Explaining benefits verification, prior authorization, and verification of pre-authorization processes

Benefits verification, prior authorization, and verification of pre-authorization are imperative procedures at all healthcare facilities. 

Depending on how well you conduct these procedures, you can either maximize your profit and build excellent relationships with your patients or cause revenue leakage and strain your relationships with patients. 

There are a couple of ways to make benefits verification, prior authorization, and verification of pre-authorization processes less painful and stressful. Have a look at them below.

Benefits verification

 

Benefits verification is the process of checking a patient’s active insurance coverage and benefits with an insurance company before various procedures to ensure reimbursement.

 

Common benefits verification terminology 

Let’s define some terms generally during the verification of insurance benefits.

In-network vs. out-of-network

In-network means that a healthcare provider has signed a contract with a patient’s health insurance company to provide healthcare services to its plan members at a discounted rate. Due to this arrangement, patients pay less when they get services from in-network physicians.

Out-of-network healthcare providers do not have a signed agreement with a patient’s health insurance company. Healthcare services, therefore, are more expensive and may not be covered at all with out-of-network providers because there is no pre-negotiated rate. 

Deductible

A deductible is the amount that a patient pays for covered medical services before their insurance plan begins to pay. For instance, with a $1,500 deductible, a patient pays the first $1,500 of covered services themselves. 

Allowed amount

The allowed amount, also called the eligible expense or negotiated rate, is the maximum amount that a plan will pay for a covered medical service (such as a test, procedure, or doctor visit). If a service provider bills more than a plan’s allowed amount, the patient usually pays the difference. 

In-network providers offer services at a reduced rate since they have a contract with the health insurance company. Therefore, they agree not to charge more than the allowed amount to health plan members.

Out-of-network providers might charge more than the allowed amount. If a patient visits an out-of-network provider that charges more, the patient may be required to pay the additional cost. 

Out-of-pocket costs

Out-of-pocket costs are a patient’s medical bills that are not covered by insurance. Out-of-pocket costs include deductibles, coinsurance, copayments for covered care, and all expenses for non-covered services.

Out-of-pocket maximum

The out-of-pocket maximum is the maximum amount a patient has to spend for covered services in a plan year. Once a patient has spent this amount on deductibles, copayments, and coinsurance for in-network treatment and services, their health plan will cover 100% of additional covered expenses.

Coinsurance

Coinsurance is the percentage of the costs of a covered medical service that a patient pays (e.g. 20%) after they have paid their deductible.

For instance, assume an insurance plan’s allowed cost for an office visit is $100 and a patient’s coinsurance is 20%. If the patient has paid their deductible, they pay 20% ($20) for the visit, and their insurance company pays the rest. If the patient hasn’t met their deductible, they pay the full allowed amount for the visit, which is $100.

Copayment

A copayment, or copay, is a fixed amount (e.g. $20) that a patient pays for a covered medical service after they have paid their deductible.

This means that if the allowed cost for an office visit is $100 and the patient has paid their deductible, their copayment will be $20. If a patient hasn’t met their deductible, they pay $100, which is the full allowable amount for the visit. 

Claim

A claim is a payment request that a patient or their healthcare provider submits to an insurance company when the patient receives a covered medical service. 

This payment request contains patient information, including insurance and healthcare provider information and unique medical codes which describe the diagnosis, medical supplies and devices, pharmaceuticals, and the services that have been or are going to be administered.

Why is it important to verify patient benefits?

Verification of insurance benefits is the first and most critical stage in revenue cycle management. Verifications done properly and on time lead to a smoother claim submission process. This results in fewer claim denials and a steady cashflow to the facility, which improves its financial security. 

If a facility doesn’t have an efficient way to collect, store, and update a patient’s information, the facility could provide incorrect information when calling the patient’s insurance company. What happens next is all too familiar — a claim rejection. Resubmitting a claim is a hassle and consumes valuable time and resources. 

Moreover, an efficient and proper benefits verification process can significantly improve patient satisfaction because you can notify patients about how much they will need to pay for services before they are rendered. When patients are aware of the cost in advance, they are more likely to come ready to pay or have a payment plan prepared.

An inefficient insurance eligibility verification process makes it difficult to explain to patients what their financial responsibilities are, which leads to unpaid accounts that have to be sent to collections. Ultimately, this can cause your patients to get frustrated and look for another care provider.

What does insurance eligibility verification look like?

In many facilities, the front desk staff handles benefits verification. They cross-check necessary data about a patient and gather demographics data, the patient’s medical history, insurance plan details, and other information needed to submit the insurance claim.

After collecting a patient’s insurance information, the next step is contacting the insurance company. The hold time can be over an hour, as insurers’ lines are often busy. However, calling is deemed to be the most efficient way to verify benefits. That’s because even though some insurance companies have online portals, these portals often are outdated or don’t provide sufficient information to determine whether coverage exists, which can cause the results of the verification to be incorrect. 

It’s crucial to start the benefits verification process early. One reason is the long wait time. Your front desk staff won’t always be able to sit on the phone for 40 minutes, as they have other tasks to do. Another reason is to have enough time to fix issues as they arise, such as adding missing information that wasn’t collected or updating old documents. 

During the call, it’s important to make sure the insurance representative is qualified to authenticate a patient’s insurance information and that the transmission of patient information during the phone call complies with HIPAA requirements. After that is confirmed, your staff can provide the patient’s insurance data for verification.

Front desk staff should be trained on how to verify benefits over the phone. They have to know what kind of questions to ask and which information to clarify. 

• First, the staff member should verify all the collected information with an insurance representative.
• Next, they should confirm whether the insurance policy is active and when it expires. 
• Provided the policy is active, they should then inquire about the patient’s copayment and deductible.
• After verifying the basics of the insurance plan, your staff member should then ask about any special coverage limits and clarify if prior authorization is required before the patient visits a physician.

Prior authorization

 

Prior authorization is the process of getting approval from an insurance company that a healthcare service, treatment plan, prescription medicine, or piece of durable medical equipment is considered medically necessary. 

Prior authorization can also be called prior approval, pre-certification or pre-authorization.

 

Prior authorization approval does not guarantee that a health insurance company will cover the cost of care, however, which is why practices must verify patients’ benefits. 

Why is prior authorization required?

Health insurance companies give a couple of reasons why they require prior authorization. The first is that prior authorizations are needed as a means of moderating healthcare costs. Also, prior authorizations prevent service from being duplicated. This can be an issue when several specialists are working with a single patient. Hence, with prior authorization, insurance companies can evaluate whether a continuous or recurring treatment is genuinely beneficial for the patient. 

Ultimately, pre-authorization in healthcare is a method of rationing care. Medical insurance providers are restricting access to costly medications and services to ensure that the only people who receive these medications or services are those who need them.

Obstacles to prior authorization 

Unfortunately, prior authorization has been found to negatively impact physician practices, patients, and businesses. It is a significant administrative burden for facilities and causes delays in patient care. What’s more, these delays not only can harm patients’ health but also hamper workforce productivity.

In an AMA survey, 51% of physicians stated that prior authorization has indeed interfered with patients’ job duties. Hence, while health insurers praise pre-authorization for the supposed cost savings, the AMA survey reveals that it can actually result in absenteeism and less productive employees.

Dr. Harmon, a family physician in South Carolina, states that excessive authorization controls in insurance plans cause major problems for companies when delayed, refused, or abandoned care hurts employees’ health and results in missed workdays, lost productivity, and other expenditures.

93% of physicians experienced care delays while waiting for insurers to authorize needed care, and 82% indicated that prior authorization issues with an insurance company can result in treatment abandonment. 

Furthermore, 34% of physicians reported that pre-authorization led to a major adverse event like hospitalization, disability, or even the death of patients in their care. 

There is yet another issue with the pre-authorization process: 30% of physicians say that pre-authorization criteria are hardly ever evidence-based, with 91% of physicians reporting that prior authorization has a moderate to severe detrimental effect on patients’ clinical results.

What these statistics show is that pre-authorization processes are complicated. And if your facility struggles with completing these processes efficiently, it is likely that prior authorization causes your staff unnecessary stress and consumes valuable time. 

Sending information to the insurer, following up to make sure they got it, and then sitting on the phone for hours just to negotiate authorization leaves medical office staff with little time to provide patients with the quality care they need.

If you want to take some pressure off your staff while gaining more time to focus on patients and actual treatment, continue reading to learn how to make prior authorization easier.

Verification of pre-authorization

 

Verification of pre-authorization is a service requested to confirm if the facility and physician are accurately listed and authorized to perform the needed medical procedures and that all CPT codes are correct and correspond with the requested procedures.

 

Why do facilities need verification of pre-authorization?

Let’s first clarify what CPT codes are.

 

CPT, or Current Procedural Terminology, codes were developed by the American Medical Association in order to describe medical, surgical, and diagnostic services. They are intended to provide physicians, coders, patients, accreditation bodies, and payers with consistent information about medical services and procedures for administrative, financial, and analytical purposes.

 

The initial CPT code book contained about 3,500 codes. With new editions released every year, now there are over 10,000 widely approved and used CPT codes. For instance, knee surgery has over 100 codes. And not only do you have to get the correct code for the main surgery; but you also need to indicate the codes for side procedures that can happen during the surgery. Hence, every procedure may need up to 10 codes to be authorized. 

The process of authorizing codes is very specific, and it is all done over the phone. Due to the complexity of the process and the sheer number of codes, it is unsurprising that mistakes happen. When they do, your facility needs to make sure that those mistakes are caught quickly so they don’t cause irreversible damage.

Probably a good portion of facilities experienced this unfortunate scenario: a surgeon’s or physician’s office made a mistake and obtained authorization for the wrong CPT code. They gave it to the facility and the facility failed to double-check it, so the mistake is only uncovered after the procedure is completed. Now, because of the inaccurate procedure code, neither the facility nor the doctors get paid. 

You can imagine how huge the losses can be considering the cost of the operating room time alone. Just by getting the code wrong, the facility could lose $50,000. That’s why it is crucial to have a team that concentrates on verifying pre-authorizations.

How can benefits verification, prior authorization, and verification of pre-authorization processes be made more efficient?

The intricacy and complexity of these processes are evident. And when your facility handles numerous patient cases, you need to verify benefits as well as carry out prior authorization and verification of pre-authorization for each of them. Not to mention that these processes don’t go from start to finish in one smooth go, as your staff must call the insurer back if they are interrupted, need to resolve an issue or fix a clerical error, or need to provide updated or missing information. All of that takes up valuable time that your staff could devote to providing patients with higher-quality care.

Here are a few tips on how to make these processes more efficient.

Preparation is key

Whenever a new patient contacts your facility to book an appointment, make sure to collect their insurance information straight away. This will give you plenty of time to verify their benefits. 

When collecting a patient’s insurance information, it’s necessary to document:

• the patient’s name and date of birth
• the insurance company’s name
• the insurance company’s address and phone number
• the primary insurance plan holder’s name and their relationship to the patient
• the patient’s policy number and, if relevant, group ID number

Don’t forget to inquire about secondary insurance. If the patient has other policies, you must collect all of the information above for them too.

Next, make a checklist of questions before you call the insurance company. Your list may include:

• When does the patient’s policy expire?
• How many therapy sessions does the patient have left for the rest of the year (if applicable to the service you ask about)?
• Does the patient have a deductible, and, if so, what is it?
• Does the patient have a copay, and, if so, what is it?
• Is a reference, pre-authorization, or medical necessity required for reimbursement?
• Is the physician that the patient intends to see in-network or out-of-network?
• Does the coverage have any limitations or document requirements that must be met prior to the patient’s visit?

Another tip — when calling insurers, have all of the patient’s information in front of you. Unfortunately, calling insurance companies is usually time-consuming and rarely avoidable. Be ready to hold for some time. But after working with insurance companies, you’ll figure out what hours are the busiest and when the lines are more available. For instance, many recommend avoiding calling in the morning since it tends to be the busiest time of the day. Once you get to a representative, confirm with them that they are the right person to talk to. Provided they are, you’ll then be asked about the patient’s information so they can look up the correct policy. 

Leverage outsourcing

If your facility is drowning in a sea of benefits verifications or prior authorizations that require checking or updating, thorough preparation can help make these processes more efficient. But they will just keep coming and piling up. If you have a high turnover rate, as many facilities do, your staff could get overwhelmed leading to inevitable clerical errors and mistakes.  

One practice that numerous facilities use to take some pressure off their staff and save time and money is outsourcing benefits verification, prior authorization, and verification of pre-authorization. 

Let’s break down why facilities choose to outsource and how they benefit from it.

Advantages of outsourcing

When you outsource prior authorization, benefits verification, and verification of pre-authorization, you transfer all of the work you can’t or would prefer not to shoulder to an outsourcing team. 

That means all of that waiting on hold to clarify benefits, allowed procedures, copays, and deductibles, negotiating authorization, keeping up with payment changes, and more can be done by your chosen outsourcing team. 

Outsourcing can save you valuable time, free up your staff to concentrate on their core responsibilities, reduce paperwork and errors, and ensure maximum claim reimbursement. 

You don’t have to scramble to hire and train new personnel every time someone quits, and most outsourcing companies do not require long-term contracts, as they provide their services on demand. Additionally, facilities are able to reduce expenses if they don’t hire extra staff but outsource pre-authorization and benefits verification instead. This is because you don’t pay a salary, overtime, benefits, or taxes for your outsourcing team. You pay a fixed fee for the performed work. There are no setup or onboarding fees either. You might also be able to reduce recruiting and advertising costs since you don’t need to rush to hire new employees.

Finally, many outsourcing companies that provide prior authorization and insurance verification services complete these processes faster by working on weekends and even holidays. Additionally, because they leverage HIPAA compliant scheduling software to store and update documentation, you can be sure that there won’t be a decline in quality. In fact, it’s likely to improve.

With today’s health insurance landscape and all of the different and complex reimbursement models that substantially affect the insurance benefits verification process, most facilities could use some assistance. Reputable benefits verification and prior authorization outsourcing providers have proven able to help facilities cut costs, save time, and improve payment cycles and reimbursements overall.

Where can you outsource prior authorization, benefits verification, and verification of pre-authorization?

Let’s say you are considering outsourcing these processes. This begs the question: Where?

How can you be sure that the company you’re outsourcing to is going to do an adequate job and can be trusted with your patients’ data?

First of all, a professional outsourcing provider always uses HIPAA-compliant tools and software. Be wary of providers that neglect this rule, as it is a huge risk for your facility.

Secondly, conduct thorough research. It does require a good chunk of time, but it’s well worth it in the end because you’ll be confident in your chosen provider. Read reviews and testimonials, and don’t be afraid to contact providers and ask them for references. The provider should be ready to connect you with their current clients who can honestly tell you the benefits and the downsides of outsourcing to that provider.

Finally, transparency. Medical insurance verification service providers should be transparent about what the process is going to look like, how much it will cost, and what both parties’ responsibilities will be during the process. Transparent providers most likely already have some basic information about the process on their website. Look for sections such as “How it works” to get some understanding of their working model.

When you narrow down your list of options to two or three providers, it’s best to book calls with their representatives. During these meetings, you’ll be able to talk more in-depth about their services and ask about the qualifications of the provider’s callers.

Here are a few companies that provide either benefits verification services, prior authorization services, verification of pre-authorization services, or all:

• PreferredMD
• Outsource Strategies International
• ScribeEMR
• Aqkode Healthcare Solutions
• WebPT

Conclusion

Benefits verification, prior authorization, and verification of pre-authorization processes must be carried out by all healthcare facilities. As time goes on, however, these processes don’t seem to get any easier and can put a significant burden on facilities’ staff. Staff members have to devote a lot of time and resources to stay on top of documentation. This often comes with sacrifices including patient dissatisfaction, overworked and stressed employees, errors, and high expenses.

Avoid stunting your facility’s growth and consider outsourcing these processes to a team of experienced callers at PreferredMD. We charge just $12.95 per request without setup or onboarding fees. Take a look at how we work.

You probably want to see how we complete these processes in real time. No worries. Just schedule a demo here and let’s talk.