Terms such as preauthorization, retro authorization, and precertification can be difficult to differentiate when it comes to the world of medical billing. Nevertheless, it is important to know these concepts, particularly in matters regarding payment or whether a patient has insurance covering the treatment. Retro authorization is one of the terms that are not usually understood by even healthcare providers and their patients.
This blog post will go into details and explain all you should know about retro authorization in medical billing service, including what it is and why it is important.
Understanding Retro Authorization in Medical Billing
Retroactive authorization is where a medical procedure or medical service is subjected to seeking authorization after the service has been conducted. This differs from the usual practice of pre-approvals, where approval is required before care delivery.
This is because in cases where a patient requires urgent medical attention and may not have time to seek the insurance company to get preauthorization. A provider could go ahead and proceed. At the end of the process, the provider sends in a request to the payer to authorize retro so that the services can be repaid.
What is the Purpose of Retro Authorization?
Retro authorization in medical billing is important for both sides of recovery and patient care. Here’s why:
- Emergency Treatments: The provider cannot wait to get a preauthorization in cases that are urgent or threatening to life. Retroactive authorization makes sure that the desired treatment can be charged.
- Averted Claim Refusals: By filing a retro authorization, one will be able to bypass the insurance companies rejecting a claim because it did not have prior authorization.
- Fills Communication Gaps: There are cases when administrative mistakes or a failure to communicate with the insurance company may slow down the preauthorization procedure. Retro authorization is something that can solve those problems afterwards.
Though it is necessary to mention that retro authorization requests are not accepted by all insurance plans. Others will simply not cover at all, provided that prior authorization was not acquired, even when in an emergency.
Important Elements of Retro Authorization
A retro authorization request is likely to be approved when composed and exemplified by the appropriate documents. The following are the most important ingredients:
- Patient Information: full name, insurance ID, date of birth.
- Description of service: The date of treatment and kind of treatment.
- Medical Necessity Documentation: Reason as to why the procedure or treatment became necessary.
- Reason for the Lack of Preauthorization: The reason should be evident, with some clear occurrence like a medical emergency or a clerical mistake.
- Notes of the Physician: Clinical supporting documentation has a tendency to confirm the request.
Healthcare providers are not allowed to waste time, and most of the insurers have a short time frame (usually within 30 days of the service provision) to submit a retroactive authorization request.
Difference Between Precertification and Preauthorization
Many people use the terms precertification and preauthorization interchangeably, but they are not exactly the same.
| Aspect | Precertification | Preauthorization |
| Definition | A notification to the insurer before a procedure is performed. | An approval from the insurer is required before a service is given. |
| Purpose | To inform the payer, not necessarily to get approval. | To get confirmation that the insurer will cover the service. |
| Requirement | It may not always be required for payment. | Often mandatory for coverage. |
| Timing | Done before treatment. | Also done before treatment. |
Retro authorization, on the other hand, is a very different procedure entirely since it is done after the service has been rendered.
Want to learn more about types of authorization and their effects on the billing process?
See our complete guide to What is Authorization in Medical Billing.
Retro Authorization Uses
Retroactive authorization may be required in a number of circumstances:
- Emergency Room Visits: Making a call to the insurer does not leave time to treat the patient.
- Service of out-of-Hours: This can be the hours when a preauthorization is received, ideally, but clinics or providers are closed.
- Out-of-Network Care: Patients who unknowingly are treated by an out-of-network provider.
- Coverage Delays: This one occurs when the insurance of a patient is new, but the system has not been updated yet.
None of such situations removes the need for the provider to be paid, and the retro authorization appears to be the sole possibility.
Final Thoughts
Retro authorization in medical billing is not the best; it is, however, an option that is needed in various everyday situations. When either an emergency occurs, human error is present, or there is a system malfunction, it is important that healthcare providers can continue to be fairly reimbursed: having the option to request retroactive authorization allows this to happen. A patient should not be left with a bill that he or she did not expect.
Being informed about what it is, its importance, and the difference it makes compared to the other types of authorizations, health practitioners will be in a better position to navigate through the process of billing with more confidence.
Require the assistance of an expert in the medical billing procedure?
DWP Medical USA has total assistance in prior authorization, retro authorization, and so on. Contact now to ease the passage of the most important billing elements.