Difference between authorization and pre-authorization in medical billing

In medical billing, authorization and pre-authorization are the same terms that are correspondingly used for getting any medical procedure authorized from the insurance provider. It is a legal process performed to ensure that insurance providers pay for the particular medical services that are billed in a medical claim. Insurance verification and authorization play a significant role in revenue cycle management. Most of the time, claim denials happen by the insurance providers when the patient is ineligible to get the service billed by the provider.

Depending upon the health care plan, neglecting pre authorization may result in no or reduced compensation for the patients. Without prior authorization, the insurance provider can refuse the payment of the claim as a part of healthcare policies. For the process of medical authorization, medical coders and health care specialists work together for authorization of a particular service. The medical coder is accountable for assigning the right CPT for the medical process received by the patient. The wrong CPT may result in the dismissal of a claim and the patient will not be able to avail of the service. For the authorization process, it is the liability of the health care provider to apply for the authorization process before performing the procedure. After permission, the insurance payer needs to provide the authorization number, then only the health care service provider can offer the service.

Importance of preauthorization:

Although having the service approved does not guarantee complete reimbursement, the absence of preauthorization may surely result in denial of the claim or non-reimbursement. Once the health care provider gets a pre-authorization number, the number needs to be attached with the claim to avoid delay in claims or unnecessary denials. 

What are the medical services that require prior authorization?

Many insurance care providers require referrals from physicians before providing health care services to patients. Hospitalization that does not involve emergency services requires preauthorization by insurance providers. Adding on, imaging services like CT scans, MRIs often require “prenotification or pre-authorization”. Lastly, health care providers get a permission number that needs to be submitted with the claim.

Patient responsibility:

If a patient fails to provide timely or accurate information to medical insurance, then the patient can be liable for paying the medical services charges or partial compensation by the payer. Sometimes, the insurance payer may say that a patient is liable to get only partial financial advantages such as an elective plastic surgery is particularly paid by the insurance provider and remaining paid by the patients.

Role of correct CPT Codes:

The best way for a claim reimbursement is to prepare the right CPT codes. It is not possible to find the right CPT code before receiving service from the patient. Therefore, medical billing personnel need to discuss the right CPT code with the physician. It will be best to know about all the possibilities rather than risk a procedure without preauthorization.