What Is Meant By Retro Authorization In Medical Billing?

Medical billing is a complex process — it requires an understanding of insurance plans, coding & reimbursement regulations, and correctly filling out & submitting claims to ensure timely payments. The process is similar to an accountant filing taxes, where the paperwork must be precise in order for the process to be successful, but the outcome—getting paid—is well worth the effort.

The American Academy of Family Physicians (AAFP) reports that the health insurance industry denies an average of 5-10% of claims per year. Having delved deeper into the factsheet, it was found that the common occurrence in most instances of claims denial was inaccurately or incompletely processed retro authorization.

The observable part of claims denial is the financial strain on families already struggling with medical costs and on healthcare providers whose costs are uncompensated. In an attempt to provide providers with a clearer understanding of retro authorization, this post uncovers what they need to know to ensure successful claims submission.

Understanding Retro Authorization

Prior authorization is a key step in the healthcare billing process and ensures that the services provided to the patient have been approved by the payer. Retro authorization, on the other hand, is the process of obtaining authorization after services have already been provided, in order to ensure that the patient is reimbursed for the services rendered.

When a claim is submitted to the payer and denied due to a lack of prior authorization, retro authorization is initiated by the healthcare provider or medical billing company. It serves as a crucial step in the reimbursement process for healthcare providers, as it ensures appropriate coverage for the patient, and thus appropriate reimbursement for providers.

Why is Retro Authorization Necessary?

The need for retroactive authorization can be attributed to a number of factors. The healthcare provider may, for instance, have provided a diagnostic test or surgical procedure to the patient that wasn’t initially planned or requested by him. In these instances, the provider may have been unable to obtain prior authorization, thus leaving him with no choice except considering retro authorization

The patient’s insurance coverage may also need to be retroactively authorized in the event that the policy changes after the services were provided and the previous coverage no longer covers the patient. Thus, it is needed to confirm that the patient’s insurance coverage will remain valid for the services provided.

What Involves in Retro Authorization

Each insurance company has its own process for retro authorization, but in general, it requires submitting a form with the necessary paperwork. Once the form and paperwork are submitted, the company will review and determine whether retro authorization should be granted. The insurance company will then respond to the provider regarding the claim approval or denial.

In order to receive reimbursement for services that have been rendered in the past, medical providers should be familiar with retro authorization processes. Providers should be knowing the insurer’s policies and procedures necessary for obtaining retroactive authorizations as well as the documentation and information needed to receive payments.

What Makes Retro Authorization Complex?

The multifaceted nature of retro authorization makes the process complex, which often leads to delayed reimbursements for healthcare services provided. To make matters worse, these delays can put additional strain on providers’ already-stretched resources. Moreover, the involvement of a great deal of documentation and paperwork makes the process challenging at least for the providers who just stepped into the market.

The task of reviewing the services that were provided while ensuring that they meet the payer’s criteria for medical necessity make retro authorization even more complicated. As such, providers must ensure they take all the necessary steps to expedite the process of retro authorization in order to receive timely reimbursements.

Streamlining Retro Authorization

Despite the complexity and time-consuming nature of the retro authorization process, it is important to recognize that strategies exist to streamline the process and minimize its impact on revenue as much as possible.

1. Communicate clearly with payers

Make sure to use concise and precise language when communicating with payers for retro authorization requests to be approved.

2. Ensure retro authorization is error-free

Ensure that all requests are properly documented and submitted on time. This will reduce the chances of errors and will also make it easier to track and manage retro authorization requests.

3. Ensure proper documentation

Proper documentation helps to provide an audit trail that shows who requested the retroactive authorization, when it was requested, the reasons behind the request, and the outcome of the request. This helps to ensure that the authorization request is reviewed in a fair and consistent manner.

4. Set clear deadlines

By setting a clear deadline, everyone involved in the process will be aware of when the request is due, and will be able to plan accordingly. This will give each request the attention it deserves, and help ensure that it is processed in a timely manner.

5. Automate the process

Automation will reduce the labor costs associated with the manual processing of retro authorization, as well as minimize the potential for human error. It will also speed up the process, as manual processing can take days or weeks, whereas automated processing can be done in a matter of moments.
Review before Requesting Retro Authorization
Reviewing retro authorization requests will ensure that everything has been handled in a consistent and fair manner and in accordance with the payer’s policies and procedures.

As payers are becoming increasingly stringent when it comes to reimbursement, any errors or inconsistencies in documentation or communication can lead to delays in or even denial of reimbursement. It goes without saying that the above considerations will in many cases result in providers being successful with retroactive authorizations.

6. Final Thought

In conclusion, obtaining retro authorization is important in medical billing owing to the fact that it provides providers with the opportunity to avoid financial losses that may occur when prior authorizations are not obtained in time. Errors in the paperwork, however, can lead to delays in reimbursement—or worse—complete denial of the claim when processing retro authorization.

Capline Healthcare Management, a reliable healthcare management firm, can be a valuable asset in the course, helping healthcare providers navigate the complex retro authorization process and increase the chances of successful claims. As an outsourced partner, we can help identify any discrepancies in the authorization process, allowing healthcare providers to quickly address them and maximize the chances of successful claims.