Insurance verification and authorization are crucial components in the revenue cycle management or medical billing insurance claims process. RCM is the financial process used by healthcare institutions to track patient care experiences from registration and appointment scheduling until final payment using medical billing software. Insurance verification and prior authorization are independent and distinct processes that both works to prevent claim denial and backlog.

Insurance Verification
The practice of approaching the insurance company to verify whether the patient’s healthcare plans cover the requested procedures or not is known as insurance verification.
The key stage in the medical billing and coding process is insurance verification. In today’s constantly-changing and more complex healthcare market, confirming coverage, benefits, co-payments, and deductibles is more important than ever. As a result, medical care professionals must comprehend the insurance verification procedure and its significance in the healthcare business.
Its objective is to confirm:
- If the patient has current health insurance coverage
- What procedures/services are covered and which are not
- The amount of each process that the insurer will cover and the patient’s financial responsibility.
Insurance verification must be completed before a patient may get medical treatment. Failure to do so may result in an unpaid claim from the insurance company or a patient-facing unexpectedly high expenses.
Role Of Insurance Verification In Medical Billing
Proper insurance verification allows for faster and more efficient payments, minimizes debts, and improves patient satisfaction.
- Enhances Cash Flow: Effective insurance verification results in more clean claims, which speeds up acceptance and leads to a shorter billing cycle. Inadequate eligibility and plan-specific benefit verification expose healthcare businesses to claim rejections, denials, and bad debt.
- Reduces the number of claim rejections and denials: A patient’s insurance plan must be verified before admission to any hospital, clinic, or medical institution To avoid claim rejection. Filing for claim rejection is a pain and takes a long time. Check that the documented patient information is valid and up to date. Also, ensure that the policies are still in effect and have not been amended. Even the smallest and most insignificant inaccuracy might result in claim rejection or denial. Make sure you’re thorough and attentive.
- Improves patient satisfaction: Transparency is ensured by verifying the patient’s insurance before the office visit and speaking with them about what their plan covers and does not cover. Patients will be aware of their care expenses and will be able to better prepare to pay their payments. Patients will avoid costly surprises if the medical billing procedure is transparent throughout.
Insurance Authorization
The process used by insurance companies to assess whether or not a patient is qualified for specific surgeries, drugs, or tests unless in an emergency is known as insurance authorization. It is also known as preauthorization, prior approval, or precertification. Prior authorization establishes the medical necessity of service, treatment plan, prescription medicine, or durable medical equipment (DME).
Role Of Insurance Authorization In Medical Billing
Insurance companies utilize preauthorization and predetermination to guarantee that patients only receive essential treatments and drugs. They will examine prescribed therapies to industry standards and approve those necessary for the patient’s health. If a less expensive, more appropriate therapy is available, they will decline the claim. Preauthorization has the following advantages:
- Encourages safety
- Aids in cost reduction
- Prevents the abuse of drugs
- Assists patients in avoiding needless medical treatments
The medical coder and the health care practitioner collaborate to authorize medical treatment. The medical coder is responsible for assigning the right CPT code to the medical procedure received by the patient. Consequently, the medical coder must take their responsibilities seriously since providing the incorrect CPT code might result in rejection.
Insurance Verification V/S Insurance Authorization
The following are the variables between insurance verification and insurance authorization:
- Insurance verification occurs before the patient contact, whereas the prior authorization process begins when a physician’s treatment, test, prescription, or equipment requires preapproval from the insurer.
- Medical billing professionals must be familiar with the CPT codes for the services for which clearance is sought for the preauthorization process to go smoothly. Insurance verification focuses on coverage status, active/inactive status, and eligibility status.
- Prior authorization is concerned with getting prior authorization for treatments, whereas insurance verification is concerned with drafting and filing medical claims and receiving reimbursement for patient care.
Insurance verification and authorization both are time-consuming processes that may result in refusal. An outsourced medical billing partner who provides HIPAA compliant medical billing relieves your overloaded employees. A medical billing company’s precise verification speeds up approval and authorization, allowing you to focus on providing value-based treatment, which benefits your practice’s financial line.
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