For anyone new to revenue cycle management, understanding all the terms, acronyms, and standard operating procedures can be overwhelming. So we continue to do what we can to create quick guides and simple reference materials that can help bring employees up to speed (like this one: Revenue Cycle Terms & Acronyms Quick Reference Guide).
‘Service approval’ is the term used to define any pre-service or time-of-service task contractually imposed on a provider pursuant to a claim payor’s utilization management program.
Service approvals are not a guarantee of payment – payment is contingent upon policy benefits and member compliance to their specific policy guidelines (e.g., such as obtaining a second surgical opinion if required by policy). However, in order to maximize the possibility of revenue recovery, there are a number of steps that need to be taken based on the type of service approval.
Here are some hit points about each of the types of approvals that you can use as a refresher or share with a new employee to bring them up to speed:
Referral
- Always applies to managed care HMO plans
- Issued by the primary care provider
- Evaluate referrals do not cover treatment
- Evaluate & treat referrals do cover treatment
Pre-Certification
- Used by most managed care payors
- Used interchangeably with Authorization
- Must be obtained in advance of service
- Always includes medical necessity validation
Authorization
- Used by most managed care payors
- Used interchangeably with Pre-Certification
- Must be obtained in advance of or at the time of service
- May or may not require medical necessity validation
Notification of Admission
- Used by most managed care payors
- Applies when a member admitted as an inpatient
- Triggers payor’s utilization/concurrent review process
- It May be required same day or within 24 hours of admit
- It May be sent via EDI 278 notification
Notification of Outpatient Service
- It May be used by managed care payors
- Applies when high-dollar outpatient service is scheduled (e.g., MRI, CT, PET)
- It May be required same day or within 24 hours of appointment booking
- It May be sent via EDI 278 notification
Medical Necessity Check
- Applies to Medicare National and Local Coverage Determinations
- Advanced Beneficiary Notice (ABN) issuance is needed anytime a medical necessity check fails (i.e., service deemed not medically necessary) and the provider intends to proceed with treatment
Service Exception Check
- Applies when service is considered experimental or investigational by the payor
- ABN issuance is needed anytime a service exception check fails and the provider intends to proceed with treatment
These are just some of the basics when it comes to service approvals. Revenue cycle management can be complicated, but we hope this quick overview has helped make things a little bit simpler. Don’t hesitate to reach out if you have any questions – we’re here to help!
For more information on revenue cycle management, check out our other blog posts:
– 7 Tips for Creating a Stellar Denials Management Team
– Developing a Comprehensive Denials Management Program
– Using Scorecards to Drive Performance and Eclipse Industry Benchmarks