Games Payers Play: ASCs and Prior Authorizations

In today’s healthcare world, every stakeholder is trying to cut costs. Ambulatory surgery centers (ASCs) are trying to optimize revenue cycle management (RCM). At the same time, both commercial and government payers are trying to contain costs by turning to utilization management (UM) strategies, such as changing or increasing preauthorizations, also known as prior authorization requirements.

What this means is that the world of medical billing and collections has turned into a high-stakes game for ASCs. The rules of the game are dictated by the ASC’s payer contracts. Play by those rules, and an ASC can be paid for services in a timely fashion. But violate those rules, and an ASC risks delays in payment, time-consuming appeals and outright claim denial.

Many of the ASCs I have worked with have identified the preauthorization process as a source of growing frustration. In the not-too-distant past, payers seemed to require prior authorizations only for especially complex or particularly high-risk procedures. With the increasing number of Medicare-approved procedures in an ASC setting, prior authorizations are now more of the norm than the exception in today’s world. Regardless of what they are called — prior approval, prior authorization, precertification, prospective review — preauthorization requirements have the potential to derail RCM objectives.

One study cited by the American Medical Association (AMA) estimated that the preauthorization process consumes at least 20 hours of staff time per week (PDF), including physician time, nursing time and clerical hours. What can an ASC do to minimize wasted staff time and reduce claim denials related to the prior authorization process? The following six steps are a good place to start:

1. Verify the patient’s insurance eligibility, benefits and coverage upfront.

Whether this means a phone call to the payer or electronic verification through a healthcare clearinghouse, don’t skip this step. There are automation tools available at very low cost for real-time confirmation that the patient has valid insurance coverage.

2. Examine your payer contract to see if the specified procedure(s) require prior authorization.

As a best practice, each surgical case should be reviewed in advance of the date of the procedure to confirm whether a preauthorization is necessary. Most insurance companies can’t provide this information in an automated way, therefore ASC staff must contact the insurance company to get this data.

Often, I hear clients say, “The physician’s office provides us that information.” My recommendation is to always have someone at the surgery center contact the insurance company to confirm. All too often, the preauthorization only includes the physician’s office and not the surgery center. Do not take someone else’s word. Invest the resources to verify and confirm the procedure codes are authorized for the surgery center in advance of the procedure. Otherwise you are taking the costly risk of spending significantly more time and resources to appeal a “Not Authorized” denial — or worse, not getting paid at all.

3. Document what was authorized, when and the dates the authorization is valid.

Document exactly which procedure codes are included in the prior authorization. Also note the time frame included in the authorization. The majority of authorizations are not open-ended. They come with an expiration date. Make note of that so that in the event the procedure needs to be rescheduled, it can be scheduled within the approved time frame or someone can be alerted to contact the insurance company to extend the authorization time period.

4. Build in a process that ensures a quick turnaround for the physician’s operative report.

ASCs have an obligation to bill what the physician dictates on the operative report. The physician’s operative report may not always align with the preauthorized CPT codes. This can happen for a variety of reasons. The physician may have done additional procedures that were medically necessary but not preauthorized, or the physician’s report may lack enough detail to accurately code what was performed and authorized. When additional details are needed in the operative note as part of ensuring accurate and applicable clinically documentation, an addendum is necessary. In either case, it is important to immediately identify discrepancies between the CPT codes that were preauthorized and the codes your facility intends to bill on a claim.

5. If needed, request a retroactive authorization for additional services rendered that were not included in the original authorization.

Many payers have allowances for retroactive authorizations, but payer timelines for requesting retro authorizations can be as short as 72 hours from when the service was performed. Beyond that defined window for retro authorization, the ASC has little recourse to get additional codes authorized. That is why discrepancies between the services authorized and the services rendered must be identified as quickly as possible. When you receive a retroactive authorization, document it.

6. Before submitting the claim, do one last check to ensure that all codes describing the billed treatment and procedures match the codes in the authorization.

It’s important to have a systematic way to validate that all codes billed that require a preauthorization are, in fact, authorized. Many payers will deny claims with virtually no recourse for recouping payment when procedures are performed without the required preauthorization.

These six steps, if implemented consistently, can help to minimize claim rejections associated with prior authorization errors. Leverage automation and workflow tools as much as possible. Verification of insurance eligibility, coverage and benefits can be done through a clearinghouse, ideally one that is integrated with your practice management solution.

Obtaining authorizations is, for the time being, still a manual process. Some organizations are advocating for standardization of preauthorization processes so they can be handled electronically, but payers aren’t there yet. In the meantime, your ASC practice management software can help by incorporating fields for documenting prior authorization numbers and associated procedure codes and documents.

Finally, the right software solution can automate checks and balances on your claims by automatically comparing the codes included in a prior authorization to the codes billed for services rendered and flag claims where discrepancies are found. Automating this process can help ensure that claims that contain unauthorized billing codes don’t leave your organization without a final review.

Automating these processes within your ASC organization can help you stay ahead of changing payer rules related to preauthorizations. Automating workflow related to preauthorization will help you level the playing field in the game of medical billing and collections.

Tara Vail is chief operating officer of HSTpathways.

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