The Industry Guide to Prior Authorizations

The intent of prior authorization is to reduce payor costs without compromising patient care. However, prior authorization has increased the administrative burden to medical facilities and payors.

Prior Authorization

A prior authorization (PA), sometimes referred to as a “pre-authorization,” is an approval requirement that a physician obtains from a health care provider based on the patient’s health plan. If it’s approved the plan covers the cost of a specific procedure, test, device, or medication. Without this prior approval, health insurance provider may not pay for the test or procedure being done, leaving the patient with the bill instead.

Why do health plans require Prior Authorizations?

There are several reasons why health care plans require prior authorizations. One instance is that health insurance companies uses this as a way of keeping health care costs in check. They also want to make sure that:

Who handles Prior Auths?

A PA can be directed by the ordering provider or laboratory. This creates a complex process as there are hundreds of payors and laboratories, and millions of providers in the US.

Physician Directed

A Physician Directed PA is a situation in which the ordering provider is requiring a prior authorization to be processed. If a provider is requesting a prior authorization, someone in the office needs to complete this prior auth for the patient.

Lab Directed

A Lab Directed PA is a situation in which the laboratory requires a prior authorization to be completed prior to the sample being tested.

Benefits Investigation

A benefit investigation determines the in-network and out-of-network coverage based on the patients’ health care plan. This includes deductibles, co-pays, co-insurances, out-of-pocket maximums, exclusions, and requirements such as prior authorization or pre-certification. Our product, seeQer, handles all of this.

Financial Transparency

Price transparency helps patients know the cost of a hospital item or service before receiving it. Hospitals and certain service providers must provide standard charges, including the rates they negotiate with insurance companies and the discounted price a hospital is willing to accept directly from a patient if paid in cash. It must be publicly available, free of charge, and presented in a consumer-friendly display.

Payors & LBMs

Government-sponsored health insurance policies generally are reserved for specific groups, such as senior citizens, people with low incomes, or disabled people. These government programs, funded primarily through taxes, are designed to provide medical coverage without returning a profit. Examples include Medicare, Medicaid, and the Veterans Health Administration program.

A Lab Benefit Manager (LBM) is a program that is contracted by employer groups or insurers to help reduce the medical and pharmaceutical costs and enhance the quality of care through utilization management practices. They manage claims and lab test utilization, while reviewing medical necessity of the tests completed. Examples include AIM Specialty Health, Optum, Avalon, and EviCore.

Additional Players

Commercial health insurance is for-profit, and is usually provided by employers but also accessible in the independent-market. Examples include Anthem BCBS, UHC, Aetna, Cigna.

Why does this matter?

MIT Medical puts it best: There is no universal healthcare. 

The U.S. government does not provide health benefits to citizens or visitors. Any time a person gets medical care, someone has to pay for it. Healthcare is very expensive. According to a U.S. government website, if a patient breaks their leg, they could end up with a bill for $7,500. If a patient needs to stay in the hospital for three days, it would probably cost about $30,000. Most people in the U.S. have health insurance. Health insurance protects patients from owing a lot of money to doctors or hospitals if they get sick or hurt. To get health insurance, patients need to make regular payments (called “premiums”) to a health insurance company. In exchange, the company agrees to pay some, or all, of your medical bills.

There is a huge push for healthcare system reform in the US:

Health reform includes addressing the ever- increasing costs of national health care by individuals, families, and the government. It also addresses the benefits people receive and how people obtain health insurance. The goal of health reform is to reduce the number of uninsured, making healthcare more affordable and improving quality of care.

This is where careviso comes in

From one patient to a whole network, careviso supports providers, payors, labs, and patients alike. Our complete technology platform improves patient access to care by delivering real-time cost estimates, administrative requirements, and approvals.

We help patients get access to the right diagnostic test needed to treat their condition or disease.