How to Develop a Solid Prior Authorization Strategy For Labs

How to Develop a Solid Prior Authorization Strategy For Labs
In the wake of reimbursement complexities, many laboratories grapple with one of the largest growing areas in healthcare – prior authorization. Prior authorization ensures you can monitor and control spending on medications, services, and treatments – making it an essential tool in increasing access and continuity of care. However, growing labs are not yet well-versed in this process and lack control over their own strategy.

In this blog, we want to explore prior authorization in healthcare and provide practical best practices for developing a solid strategy.

What is prior authorization?

According to the American Medical Association (AMA), prior authorization is a health plan cost-control process that involves obtaining advance approval from a health plan to qualify for payment coverage before a specific service is performed on a patient.

You may hear others refer to prior authorization as the following, but don’t worry, they mean the same thing:

  • Preauthorization
  • Preapproval
  • Precertification

Understanding prior authorization and labs’ dilemma

In the 1960s, prior authorization was developed to verify a patient’s admission to the hospital and treatment needed on a confirmed diagnosis from two doctors. However, in today’s environment, prior authorization is used for various medications, which is becoming a well-known headache in healthcare. A 2023 American Medical Association Survey reported that 88% of physicians perceived this process as plagued by high administrative burdens.

For laboratories, most insurers now require prior authorization for certain genetic and molecular laboratory testing. CPT code 81479, used for unspecified molecular pathology procedures, was ranked second in lab procedure with $470.2 million CMS payments in 2022 (Bonislawski, 2024). Expectedly, molecular infectious disease testing has risen as well. CMS spent $221.6 million on CPT code 87798 for unspecified infectious disease detection by nucleic acid in 2022.

Pitfalls of prior authorization

Due to these developments, labs face numerous challenges as they cater to provider and patient needs while ensuring they are paid, like:

  • Incorrect insurance information: The provider may fail to seek authorization from the right payer.
  • Inefficient operations: Poorly defined processes will lead to inconsistencies and admin errors, such as wrong billing codes or misspelled names.
  • Outdated information: Frequent changes to payer requirements can be missed by labs, resulting in denials.

A single error can cause denials. By the time the amended paperwork is resubmitted, you can lose your leverage with the payer. In return, patient tests, care, and access to lifesaving medications can be delayed. Don’t let the loss from reworking put a hole in your wallet – it’s time to develop a solid prior authorization strategy.

Prior authorization strategy: Build the fundamentals with Synapse

To reduce prior authorization impacts on lab’s revenues and patient care—and, by extension, outcomes—you need a strategy founded on automation and transparency.

America’s Health Insurance Plans (AHIP) revealed that electronic prior authorization (ePA) can speed up the time for patient treatment. The median time to make a medical decision dropped from 18.7 hours (paper-based prior authorization) to 5.7 hours with ePA. Also, the automation of prior authorization allows quicker detection of errors and early flagging of authorization requirements.

Here’s the good news: Outsourcing your prior authorization services will give you access to ePAs and all the stress-free benefits of outsourcing. At Synapse, we have fully integrated automated systems that are safe and secure for labs to utilize and manage their revenue cycle management, working together with your staff to have tailor-made solutions to your unique needs. Schedule a FREE consultation with us by filling out the contact form below or contacting us at (844) 384-7532 or medicalsales@synhs.com

Source:

2023 AMA prior authorization physician survey. American Medical Association. From: https://www.ahip.org/documents/Fast-PATH-Evaluation.pdf

Bonislawski, A. (2024). Prior Authorization a Growing Headache for Labs as Payors Clamp Down on Molecular, Genetic Testing. From: https://www.360dx.com/clinical-lab-management/prior-authorization-growing-headache-labs-payors-clamp-down-molecular

Berg, S. (2023). What doctors wish patients knew about prior authorization. From: https://www.ama-assn.org/practice-management/prior-authorization/what-doctors-wish-patients-knew-about-prior-authorization

Heath, S. (2023). How Prior Authorization Impacts Patient Access to Care. From: https://www.techtarget.com/patientengagement/feature/How-Prior-Authorization-Impacts-Patient-Access-to-Care

Pestaina, K. & Pollitz, K. (2022). Examining Prior Authorization in Health Insurance. From: https://www.kff.org/policy-watch/examining-prior-authorization-in-health-insurance/