Authorization in medical billing helps and allows a patient to avail of a recommended service or procedure before they are rendered. This aids in protecting the patient as well as the dental practice or the healthcare provider.
One step in the management process of the revenue cycle is authorization in medical billing. It is the next step after the entire process of insurance eligibility verification, as it is the output of this verification that forms the basis for the authorization process. Prior authorization in medical billing significantly reduces follow-up on payments and claim denials. This enables the dental practice to secure payments for the services rendered.
It is the process in which the insurance company agrees and authorizes to cover the cost of the advised service before its commencement. This process is also termed pre-authorization or prior authorization. Pre-authorization requires the insurance company’s approval to be obtained for the prescribed service.
It is mandatory to get a pre-authorization go-ahead from insurance organizations for certain dental procedures. The team needs to be aware of which services and procedures need pre-authorization. The patient's insurance plan forms the basis of approval. Insurance organizations authorize requests based on the benefit terms and the procedures that are required. Post the completion of the procedure and treatment, the authorization number that was provided by the insurance payer must be quoted at the time of claim submission.
When recommended procedures have received pre-authorization, claim submission gets streamlined and becomes a hassle-free process. Pre-authorization is not a guarantee of reimbursement but the lack of it could lead to a denial of claims and non-payment for services rendered.
A crucial aspect of authorization is submitting the correct medical codes and providing the right diagnosis. For timely authorization to take place, methodically documenting the necessary procedure before the treatment as well as correct coding is key.
There are also instances in which procedures would have been scheduled on receipt of pre-authorization. At the same time, while providing treatment to patients, some procedures might be required based on a variety of external factors such as the patient's health condition, and thus some secondary or alternative procedures can be performed without authorization accordingly.
A practice needs to keep in mind that a lack of authorization increases the chance of claim denial. A penalty will not be levied when a procedure has been authorized but not completed.
In situations such as an emergency, the treatment of the patient can begin before obtaining any authorization. Typically, in case of an accident or a procedure on the weekend, the practice must get in touch with the insurance organization as early as possible and request the necessary authorization
In cases when a practice is unable and fails to collect the approval required, it can result in the claim being declined by the insurance organization. In such cases, the practice is forced to weigh the options of cost getting absorbed or if payment can be collected via the patient.
While conducting the verification process, the procedures not covered by the provider are highlighted and explained to the patient. If treatment of those procedures that aren’t covered by the provider is received by the patient, they are liable and responsible for the payment for the respective treatment.
However, when there is a failure to collect pre-authorization from the insurance provider, it can lead to a denial of claims. The practice is thus obligated to accept and absorb the cost. This leads to a loss of revenue for the practice.
In these cases, billing the patient for the unpaid amount is unethical and this can drastically affect the goodwill and reputation of the practice. Thus, obtaining authorization promptly is crucial to secure payment for performed procedures and treatments.
The dental team needs to ensure the following steps to acquire a go-ahead from the insurance company
The success of a dental practice can be determined by how effectively the preauthorization processes are managed among other critical tasks. Pre-authorization can affect the revenue cycle management of the practice and hence the team needs to be properly trained to understand the impact it has on the business.
