Understanding the Financial Risks of Incomplete Prior Authorizations

Prior authorizations are a universal pain; providers, billers, and patients all feel the strain. A missing or stalled approval can disrupt care and create chaos. But the real issue? The financial stress. Incomplete authorizations mean claim denials, payment delays, and revenue leaks, hitting healthcare organizations where it hurts. For admins and clinicians, handling these risks is not just about smoother operations, it’s about safeguarding profits. Handling the prior authorizations carefully will help you to keep the profit margins safe and cut down on losses.  

What is prior authorization? 

Prior authorization is an important process for you as a healthcare provider. It is taking approval from the patients’ insurance company before providing any treatment, medication, or any healthcare services to them. This is an important part of the treatment process, because it means to verify that the treatment is necessary for the patient’s well-being.  

It also confirms whether the treatment is covered under the patients’ insurance plan or not. According to the American Medical Association (AMA), 94% of physicians report care delays due to prior authorization, and 33% say these delays have led to serious adversities for patients. 

Financial risks of incomplete prior authorization 

1) Claim denials 

One of the most common issues of incomplete prior authorization is the denial of claims. If you as a provider fail to get the prior authorization approved, the insurance company can deny the claim altogether. Claim denials due to authorization errors are more common than you might think. A 2022 report from the Council for Affordable Quality Healthcare (CAQH) found that authorization issues are among the top reasons why claims get denied. 

2) Delays in payment 

Timely prior authorization is important for your practice. If your prior authorization gets delayed your practice will be affected. That kind of lag can seriously affect your cash flow, especially if you are part of a smaller practice or working with tight margins. You must focus on getting prior authorization timely to receive payments on time. In such cases, you can go for experts who have the knowledge of prior authorization solutions. 

3) Operational costs will increase 

If you are spending time chasing down approvals, resubmitting denied claims, and appealing decisions, you know that it is a waste of your resources. You and your staff could be spending hours each week on these tasks. You can save this time, and it can be better used on patient care or other revenue-generating work. That’s where investing in prior authorization services can really help.  

How can you reduce the risk? 

Fortunately, there are ways to protect your organization from the financial losses from incomplete prior authorizations. Here are a few strategies: 

1. Invest in training: Make sure your team understands payer-specific rules and timelines. 
2. Use technology: Platforms offering prior authorization services like Priorauth Online can simplify and speed up the process. 
3. Track metrics: You must monitor the denial rates and approval turnaround time to identify where breakdowns occur. 
4. Partner with experts: You can consider working with a prior authorization company that specializes in navigating the complex insurance landscape. 

Concluding 

Prior authorization is an integral part of your practice. Therefore, if you don’t want to chase insurers for approval, you can go for a prior authorization company that will make your job easier. This is how, you will be able to save your time and avoid losses.