Making Sense of Prior Authorization, What is it?

You have healthcare experience, but you recently joined a genetics laboratory and have been tasked with understanding and optimizing the prior authorization process. There are a great deal of moving parts in the process affecting providers, payers, and most importantly, patients.

What is prior authorization?

The American Medical Association defines prior authorization as, “Any process by which physicians and other health care providers must qualify for payment coverage by obtaining advance approval from a health plan before a specific service is delivered to the patient.”

Essentially, to quality for coverage, physicians need to obtain advanced approval from a healthcare plan before a laboratory test can be ordered. Most insurers require prior authorization for outpatient genetic and molecular laboratory tests.

Why are insurers requiring prior authorization?

The AMA states they require prior authorization because the current, “Health plan cost-control process... is overused, costly, inefficient, opaque and responsible for patient care delays.” Insurers claim prior authorization lowers overall healthcare costs by not testing when it’s not medically necessary.

What’s the difference between prior authorization and pre-authorization?

There is no difference. These are two of the many terms used to describe the same process. You may also come across, prior notification, prior approval, pre-certification, coverage determination, or even a simple PA. While they are used interchangeably, the industry is moving towards standardizing on prior authorization. For consistency we suggest you use prior authorization.

Which laboratory tests require prior authorization?

Not all tests require going through a prior authorization process. The only way to know for sure is to contact the insurance company and complete their authorization process. As an example, with UnitedHealthcare, the following are in scope for prior authorization:

  • Commonly performed single-analyte molecular tests known as Tier 1 Molecular Pathology Procedures
  • Lower volume molecular tests known as Tier 2 Molecular Pathology Procedures
  • Genomic Sequencing Procedures
  • Multianalyte Assays with Algorithmic Analyses that include Molecular Pathology Testing

Who is responsible for obtaining prior authorization?

The ordering physician is responsible for obtaining prior authorization for the laboratory test. With approval from the provider, this responsibility can be handed off to the laboratory. If the physician’s office or laboratory fails to obtain prior authorization, the patient or laboratory can end up footing the bill for the testing.

How is a prior authorization requested and what information should be included?

There are multiple ways to request a prior authorization from an insurer:

  • Over the Phone
  • By Faxing an Authorization Request Form
  • Secure Email
  • Using an Online Provider Portal

The biggest push is to move toward electronic prior authorization with online portals or Electronic Data Interchange. EDI allows laboratories to submit claims, review claim files, and review remittances from their insurance carrier or clearinghouses, all electronically. Information can then be transmitted between systems without human intervention.

One example of an EDI enabled platform, is BeaconLBS (Lab Benefit Solutions). It is a common online portal used by several insurers where providers and laboratories have the ability to submit a new notification for prior authorization. To make submitting easier, BeaconLBS allows care providers to access clinical policy requirements for their coverage policies. Participating labs are required to provide all necessary information for prior authorization and claims payment.

Ordering physicians need to provide:

  • National Provider Identifier
  • CLIA numbers
  • Email address
  • Test name
  • Test unique identifiers, and associated CPT codes

Insurers are leveraging BeaconLBS to manage the overutilization of laboratory testing as well as guide members on selecting qualified in-network laboratories.

Can a laboratory perform retroactive prior authorization?

Performing a retroactive prior authorization is becoming a thing of the past. Some insurers actively state that all prior authorization requests must be complete prior to claim submission, while all retroactive requests will be denied and are not applicable to laboratories. There is too much impact to a laboratories bottom line as it must handle the complications of processing denials for lack of prior authorization.

How long does it take to get a prior authorization?

The time it takes to process prior authorization varies anywhere between a few hours and several days. In rare cases we have seen prior authorizations take weeks, but this has been mostly caused by a miscommunication with the insurer.

Can we charge for performing a prior authorization?

No. This is a contractual limitation as providers and payers generally don’t allow these types of practices. It could be tempting to charge, because of the time-consuming process, however, it is best to automate the process, before attempting to charge for these services.

Why is performing a prior authorization difficult?

  1. Ever-changing payer rules requiring constant monitoring and revision
  2. Complex manual process with many steps leading to constant errors
  3. Varying standards across all payers
  4. Large amount of payers and health plans without standardized processes
  5. Time-consuming manual review of prior authorization claims and medical charts

What are the benefits of optimizing the prior authorization process?

  • Increase patient satisfaction by avoiding surprise bills and providing upfront transparency
  • Avoid delays in patient care, any additional overhead in the process means fewer answers for the patient
  • Increase revenue by reducing preventable denials
  • Lower burden on ordering physicians using automation requiring less touches throughout the process
  • Increase claim transparency for all involved parties
  • Automate and inform all parties during the process

What do we recommend?

Don’t avoid or bypass the prior authorization process. If you do, you risk paying for extra costs like specimen transport, accessioning, cost of goods, etc. By starting the prior authorization process as soon as possible, you avoid these costs and streamline the process as a whole.

Hold off on submitting a specimen until you receive payer authorization to perform the test. Better yet, move prior authorization to an earlier point in the process. Ideally the prior authorization process is initiated by the provider before ordering a test and as soon as an order is received through an EMR or the specimen is shipped to the laboratory. You must start thinking of the process at the time of the first patient encounter. If the initial patient information isn’t accurate, all the downstream processes will be impacted.

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