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How Outsourced Pre-Authorization Works and What to Avoid

Posted on: 05.23.19 by Digirad

How outsourced pre-authorization works

How much time does your practice spend on pursuing in-house pre-approvals for nuclear imaging or other cardiology procedures?

The pre-authorization process can be valuable for ensuring that a patient’s insurance will cover procedures, but on the other hand it can be frustratingly time-consuming. Many physicians and administrative staff are finding that the lengthy process of pre-authorization cuts their productivity and turnaround times for care.

One solution to take these headaches off your hands is to outsource the pre-authorization process. A company such as MD Boss is able to take care of insurance authorization services without you having to commit more time and resources.

Here’s how it works:

A primer on pre-authorization

Here’s the definition of prior authorization from the American Medical Association:

“Prior authorization (PA) is any process by which physicians and other health care providers must obtain advance approval from a health plan before a specific procedure, service, device, supply or medication is delivered to the patient to qualify for payment coverage. Other terms used by health plans for this process include “preauthorization,” “precertification,” “prior approval,” “prior notification,” “prospective review” and “prior review.”

Health plans often require this pre-authorization as a method for restricting access to costly services and therapies, or checking that a proposed therapy is appropriate for the patient. The whole process can be disruptive and burdensome for physicians and their patients. Common issues include:

  • Delayed access for patients to necessary services or therapies.
  • Increased overheads for practices, especially where they need to hire staff to handle pre-authorization duties.
  • Uncompensated time for physicians or other practice staff.
  • Disruptions to and inefficiencies in the practice workflow.

The use of pre-authorization has been growing and is expected to continue doing so due to demand from health plans looking to lower or minimize costs. Many new therapies and treatments are coming out, but they are very expensive. While the current fee-for-service system remains in place, pre-authorizations will be an expectation.

Download our tips for quicker pre-authorizations here

The AMA reports that pre-authorization consumes approximately 1 hour of physician time, 13.1 hours of nurse time, and 6.3 hours of clerical time per week. This translates to 853 hours per year of staff time, which is a cost of $82,975 in labor annually per full-time physician.

Electronic pre-authorization

Electronic pre-authorization systems are available and many practices use them. However, there is often a large gap in the system. Many health plans have their own standardized forms and it is difficult for software makers to reconcile the thousands of variables across health plans.

How to outsource pre-authorization for medical procedures

This means that using electronic pre-authorization often doesn’t save a lot of time because practices are having to take a sort of hybrid approach. Some insurers have adopted the standardized ANSI 278ePA (also used by the Centers for Medicare and Medicaid), but not all have or will.

Outsourcing pre-authorization

Outsourcing to a company that specializes in pre-authorizations can be a great step for saving precious time and money. It also helps to get patients access to treatments or diagnostics as soon as possible.

How outsourcing works

Just as it sounds, when you use an outsourced service for your pre-authorizations, a third-party acts as a facilitator between your practice and the payer (such as insurance companies or Medicaid). The third-party company collects patient information from your practice to obtain prior authorization for inpatient and outpatient procedures, in addition to pre-certifications for hospital admissions.

An advantage of an outsourced pre-authorization service is that they have developed a centralized and streamlined process that tends to minimize any patient data errors. They specialize specifically in this type of work so they are very familiar with the process and what needs to be done – unlike physicians and nurses who are trying to balance this with the rest of their work!

Most of these types of companies use software to gather information from practices, then process their requests.

An outsourcing company will take care of tasks like:

  • The end-to-end pre-authorization process
  • Any follow-up that may be required, for example, if more information is needed from the physician for the pre-authorization.
  • Appeals against denials where applicable.

Benefits of outsourcing your pre-authorizations

There are multiple benefits of outsourcing your pre-authorizations. The bottom line of whether it is the right choice for your practice is to look at the number of hours you are spending on pre-authorizations and what those hours are costing you. If outsourcing comes out on top with saving you time and money, then it’s probably the right move to make.

Here are a few points to consider:

1. Understanding payer-specific preauthorization requirements and monitoring for confirmation of payer decisions are activities that commonly suffer from lack of consistency and slip-ups. They are often complex and inefficient for individual practices, which is where outsourcing comes in. Good third-party companies keep their team members up-to-date with training and compliance. They are dedicated to ensuring that those requests don’t slip through the cracks.

2. Clearly defined roles and communication channels with physicians can also be an issue where practices (especially larger ones) handle their own pre-authorizations. Outsourcing mitigates these issues.

3. Procedural issues are another common problem when it comes to pre-authorizations in practices. Procedures are often manual and cumbersome, involving binders of information and sticky notes. Adding to the complexity can be the need to figure out UMOs – third-party benefits providers used by the insurance companies.

Outsourcing can mitigate these issues by centralizing procedures to a team with a good electronic process. Given that third-parties do this all day, they have developed streamlined processes that help to get better results more quickly. They have efficiency and repeatability of processes on their side.

4. Industry estimates put pre-authorizations at somewhere between $30 and $100 per occurrence. Staff members in practices spend up to nine hours each week just on hold for pre-authorization responses.

Outsourcing is charged out in different ways depending on the company, but as a general rule, you can cut the cost of a pre-authorization right down. Many outsourced providers charge based on a per-study basis so even small clinics can leverage the service without worrying about minimums or expensive retainers.

What to avoid or look out for

First of all, you need to understand exactly what a third-party pre-authorization vendor is offering – not all are built the same way. Some only do pre-authorization for prescriptions, which would leave your cardiology practice having to sort out pre-authorization for labs and diagnostics. It is preferable to find a vendor that offers a full range of pre-authorization services.

Get the bonus content: Tips for Quicker Pre-Authorizations 

Secondly, you should ask questions about the system they are using and how communication between them and your practice works. For example, how will your team know when a pre-authorization has been automatically initiated, or when further information is required? How will you be able to track any pre-authorizations that are in progress?

You’ll also want to ensure that they have good reporting features available to you. For example, it’s important to be able to track the approval rate of pre-authorizations, along with things like success rate upon appeal.

Final thoughts

Pre-authorizations have been a frustrating, moving target for cardiology and other medical practices for quite some time. There is naturally a clash between care and the need for good diagnostics, and the profits that the insurance companies seek.

For cardiology practices that manage their own pre-authorizations, key frustrations include the time and overhead devoted to it. Your physicians, nurses and administrative staff could be spending more time on tasks that grow the practice, rather than chasing pre-authorizations.

Outsourcing of pre-authorizations is a great option where it makes sense to save the time and money in your own practice. A good third-party provider will keep up with changes in requirements and have a very streamlined process for ensuring maximum success.



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