Difference Between Insurance Verification and Authorization

Maximum reimbursement is important for a hospital to boost its finances. To get the reimbursement of maximum health insurance plans the hospital needs to ensure that no claims lead to denial or fraud. The only way to prevent denied claims or fraud is to cross-check the insurance eligibility and authorization.

Both insurance verification and authorization are different processes and play an equally important role in generating a hospital’s revenue. However, people tend to get confused between these two terms and sometimes may use them interchangeably.

But one must understand that there’s a huge difference between insurance verification and authorization. There is no similarity in these terms except the aim of getting maximum reimbursement.

So, what is insurance verification and authorization?

Insurance verification: It may be defined as the process of verifying an insurance claim made by a patient.

Authorization: It may be defined as the process of getting an insurance claim approved by the insurance payer.

What’s the purpose of insurance verification and authorization?

Insurance verification: A of patients claims to have health insurance to get medical care. It is because few procedures are quite expensive and not everyone is able to afford them. To help patients get medical care the health care industry hires a medical insurance verification company to offer financial aid to certain groups of people. However, sometimes people may make false claims to get medical care. In such cases, hospitals are likely to face financial loss. After all, doctors treating patients with insurance claims won’t be getting paid for their services due to denied claims or fraud. Moreover, hospitals won’t be able to generate revenue to make an investment in medical equipment and facilities. This will further affect the quality of medical care offered by hospitals. Therefore, to prevent loss in finances due to denied claims or fraud insurance verification is indispensable.

Authorization: Sometimes the insurance payer may refuse to pay the promised amount claiming that the procedure performed is not covered in a given insurance plan. In such cases, it is important to get the approval of the insurance payer to perform the procedure. It is one way to ensure that the doctor will be paid for the same. Pre-approval obliges the insurance company to sign a legal document assuring the full payment of the promised amount.