What Happens Behind the Scenes of A Prior Authorization?

On December 6th, 2022, the Centers for Medicare and Medicaid (CMS) proposed a ruling to improve the prior authorization process for patients and providers. At the moment, providers and patients claim that prior authorizations are administratively burdensome, time-consuming, and unforthcoming. Read on to uncover where the current process stands, and the proposed improvements.

Key takeaways:
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    CMS proposed prior authorization improvement in 2023, including expedited turnaround, more documentation, and streamlined interfaces.
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    Don’t hesitate to call your insurance company for plan language, policies, and procedures that they are willing to share with you.
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    If you don’t agree with your authorization determination, follow the process for an appeal.
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    Ask your provider routinely if any of your upcoming elective services or procedures require authorization.

What is a prior authorization?

In December, the rate of prior authorization submissions increased dramatically. After nearly a year of patients working on meeting their insurance deductibles, they can finally justify an elective procedure. There are reports that 99% of Medicare Advantage enrollees are in plans that require prior authorization for some services.

Prior authorizations, also known as “precertification,” is when an insurance company requires a procedure is reviewed and approved before their payment is guaranteed. Without an approved prior authorization, you may be responsible for some or all of the procedure costs. However, this only applies to non-emergency medical care.

New CMS ruling for 2023

CMS has decided to intervene to increase prior authorization satisfaction for both patients and providers. This is just a proposed ruling and wouldn’t be enacted until 2023, but here are some of their suggestions:

  • Improved access to health data.
  • More patient information about authorization decisions.
  • Enhanced provider access to information regarding determinations.
  • Expedited process to complete authorizations twice as fast.
  • Insurance company requirements to publicly report data on authorization metrics.
  • Standardized applicable programming interface (API) for electronic submissions.

The lifecycle of your prior authorization

Your provider recommends a service

Typically during or after a medical appointment, your provider will recommend a service. Your insurance plan will ultimately determine which types of services require prior authorization, and it may change each benefit period.

Common examples of prior authorizations include:

  • Elective orthopedic surgeries (hip replacements, knee replacements)
  • Non-emergent cardiac testing
  • Sleep studies
  • Genetic testing

Surgeries that could be considered cosmetic (breast reduction, eye or nose surgery)

This is why it’s always worth it to ask if prior authorization is necessary for any non-emergent procedures. This will ensure that if your insurance company denies the service, you can appeal it ahead of time. If you don’t get prior authorization and the claim ends up being denied, you may be responsible for payment.

A claim is created

Next, your insurance company will gather the necessary information to create a claim. They will ask your doctor’s office for any applicable medical documentation. This is also why researching the prior authorization process can help you because you can ensure that necessary information has been documented and is accessible in your medical chart.

The claim will involve the following pieces of information:

Your request

This will include the billing codes (CPT codes), diagnoses codes (ICD-10 codes), and the requested date of the planned procedure (date of service).

Plan language

Your insurance company will add any relevant plan language. This may include language on definitions, like “medically necessary,” “cosmetic,” or “investigational,” for example. It will also incorporate the insurance plan terms, like your plan date, as well as any benefit exclusions that your plan has.

Medical criteria

The insurance may decide to package your claim with relevant industry criteria. Some of the most common criteria are MCG (formerly known as Milliman Care Guidelines) or InterQual guidelines. Although both criteria are not accessible to the public, many doctor’s offices are familiar with their requirements.

Questions

The claim will be set up with questions for review. These questions are decided by the insurance company.

Claim questions may range from:

Does this request meet the criteria?

Is this code requested in the most cost-effective manner?

Is this request an excluded benefit for this member’s plan?

Does this request meet the plan language for the member’s benefits?

Is this request medically necessary?

Your claim is reviewed

Some prior authorizations are auto-reviewed. This means that the insurance company may have a plan in place to auto-approve typically approved codes or auto-deny typically denied codes to increase their efficiency. If your case is manually reviewed, then it will be packaged with your medical documentation, criteria, and questions.

Manually reviewed cases will be completed by either a nurse or a provider (doctor, nurse practitioner, physical therapist, etc.). Cases completed by nurses can be approved, but if the nurse believes that the case does not meet the criteria, a medical provider must then review the case. A nurse cannot deny a case on their own. Once reviewed, it will be sent back to the insurance company.

You receive a determination

Once the case has been sent back, an approval or denial letter will be generated. This letter summarizes your requested service and why or why not the case was approved. The bottom of the letter should outline the next steps for you to take.

Next steps

Approvals

If your service was approved, then your insurance is allowing you to get this procedure without out-of-pocket cost after your meet your co-pay, deductible, and co-insurance requirements. The next step would be to speak with your provider about scheduling and preparing for the procedure.

Denials

If your service was denied, your letter would have instructions on how to appeal the decision. You should speak with your provider about why the service was denied. If it was denied due to certain requirements not being met, you could work on completing those requirements.

If you and your provider believe the case was denied unfairly, you can begin the appeal process. In this case, you can opt to send additional documentation that wasn’t submitted in the original case or a letter explaining why you are appealing. You can also elect to have your provider speak with the medical reviewer of the case and explain any extenuating circumstances. Ultimately, the appeal process will differ depending on your insurance plan.

Talk to your provider

The insurance process doesn’t have to be a mystery. If you’re considering getting prior authorization, doing initial research could end up saving you time and money in the long run. Hopefully, in 2023, the CMS rulings will reduce the burden of prior authorizations on providers and patients. Speak with your medical provider today to ensure that your upcoming procedures are going through any necessary authorizations.

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