Healthcare costs increase by authorization denials – Here’s why?

 Erika Regulsky Billing & Collections

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Healthcare costs increase by authorization denials

A study conducted by Health Affairs revealed that Independent practices and Hospitals spend an average of $68,274 per year for contacting health insurance. In many cases, Prior authorization appeals are a time-consuming process. Few Insurance companies have options for retro authorization When the patient is in need of medication/Treatment and prior auth is delayed or not obtained on time, it might become a real impact on the patients. Many doctors report that Authorization denial is detrimental to patient care and it affects reputation.

authorization denial in medical billing

And the data shows that administrative cost for prior authorization is significantly high compared to other tasks like claim submission and eligibility verification. And also it indicates that 35% of the revenue lost in the process are due to authorization denials. Some of the common reasons for authorization denials 

  • Missing prior authorization number in the claim form
  • Authorization is invalid for the service date/procedure code billed
  • Limits exhausted in the authorization
  • Insufficient documents for obtaining authorization

A health system in Texas outlined their issues with prior authorizations and claim denials in a recent round table discussion. The company executive stated “they had an efficient process a few years ago but now with all the payers’ changes, what was once effective is no longer effective for denial prevention. However, in discussions with payers, they indicate the goal is not to create hassles but to promote efficacy and patient safety. Also, the payer industry claims to hold down costs for the healthcare system”

Steps to reduce authorization denials

It may not be possible to completely eliminate the prior authorization denials. But by keeping checkpoints and best practices we can bring it under control. Here are some of the ways to reduce the authorization denials for your practice and hospitals.

  • Having a structured pre-registration team.
  • Training staff regularly on the insurance guidelines.
  • Creating a centralized system for effective follow-ups.
  • Documenting the process thoroughly, so that it can be used for appeals
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I’m a multi-certified revenue cycle management professional and compliance officer with 20+ years of experience. I contribute articles to leading healthcare publications and journals. I am currently working as Senior Transition Manager, in BillingParadise headquartered at Diamond Bar, California. BillingParadise offers Medical Billing Services that intersect perfectly with the EMR/Practice management system you use.BillingParadise has offices in New Jersey, New York, Florida, Georgia, Minnesota, and Texas.

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