How to Improve Practice Cash Flow by Improving your Prior Authorization and Benefit Verification Processes

by | Apr 3, 2024 | Ambulatory Practices, RCM Processes

Prior authorizations and benefit verification wield considerable influence over a practice’s financial health. These processes ensure that services rendered are covered by patients’ insurance plans, safeguarding against denied claims and potential revenue loss. Preventing claim denials is an increasingly important issue as average payer denial rates have grown in recent years from 9-10 percent to 12 percent of in-network claims in 2022.  And patient information accuracy consistently ranks among the top reasons for claims denials 

By diligently navigating prior authorizations and meticulously verifying benefits, healthcare practices can streamline their revenue cycle, minimize financial risk, and optimize reimbursement processes. Failure to address these aspects effectively can lead to significant revenue leakage, hindering your practice’s ability to thrive. In this post, we explore the importance of mastering prior authorizations and benefit verification to reduce potential revenue loss.   

Understanding Prior Authorization  

Prior authorization is a utilization management tool used by healthcare payers across the United States. It mandates healthcare providers to secure approval from patients’ health plans prior to delivering care to ensure payment eligibility. While prior authorization is instrumental in curbing unnecessary care, controlling healthcare costs, and expediting the integration of new standards of care, it also poses challenges. The process can lead to delays in essential care, incur time and cost burdens, and foster confusion and frustration among both providers and patients. When managed well, prior authorizations strike a balance between cost containment and quality care delivery. 

Here’s a step-by-step look at the prior authorization (PA) process: 

  •  Obtain the PA form from the payer: Healthcare providers initiate the process by obtaining the necessary PA form from the patient’s health plan. 
  •  Complete required information: Providers fill out all required clinical and administrative details on the PA form. 
  •  Submit the form to the health plan: The completed PA form is then submitted to the patient’s health plan for review. 
  •  Follow up if necessary: Providers may need to contact service representatives or other personnel at the health plan for any follow-up inquiries or clarifications. 
  •  Review and decision: Trained clinical staff, such as pharmacists or registered nurses, review the PA request and either approve or deny it. 
  •  Processing time: The time it takes for PA requests to be processed varies based on factors like the type of care, payer type, and use of automation, ranging from same-day to several days. 
  •  Appeal process: If a PA request is denied, providers and patients have the option to appeal. Health plans are required to have an appeals process under the Affordable Care Act. 
  •  Remediation and resubmission: Denials often occur due to incomplete information, but requests can be approved once submission errors are corrected.
  • External appeal: If the initial denial is upheld, providers and patients can request an external appeal by an independent third-party reviewer.
  • Validity period: Approved PA requests are typically valid for a specified length of time, after which additional requests must be submitted for continued prescription refills or therapies. 

Why Prior Authorization Can be Challenging for Providers 

As you can see in the process outlined above, managing prior authorizations can require significant time and administrative resources to execute. Prior authorizations require providers to justify patient care plans, necessitate additional clinical and administrative resources, and can potentially lead to care delays for patients.   

Overall, approximately 72% of prior authorization requests are approved on the initial request, with an additional 7% approved on appeal. Denied requests lead to delays in patients receiving necessary treatment, with many patients facing hurdles in accessing alternative options or enduring prolonged appeal processes. When prior authorization delays patient care, the process can inadvertently lead to poorer health outcomes due to treatment delays, interruptions, and even patient abandonment of necessary care.  

The Potential Revenue Impact

On the financial side, the prior authorization processes can significantly impact a healthcare practice’s revenue both positively and negatively. On the positive side, prior authorizations can help ensure that services rendered are covered by patients’ insurance plans, reducing the risk of denied claims and ensuring timely reimbursement. Additionally, prior authorizations can lead to more judicious use of resources, preventing overutilization of services and potentially lowering overall operational costs.  

However, the negative impacts can be substantial, including increased administrative burdens and costs associated with navigating prior authorization requirements, which can divert resources away from patient care and lead to delays in treatment. Denials or delays in prior authorization approval can also result in delayed or even lost revenue if services are provided without proper authorization, leading to potential write-offs or unpaid claims.  

The overall positive or negative impact prior authorizations can have on practice revenue comes down to how efficiently the process is executed and the practice’s ability to navigate its complexities effectively.  

Strategies for Efficient and Effective Prior Authorization Management 

Mitigating challenges related to prior authorizations to positively influence cash flow requires following prior authorization best practices, including:  

  • Increasing consistency and standardization across payer groups: Standardize lists of services requiring prior authorization and standardize submission processes to reduce administrative frustrations and delays associated with varying requirements. 
  • Investing in automation for both the coverage inquiry and prior authorization submission processes: Leverage automation to ensure uniformity across health plans and pharmacy benefit managers. This can significantly decrease the time spent on PA requests and minimize errors due to missing information. 
  • Continuously assessing and improving PA policies and processes: Utilize a centralized team to handle PA submissions so your clinical providers can focus on patient care. By refining PA policies and processes, practices can retain the benefits of PA programs while minimizing associated burdens. 

Another Prime Process to Improve? Benefit Verification 

Like the prior authorization process, benefit verification is another prime area to optimize to make an impact on healthcare practice revenue cycle. Benefit verification is the process of verifying patients’ insurance coverage and benefits upfront, which can help mitigate the risk of claim denials and billing errors, thus optimizing revenue collection. Effective benefit verification processes also enable practices to identify any out-of-pocket expenses for patients. This is impactful, because knowing whether a patient has financial responsibilities upfront reduces the likelihood of payment disputes. And, with rising consumerism in healthcare, patients have increasing responsibility for patients. Overall, integrating effective benefit verification processes into the revenue cycle workflow has the potential to boost financial efficiency, minimize revenue leakage, and foster positive patient-provider relationships through improved transparency and communication. 

What’s Involved in Benefit Verification  

Patient eligibility and benefits verification are essential components of the revenue cycle for healthcare practices. The process includes confirmation of coverage and financial responsibilities for medical services provided. Implementing a patient eligibility and benefits verification process enables practices to verify patient coverage status, copayments, deductibles, and co-insurance with their health plan. Verifying these items ahead of time helps ensure timely collection of accurate reimbursement and reduces the risk of claim denials. 

Why Benefits Verification Can be Challenging for Practices  

Benefits verification is an extra step, and healthcare staffing shortages can lead to difficulty executing eligibility verification and thorough verification processes. However, neglecting to dedicate resources to this crucial process causes delays in reimbursement and leads to higher rates of claim denials, which contributes to revenue loss. Additionally, it can contribute to higher administrative costs due to downstream impacts of billing errors, payment delays, and disputes with patients or insurance companies. To mitigate these issues, healthcare practices should invest in efficient verification processes, staff training, and technology solutions to ensure accurate and timely verification of patient benefits. 

Some of the most common benefit verification issues that impact cash flow include: 

  • Inaccurate or outdated information that doesn’t match the insurance company’s records.  
  • Lack of thorough verification such as overlooking important details like coverage limitations, copayments, deductibles, and co-insurance.  
  • Time-consuming manual processes for benefits verification that don’t leverage technology.  
  • Poor communication between front-office staff, billing departments, and insurance companies.  
  • Insufficient training for staff members on insurance verification processes 

Best Practices for Streamlining Benefit Verification Processes 

To improve benefit verification processes and optimize revenue cycle efficiency, healthcare practices should implement the following best practices: 

  • Training staff members on conducting eligibility checks sensitively and effectively: Establish clear protocols and document specific eligibility verification workflows tailored to your practice. Then, train staff on executing these protocols and workflows.  
  • Leveraging electronic health record (EHR) and revenue cycle management (RCM) technology solutions for real-time benefits verification: Electronic verification not only saves time but also reduces errors associated with manual processes, ultimately improving accuracy and efficiency. Additionally, consider implementing RCM tools with insurance discovery functionality to identify coverage for self-pay patients or those unaware of their insurance status. 
  •  Conducting eligibility checks at least 48 hours before scheduled appointments whenever possible: If proactive checks are not feasible, perform real-time checks during patient check-in to minimize claim rejections and denials.  

Make a Difference in Your Bottom Line by Improving Prior Authorization and Benefit Verification Processes  

Prioritizing prior authorizations and benefit verification can help reduce claim denials and make a measurable difference on your practice’s bottom line. These processes serve as crucial checkpoints to ensure that services provided are covered by patients’ insurance plans, thereby reducing the risk of denied claims and potential revenue loss. As consumerism and complexity in insurance plans increases, mastering these processes is more essential than ever to optimize revenue cycle efficiency and deliver quality patient care.  

Unlock the Power of Seamless Prior Authorizations and Benefit Verification with Resolv Healthcare 

Optimize prior authorization and benefit verification processes with healthcare billing experts. Our team at Resolv can take the administrative burden of managing prior authorizations and benefit verification off your team and help your practice verify patient coverage accurately, reducing claim denials and optimizing revenue collection. Contact us today to learn more