Preventing denials: prevents situations where services may go unpaid due to the absence of pre-authorization.
- Quality care assurance: ensures providers are reimbursed, helping them to maintain and improve the quality of patient care.
Challenges of Retro Authorization
Retro authorization also involves several challenges.
The HHS OIG report notes that retro-authorization denials are a growing concern particularly within Medicaid managed care plans. Suppose a healthcare provider has secured authorization for a CT scan of a patient’s chest. During the scan, the radiologist identifies the need to extend the study to include the abdomen. Obtaining payment for this additional service can be challenging, as many insurers do not allow retro-authorization for services that were not preapproved, even if they are deemed medically necessary.
The AMA highlights that similar situations occur during surgery when a specific procedure has been preauthorized. If the surgeon discovers an additional issue that requires immediate attention during the operation, addressing it may benefit the patient significantly. However, obtaining reimbursement for the additional procedure can be challenging, as it was not included in the initial authorization.
Insurance providers have rules as to when the retro-authorization request must be sent. For example, CareSource: allows retrospective review within 30 days of the service date while Carelon Health of Pennsylvania requires a written request within 45 days of the service date. Beacon Health Options requires that that request must be received in writing no later than forty-five (45) calendar days from the date of service. Typically, after the provider submits the retro authorization request, the payer will reimburse the claim based on their standard guidelines.
If a provider makes a mistake and fails to get preauthorization, there is no guarantee that the payer will issue a retro authorization. A denial may be overturned on appeal, but if payer rules on the retro-authorization process change, they are under no obligation to make payment if their guidelines were not followed.
Key Considerations for Managing Retro Authorizations
Essential factors for effectively managing the process include:
- Knowledge about specific plan requirements: As each health insurance plan has its own guidelines regarding retro-authorization, providers must carefully review the plan’s policies.
- Documentation is key: To successfully request a retro-authorization, detailed medical records and supporting documentation explaining the extenuating circumstances are necessary.
- Ensure accurate codes: The codes used to describe the care listed on the submitted bill should be correct, meeting CPT and ICD-10 guidelines.
- Timely filing: The payer’s timely filing guidelines for claims associated with services subject to retro-authorization should be met.
If a retro-authorization request is denied, providers may have the option to appeal the decision to the insurance company.
Outsource Insurance Verification and Authorization: Simplify the Predetermination Process
Managing prior authorization and retro-authorization involves several challenges, often leading to revenue loss and affecting patient care. Leading healthcare organizations spend millions of dollars fighting prior auth denials. The Cleveland Clinic has reported that it spends $10 million annually on prior authorization requests.
Insurance verification and authorization companies can help practices manage the prior authorization and retro-authorization request process. Their experienced insurance verification specialists contact insurance companies to secure both prior and retroactive authorizations efficiently. They verify coverage for specific medical procedures and obtain the necessary approvals from payers to ensure timely and accurate reimbursement. They have deep expertise in government and private insurance guidelines, ensuring claim submissions are accurate and compliant. By managing the complexities of insurance prior authorization and addressing retro-authorization needs when preapproval was missed, they help minimize errors, reduce delays, and maximize payment outcomes. With these experts handling time-intensive administrative tasks, healthcare providers can focus on delivering quality patient care.
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