May 19, 2022

The Impact of Prior Authorizations on Claims Payment Accuracy


Having an efficient and accurate process to manage PAs can impact multiple aspects of a health plan’s business including enhanced member care, utilization management, provider relations, and claim payment accuracy.

MANAGING DIRECTOR, AARETE

By Erica Nelson


MANAGING DIRECTOR, AARETE

Maria Turner

The purpose of a prior authorizations (PA) is to aid health plans in the management of care to their members, ensuring patient safety and validating the medical necessity of services, while also overseeing the cost of care. Having an efficient and accurate process to manage PAs can impact multiple aspects of a health plan’s business including enhanced member care, utilization management, provider relations, and claim payment accuracy.

Providers often find the PA process to be tedious and time consuming due to the lack of information and transparency into a payer’s PA requirements. As each payer has different PA guidelines, if not clearly documented and communicated, providers tend to cover their risks by over-submitting PA requests, which leads to additional administrative burden for both sides and can ultimately impact a member’s care.

There are both process and configuration opportunities on which health plans can focus to further improve the PA experience, manage utilization, and control costs.

One of the most important aspects of an effective PA process is to actively manage and regularly review PA guidelines to stay up to date on regulatory requirements and best practices within the market. It is important to share updates with external parties like providers and members; however, it is equally important to share changes with internal parties that facilitate the interface of the PA and claims adjudication systems in order to ensure payments are made only for properly authorized services and only up to the authorized service limitations.

PAYING FOR CLAIMS WITH NO AUTHORIZATION ON FILE

A common disconnect occurs when the claims system is not set up to automatically interface with the PA system and its requirements, leading to claims being paid improperly without having an active or matching PA on file. A similar issue occurs when a claim is flagged for manual PA review by a claims examiner, who manually overrides the system to pay for an unauthorized claim in error. This is typically a result of unclear documentation in the department’s policies and procedures and/or vague training.

PAYING FOR CLAIMS WHEN AUTHORIZATION IS FOR AN UNRELATED SERVICE

An improper interface between the PA and claims systems can lead to claims being paid based on a PA on file that is not related to the actual services rendered, such as paying for a service or procedure that has been up-coded to a higher level of service, is a higher-cost code that is in the same range/family of codes or is otherwise different from the one that was authorized. Without a proper automated interface or well-documented manual processes to guide claims examiners, discrepancies in the services actually rendered can lead to improper payments.

PAYING FOR CLAIMS THAT EXCEED THE AUTHORIZED UNIT QUANTITY (ACCUMULATOR ISSUES)

Matching the PA to the correct claim is crucial; however, maintaining and managing to the number of units approved and allowed per a health plan’s policies is equally important to ensure payment accuracy. If a member is authorized for a certain number of units for a particular product or service, but the units accrued are not being tracked or are not being properly accumulated over time, then it is possible to pay for units in excess of the authorized service limit. Claims systems often have difficulty tracking the accumulation of services, especially across multiple claims. Systems are often able to compare the units on a single claim to the authorized amount, but unable to accumulate the units on multiple claims submitted over time. As a result of non-functioning auto-accumulators or non-diligent claims examiners, overpayments can occur.

Health plans can approach the PA process by taking action on the following four areas:

  1. Comprehensive assessment of the current state comparing PA requirements to regulatory/policy requirements, best practices, and system set-ups
  2. Cost-benefit analyses resulting in recommendations to remove/add procedures from/to the PA grid based upon utilization, optimization, and member safety
  3. In-depth claims analysis identifying inaccurate claim payments and configuration set-up opportunities
  4. Technology improvements such as PA lookup tools

Often times, the dedicated subject matter expertise and market intelligence required to deploy these solutions is greater than the resources at hand. Partnering with a subject matter expert armed with proven digital and data capabilities will play a large role in the impact prior authorization practices have on claims payment accuracy.

MANAGING DIRECTOR, AARETE

By Erica Nelson

MANAGING DIRECTOR, AARETE

Maria Turner

Other Insights


8 Focus Areas for Accuracy of Provider Data Management that Impact Payment Accuracy

Breaking Down Benefits to Improve Payment Accuracy

Diving into Details: Accurate Contract Configuration