Health insurance companies use the pre-authorization process to verify whether a drug, procedure or service prescribed is medically necessary.

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Health insurance companies use the pre-
authorization process to verify whether a drug,
procedure or service prescribed is medically
necessary.

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Dealing with prior-authorization is crucial as it effectively improves patient outcomes by
ensuring that they receive the correct medications when they need them, thereby reducing
unnecessary prescription drug usage. Pre-authorization/Prior authorization/Pre-approval – is
an authorization that health insurance companies require plan members to obtain before
receiving any specific type of care. Health insurance companies normally require prior
authorization for medications, durable medical equipment (DME) and medical services, and
insurance authorization services are available to help handle the administrative burden
associated with the process. By pre-authorizing a service, treatment plan or procedure, your
insurance carrier is not only agreeing that the healthcare procedure recommended is
medically necessary, but also ensuring that maximum reimbursement will be met for the
procedure.
Which Services Require Pre-approval?
Most procedures that require pre-approval go well beyond the routine care provided by the
primary-care physician. Some of the common medical procedures and services for which
insurers typically require pre-authorization or written approval include –
• Surgical procedures
• Radiology services (X-ray, MRI, CT or PET scan, ultrasound)
• Pain management services (nerve blocks, trigger point injections, a host of
others)
• Non-emergency ambulance services
• Home care services (home therapy, hospice, skilled nursing visits)
• Gastrointestinal tests (endoscopies, CT colonoscopies)
• Durable medical equipment
• Specialty drugs provided in certain situations
• Sleep studies (to diagnose sleep disorders)
Inpatient hospital services are also subject to pre-approval, although they go by a different
name. For instance, if your physician want to admit you for a non-emergency hospital stay,
it is important to obtain pre-admission certification. On the other hand, pre-admission
certification is not required for emergency hospital stays.
Writing the Prior-authorization Letter – General Guidelines
The pre-authorization process can be initiated by sending a pre-authorization letter to the
concerned medical insurance company. Although there are general guidelines to write a pre-

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authorization letter, each company has varied requirements depending upon its individual
policy and procedures. Here are some important details required for all prior-authorization
letters –
• Demographic information of the patient (Includes - Name, date of birth, insurance
ID number and more)
• Provider information (both referring and servicing provider)
o Tax ID number
o National Provider Identifier (NPI) number
o Address where services are being rendered
o Phone and fax number
 Requested service/procedure along with specific CPT/HCPCS codes
 Location where the service will be performed
 Length of stay requested in case of inpatient requests
 Diagnosis (ICD code and description)
Along with this letter, it is important to submit all medical notes. Based on the coverage
policy and the complexity of the service, it is essential to submit all additional information
such as previous treatment history and clarification on the type of service provided. With
accurate and timely submissions, your pre-authorization request will be clearly
communicated to the insurance company and they will in turn process the request quickly.
Obtaining Pre-authorization and Preventing Denials – Important Steps
Here are some important steps that physicians can take to obtain pre-authorization and
prevent denials –
 Know about the coverage and preauthorization guidelines – Physicians
must be well aware about the coverage and pre-authorization guidelines of each
payer and provide the specific diagnosis on their reports. The diagnosis codes
reported tell the payer “why” the specific service has to be performed and helps
support the medical necessity of the procedure.
 Follow treatment guidelines - Physicians should ensure that they are following
the correct recommended treatment guidelines before recommending a high-cost
procedure for a patient.
 Meet all payer criteria – Prior to submitting a pre-authorization request,
providers need to check whether they fulfill all the payer’s criteria.

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 Regular monitoring of insurance carrier websites – Monitoring insurance
carrier websites on a regular basis is crucial as it will help patients identify crucial
issues affecting them so that they can bring it to the notice of their insurance
carrier and advocate for themselves and their provider.
 Update contracts with insurance companies - Insurance companies may
update their coverage policy from time to time and therefore providers need to
track these changes and update their contracts to maintain coverage.
 Take steps against denials – Healthcare providers should have relevant
information about the specific procedures performed and must have adequate
evidence to prove that the medical necessity of the specific procedure and details
on coverage for certain diagnoses. Such information would also help during
reimbursement negotiations.
 Conduct regular audits – Regular audits can detect potential issues and help
identify denial trends for certain procedures. Thus providers can correct minor
issues that may be responsible for a large portion of the denials. In addition,
audits should also focus on diagnosis codes and final payment.
 Know the diagnosis codes – This is primarily important for orthopedic and spine
procedures as many do not have clearly defined codes. The help of a reliable and
experienced medical billing and coding service provider can prove to be useful
when negotiating contracts and seeking full reimbursement for certain high-
volume codes under diagnoses.
It is estimated that prior - authorization and medical necessity related denials account for
more than 11% of all denials, and usually occurs due to failure to secure an authorization in
advance. The process of authorization starts with procedure-specific policies crafted and
managed at the payer, plan, employer, and group levels. Insurance companies have
insurance verification specialists who can help providers with the process of obtaining pre-
authorizations. Partnering with a reliable insurance authorization company helps healthcare
practices minimize the time and resources required for getting prior authorizations, reduce
the risk of denials, benefiting both physicians and patients.