Did you know 82% physicians in the United States agree that pre-authorization requirements sometimes force patients to abandon care? This might bring you to the million-dollar question: In an emergency, should the provider wait for payer approval or do what they pledged, i.e., save lives?
Definitely, patient care should be prioritized! There is a process called retrospective or retroactive (retro) authorization that enables you to acquire payer authorization after rendering the service. However, the payer will perform a manual review to determine whether the service was truly an emergency.
This guide will discuss everything you need to know about retrospective authorization (retro-auth), from its significance to challenges and usage examples. So, continue reading!
Significance of Retro Authorization in Medical Billing
Discussed below are some of the benefits of retro authorization in medical billing:
Safeguards Provider Revenue
It enables healthcare providers to recover reimbursement for high-cost emergency or unplanned services. Without retro-auth, physicians may have to write off these charges, straining their revenue cycle.
Compliance with EMTALA
With retrospective authorization, healthcare facilities become more compliant with the Emergency Medical Treatment and Labor Act (EMTALA). How? Because they know they will not lose their right to be paid for that care later.
For context, under EMTALA, healthcare providers are directed to provide life-saving care regardless of the patient’s insurance status.
Mitigates Surgical Surprises
Sometimes, surgical procedures change in scope mid-operation due to unforeseen findings. When this happens, retro-auth ensures the add-on services are legally billable.
Reduces Financial Stress on Patients
The provider ensures the insurance company remains the primary payer by securing a retro-auth. That is, it ultimately prevents surprise bills from being passed to the patients.
Ensures Clean Claim Submission
Medical practices avoid the costly and time-consuming denial-appeal-re-submission cycle by obtaining the authorization before the final claim submission.
Common Use Cases for Retrospective Authorization
Let’s review a few real-world clinical scenarios where retro-auth applies:
A Life-Threatening Emergency
Picture a 34-year-old male patient who is rushed to the emergency room following a severe car accident. He is unconscious and requires life-saving surgery for internal bleeding.
In such circumstances, retrospective authorization applies because, under EMTALA, stabilizing the patient takes precedence over administrative tasks.
Thus, the billing staff can submit the retro-auth request to the relevant payer once the patient is stable.
Retroactive Insurance Eligibility
Assume a 26-year-old female patient who received treatment on February 10. At the time of the service, her insurance shows ‘inactive’ status.
However, after two weeks, her employer finalizes the policy renewal, backdating coverage to February 1.
Here, retro authorization will be obtained for the treatment because the coverage did not exist in the system on the date of service.
Transition of Care (Out-of-Network)
Imagine a 59-year-old male patient who is hospitalized at an in-network facility for a complex condition. However, he must be transferred to a specialized facility that is out-of-network to receive a higher level of care. This transfer can be due to a sudden shortage or an emergency.
In the rush to transfer a critical patient, the receiving facility may not have time to secure an out-of-network waiver. As a result, the facility provided the care first and then applied for retrospective authorization.
Retro Authorization Process in Medical Billing
Discussed below is how the retro authorization process actually works:
Step 1: Review Medical Records
It typically always starts by reviewing the patient’s medical records. Check if any of the rendered services needed prior authorization. If yes, determine why the billing staff did not obtain the pre-authorization.
Step 2: Verify the Payer’s Retro Window
Insurance payers often have a strict time limit for applying for retrospective authorization requests. It can range from 24 hours to 30 days after the date of service, depending on the specific payer policies.
Step 3: Ensure Documentation Completeness
Once you know your deadlines, collect the necessary clinical documentation, including emergency room notes (if applicable), physician’s medical necessity statement, admission/discharge summaries, vital signs, and lab results.
All these details are essential to demonstrate the urgent nature of the rendered care service.
Step 4: Submit the Formal Request
Submit the retro-auth request through the payer’s provider portal or a designated fax line. Unlike standard authorizations, retro-auths often require a specific retrospective authorization cover sheet.
Step 5: Attach a Justification Letter
Do not forget to attach a concise letter explaining why pre-auth was not obtained at the time of service. Explicitly and clearly state the reason by using phrases like “immediate surgical necessity”, “life-threatening emergency”, “medically necessary stabilization”, etc.
Step 6: Proactively Follow Up
Note that retro-auth requests are reviewed manually by a medical director. You should take a prompt follow-up on the status after every 3 to 5 business days to avoid stalling.
Retro Authorization Challenges
The following are some of the major challenges providers face in their pursuit to obtain retro-auth:
- Most payers have tight deadlines for applying for retro authorization, i.e., as short as 24 to 72 hours post-service. If you miss this window of opportunity, it will result in a permanent, non-appealable denial.
- The healthcare provider must prove why it was impossible to get approval before rendering the service. Besides, “we forgot” is never an acceptable justification.
- Retroactive authorization requests often trigger manual reviews by a medical director. This added scrutiny can also lead to broader audits.
- Since retro authorization requires manual human review rather than an auto-adjudication, it can result in payment delays.
- Varying payer retro-auth deadlines can make it difficult for the billing team to submit timely requests.
- A single retro-auth can take twice as much staff time as a standard pre-authorization. The reason? You must hunt down ER logs, physician signatures, and time-stamped clinical data to prove the emergency.
- If a retro-auth request is denied, the patient may receive a surprise bill, damaging the patient-provider relationship.
Partner with MediBillMD to Ensure a Steady Cashflow
With that said, it is time to conclude this guide. Retro authorization enables you to ensure payment against emergency care services that would otherwise be written off. However, the documentation requirements and the added scrutiny this after-service authorization request brings with it may keep you on your toes.
If you need professional help to ease the burden on your staff, consider outsourcing medical billing services to MediBillMD. We have an experienced team of certified professional coders (CPCs) and billing specialists ready to assist you around the clock!
