Denied! Navigating Authorization Denials

​By: ​Ashley Hunter, MBA, CHFP, CRCR, Stevie Zarle, and Briauna Driggers

​When examining the top five denial categories at any organization, authorizations are almost always among them. Obtaining authorization approvals has become significantly more challenging in recent years with frequent changes in payer policies and authorization initiation processes. This poses a significant challenge for healthcare organizations as these denials are often “hard” denials, leading to avoidable revenue loss. The key term here is “avoidable,” as these types of denials can be entirely prevented with the right processes in place. 

Payer Authorization Denial Responses

​While denial remit codes are standardized, payers do not follow a consistent method in selecting these codes to communicate reasons for non-payment. Authorization denials are typically communicated using four primary remark codes:

CO39 – Authorization denied at the time of request

• An authorization initiation attempt was completed, and the insurance company denied the request

CO197 – Authorization is invalid or absent

• No authorization was obtained
• The authorization obtained contains inaccurate information, such as incorrect place of service or procedure code
• Authorization was initiated, but the status was pending or denied at the time of service 

CO198 – Services have exceeded the authorization requirements

• The quantity of services rendered exceeds the quantity approved
• The service took place outside of the approved dates

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​CO243 – Services were not authorized by the patient’s insurance or primary care provider

• Services rendered required authorization initiated by the patient’s primary care physician
• Either the facility or service provider is not in network for the patient’s insurance plan, and authorization was required for payment due to this

Among these codes, CO197 is by far the most received. CO197 often acts as a 'catch-all' code for many commercial payers since it can be triggered by various underlying causes. It's important to remember that even if a detailed code exists for a scenario, it doesn't guarantee that a payer will use that specific code. For example, a service that was deemed not to require authorization by the payer may ultimately be denied with a CO197 code due to a credentialing issue. As a result, organizations must thoroughly investigate these unfavorable responses to pinpoint the exact cause behind them.

​Another important code from this set is CO243. Some organizations classify this code as “out-of-network” based on verbiage in the remit description. While this category designation isn’t necessarily incorrect, it only identifies one of the multiple root causes. CO243 can be issued when a payer requires a referral in addition to or in place of authorization. 

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Best Practice Workflow Components for Obtaining Authorizations

​The first step in addressing authorization denials is to implement a best practice workflow. An authorization workflow should begin with scheduling or receipt of an order as the information obtained during this process is crucial for authorizations. In addition, the workflow should consider all activities up to the point when a service is billed and paid.

​Keys to Best Practice Workflow:

​Scheduling – The staff member scheduling an appointment should be required to obtain a minimum dataset of information. This should include patient demographics, complete insurance coverage, ordering provider, ordered service, and reason for service. All of this information is crucial to obtaining an accurate authorization. Another consideration in the scheduling workflow is ensuring appointments are made far enough out to allow for authorization to be obtained. The response time amongst payers to approve authorizations varies, which is important for staff to be aware of.

Insurance Verification – This step may be performed by the same staff obtaining authorization, but coverage must be verified beforehand. Staff should verify the patient's eligibility, identify if there are multiple coverages, and determine the correct order of payers if more than one exists.

Benefits Review – Some payer plans may indicate that a procedure requires 'no authorization,' but a patient's specific plan might not cover the service at all or may have guidelines on how frequently it can be received.

Authorization Initiation –To initiate an authorization, staff must be notified that an upcoming appointment requires it. During the front-end process, there should be a step that involves a task or work queue to indicate that an authorization review of an account is needed.

Obtaining an Authorization – Once the initial authorization request is initiated, notes should be entered into the EHR system to document the process.  Best practice involves documenting how the authorization was initiated, the submitted procedure code, the location, the quantity of service, and the current status.  Documenting this information provides visibility to multiple departments regarding the status and aids in any denial appeals that may later arise.

Authorization Status and Approval – If possible, it's best to include a 'status' field for the authorization within the EHR system.  The status can be used to communicate the authorization's approval stage to multiple staff members and serve as a data point to remove an account from a work queue or mark a task complete. Once an approval letter is received, it should be uploaded to the patient’s chart.

Scenarios to Consider for the Best Practice Workflow:

• Appointment reschedules
• Order changes
• Change in coverage
• Urgent or add-on cases

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Sources of Authorization Denials

When denials occur, it can be easy to blame the staff responsible for obtaining authorizations.  While a denial may stem from a lack of authorization, several other causes can lead to this unfavorable outcome. Collaboration between the front and back revenue cycle teams, along with clinical staff, can help ensure that all services are rendered with the appropriate approvals.

Front-end staff, including check-in, scheduling, and authorization team members, should collaborate to ensure all necessary information for authorization is gathered.  If front-end workflows are not followed correctly, the necessary notification for an authorization may not be created. In addition to information gathering, there should be comprehensive communication regarding scheduling. Appointment reschedules are a common root cause for denials as an approved authorization may become invalid if the service is rescheduled outside of the approved dates.  

Though some may wonder why the back-end revenue cycle staff should be involved in discussions about authorizations, there are relevant processes that can directly impact or cause a denial. Ensuring the accuracy and completeness of claim submissions is essential for timely and correct payment. Payers will deny a service if an authorization ID is missing, regardless of obtaining approval It can also become challenging when a patient has multiple services, as it's crucial to ensure the correct authorization ID is linked to the approved service. The denials team can process appeals much quicker when a best practice workflow is followed, including uploading approval letters and documenting authorization status.

Clinical staff play a role in authorizations beyond ordering a service. After an order is created, an authorization may be initiated that requires peer-to-peer review from a provider. While clinical involvement may seem obvious, several factors can lead to an authorization denial both on and after the date of service (DOS). On the DOS, if the service is altered in any way that requires a different procedure code than initially ordered, a denial can easily occur since the authorized code would not match what was performed and billed on the claim.

After service, the root cause of a denial can often be traced to clinical documentation. A diagnosis can be significantly altered based on documentation, potentially leading to a service reason that the payer no longer considers medically necessary. In certain specialties, such as radiology, a procedure can be documented in a manner that leads to the service being coded differently. For instance, in extremity imaging, a 'joint' procedure might be ordered, but due to the specific region or the radiologist's documentation, it could be coded as 'non-joint.' This coding would be accurate based on the radiologist's interpretation.

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The Approach
​Navigating authorization denials requires a comprehensive approach that involves collaboration across various departments, adherence to best practice workflows, and a thorough understanding of payer requirements. By implementing robust front-end processes, ensuring accurate documentation, and maintaining clear communication, healthcare organizations can significantly reduce the occurrence of authorization denials. This proactive approach not only minimizes revenue loss but also enhances the overall efficiency and effectiveness of the revenue cycle. Ultimately, the goal is to create a seamless process that supports timely and accurate authorizations, leading to improved patient care and financial stability for healthcare providers. 

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