Prior authorization, also called pre-authorization, pre-certification, authorization, or simply PA, is the process of obtaining approval from a health plan before a specific healthcare service, procedure, medication, or other covered item is provided to the patient.
Another way to look at PA is as a type of utilization management because, during the process, the payer runs an advance check for whether the requested care matches the coverage criteria for medical necessity before the service is provided or the claim is submitted.
Prior authorization in medical billing plays a more crucial role in revenue cycle management than most professionals assume.
A simple PA error can lead to:
- Hundreds of dollars of revenue loss
- Payment delays
- Claim denials
- A full audit
For example, an expired, missing, or mismatched authorization in medical billing is among the common yet preventable reasons for claim denials.
Why is Identifying Pre-Authorization Errors Necessary?
Generally speaking, coding or documentation errors surface in the later stages (typically during claim scrubbing or worse: after claim submission). Conversely, authorization-related errors are avoidable at the initial stage if the front office detects them early.
According to the Kaiser Family Foundation (KFF), in 2024, Medicare Advantage insurers fully or partially denied 4.1 million prior authorization requests, leading to revenue cycle disruptions.
Billing teams need to understand the value of early detection for prior authorization challenges. Ideally, pre-authorization errors must be resolved before claim submission. Fixing the errors afterwards wastes effort and resources.
If a required prior authorization was not obtained, the resulting claim may be denied, and the provider may need to pursue an appeal or another payer-specific resolution.
Types of Authorization in Medical Billing
Not all authorizations are the same in medical billing. Each type carries different payer expectations around:
- Timing
- Documentation
- Turnaround
Turnaround times vary by payer and request type. Standard requests generally take longer than urgent or expedited requests, which are subject to shorter timeframes under applicable payer and state rules. Whereas, the timing of an authorization request refers to whether the payer approval was sought before the service, after, or during it.
The following table comprehensively covers the types of authorizations, what they cover, and an example for each.
| Type | What It Covers | Example |
|---|---|---|
| Prior or Pre-Authorization | Payer approval required before certain covered services, procedures, medications, or items are provided. | Authorization required before an MRI. |
| Concurrent Authorization | Approval to extend or continue underway care. | Increasing the duration of inpatient stay for medical reasons. |
| Retrospective Authorization | Approval request submitted when a service or procedure has already been performed. | Requesting authorization after a service has been provided when the payer permits retrospective authorization. |
| Referral Authorization | A provider’s direction for a patient to receive care from another provider or specialist. | A primary care physician referring a patient to a cardiologist. |
The Prior Authorization Process for Providers
Pre-authorization in medical billing is a step-by-step process and involves a predefined workflow. Here’s what the process entails:
1. Verify Eligibility and PA Requirements
The process begins with the front desk or eligibility staff confirming the patient’s active coverage. Once coverage is verified, staff checks whether the ordered service, drug, or procedure requires authorization under that plan.
2. Compile Clinical Documentation
The ordering physician’s office staff collects relevant clinical documentation such as notes, diagnosis codes, prior treatment history, and medical necessity justification. The payer typically requires the documentation.
3. Submit An Authorization Request
Next, an authorization specialist submits an authorization request. This may be done through the payer’s portal, an electronic prior authorization (ePA) system, or a fax line along with relevant patient details.
4. Track and Follow Up
After the pre-authorization request is submitted, the specialist monitors the request, handles any documentation requests made by the payer, and escalates urgent cases.
5. Receive the Determination
The applicant then receives payer approval, denial, or a request for additional information. The approval also includes a validity window and reference number for when the service is performed.
6. Hand Off to Billing
Lastly, the billing team verifies and logs the authorization number against the service so it may be entered into the claim when submitted.
Prior Authorization Number in Medical Billing
The prior authorization number is the reference code a payer issues once an authorization request is approved. The authorization number confirms that the payer has reviewed the request and agreed to provide coverage for the service (under the stated conditions).
Additionally, the prior authorization number is necessary since claims are automatically matched against it when a payer adjudicates the claim. The claim is typically denied if the authorization number is:
- Missing
- Entered incorrectly
- Connected to the wrong CPT or HCPCS code
- Expired at the time of filing
Notably, the claim will be denied even if the service provided was medically necessary and the documentation is flawless. Simply put, medical necessity alone does not prevent a claim denial if the administrative process collapses.
For this reason, billing teams consider the authorization number as important as a diagnosis or procedure code. As a general rule of thumb, the authorization number must be:
- Current
- Correctly formatted
- Correspond to the service it was approved for
Prior Authorization Lists by Payer
Prior authorization requirements do not follow a unified standard. The requirements may vary by:
- Payer
- Plan type within the same payer network
- Changes to payer policies and authorization lists
Thus, a service that did not require prior authorization last year may need it today, and vice versa. Therefore, payer-published authorization lists are generally the most reliable source for practices when determining current authorization needs. Typically, practices check the following lists:
| Payer / Program | Plans / States Covered | Authorization Resource |
|---|---|---|
| Medicare | Original Medicare, including applicable DMEPOS and other Medicare Fee-for-Service initiatives. | CMS Prior Authorization & Pre-Claim Review Initiatives |
| Medicare Advantage | Part C plans; requirements vary by individual MA plan. | Medicare — Original Medicare vs. Medicare Advantage |
| Aetna | Commercial, Medicare, and Medicaid; Medicaid requirements are state-specific. | Aetna Precertification Lists & CPT Search |
| Cigna Healthcare | Medical procedures and services, medications, behavioral health, and other services; requirements depend on the member’s plan. | Cigna Precertifications & Prior Authorizations |
| Humana | Medicare Advantage, Dual Medicare-Medicaid, Medicaid, and Commercial; Medicaid resources are state-specific. | Humana Prior Authorization Search Tool |
| UnitedHealthcare (UHC) | Commercial, Medicare Advantage, Dual Complete, Community Plan/Medicaid, and Individual Exchange. | UHC Prior Authorization Requirements |
| Blue Cross Blue Shield (BCBS) | Alabama, Arkansas, California, Delaware, Georgia, Idaho, Illinois, Kansas, Kansas City, Louisiana, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, North Carolina, Oregon, Tennessee, Texas, Virginia, and other BCBS service areas. | BCBS Companies by State |
Important Billing Note: The requirements for pre-certification are subject to change. Billers must verify the latest changes based on the particular payer/state they seek authorization with.
How to Appeal a Prior Authorization Denial?
Since a prior authorization may be denied for various reasons, billers must know the key steps for denial management.
Pre-authorization denials are different from claim denials, and when denied, the path forward depends on why it was denied, as discussed below:
1. Identify the Denial Reason
Since denial management varies by denial reason, billers must identify the reason first. They can find details in the denial letter and identify:
- Appeal deadline
- Exact denial reason
- Affected service
- Payer policy
Additionally, billers must also determine whether the denial is due to an error in:
- Coding
- Eligibility
- Authorization
- Missing documentation
- Benefit exclusion
- Medical necessity
2. Correct Errors and Resubmit
Once the denial reason is identified, billers should determine whether the issue can be corrected through:
- New authorization request
- Reconsideration
- Formal appeal
The appropriate action depends on the payer’s process and why the denial occurred.
Additionally, professionals should update any incomplete/ missing records or authorization information. Billers must also verify that the corrected submission addresses the reason for denial and retains the submission confirmation and reference number.
3. Request Peer-to-Peer Review
If a practice faces a medical-necessity denial, the treating or ordering physician should confirm if they can request a peer-to-peer review. During the review, the physician should explain how the patient’s clinical circumstances meet the payer’s applicable medical-necessity criteria, supported by:
- Patient’s diagnosis
- Symptoms
- Treatment history
- Test results
- Prior treatment response
- Relevant clinical guidelines
Important Note: Document the outcome and additional information the payer requests.
4. Submit a Formal Appeal
Billers should file a written appeal before the deadline if the denial is not overturned. The appeal should address each denial reason individually and support the appeal with relevant evidence, such as:
- Medical records
- Physician documentation
- Plan or policy language
- Clinical guidelines
- Supporting literature
Explain why the service meets the applicable coverage or medical-necessity criteria and state the specific resolution requested.
5. Use Expedited Review (When Allowed)
If waiting for the standard appeal process could seriously jeopardize the patient’s health, ask the payer whether an expedited appeal or review is available under its rules.
If the internal appeal is denied, providers can request an independent external review, as outlined by Centers for Medicare & Medicaid Services (CMS).
Common Challenges in Prior Authorization
Billers handling prior authorization in medical billing may face several operational pain points. These may include:
- Prior authorization requirements change frequently, and processes built around outdated rules can quickly lead to denials.
- Even an approved authorization can result in a denial when the service date, provider, or billed code differs from what was originally authorized.
- Some payers still require phone-based processes or payer-specific portals rather than a unified electronic workflow. This slows turnaround and increases the risk of lost or overlooked requests.
- Delays in authorization can postpone scheduled services and create additional administrative work for providers.
- Several patients abandon treatment because of PA-related barriers.
- Smaller practices may not have dedicated specialists, leaving front-desk and clinical teams with PA tasks.
Specialty-Based Authorization Challenges
Newer practices often overlook the span of challenges that may arise in pre-certification. These challenges differ for each practice, and adopting a one-size-fits-all approach might backfire.
Here are the most prevalent prior authorization challenges for our top three specialties:
| Specialty | Frequent PA Challenge |
|---|---|
| Ophthalmology | Repeated PAs for ongoing injections/treatments. |
| Orthopedic | Documenting failed conservative therapy. |
| Dermatology | Proving medical necessity vs. cosmetic treatment. |
Medical billers should refer to our articles for full details on specialty-based challenges. Considering PA challenges by speciality highlights underlying gaps in the authorization process that practices may overlook otherwise.
How Does NeuraBill Support Practices with Prior Authorization?
Authorization denials can result from administrative issues such as:
- An unchecked authorization requirement
- A late or incomplete submission
- A mismatch between the authorized service and the submitted information
Managing these gaps is tedious, and not every practice is equipped to resolve prior authorization errors in medical billing.
Our services can help practices:
- Reduce administrative errors
- Streamline authorization workflows
- Reduce staff time spent managing payer portals and follow-ups
If you want to optimize your revenue cycle, consider exploring our medical billing and coding services.
