Workflow Tips to Help Manage Prior Authorization Requirements

Prior authorization (PA) is the process by which independent pathology groups and clinical laboratories must obtain approval from an insurance company or payer before performing certain medical services or procedures. At its core, prior authorization is intended to balance medical decision-making with fiscal responsibility by determining whether a proposed test or treatment will be covered. However, in practice, PA often introduces significant laboratory billing challenges for lab organizations, other healthcare providers, and patients, adding administrative burden, delaying care, and increasing the risk of denials and revenue leakage.

Discover More: Automate Administrative Tasks and Optimize Medical LIS & Lab RCM Workflow with LigoLab

Current Industry Standards and the Steps Associated with Prior Authorization

Prior authorization typically begins when a provider evaluates a patient and determines that a specific medical service or procedure is clinically necessary. If that service is not automatically covered under the patient’s insurance plan, approval must first be obtained from the payer before testing or treatment can proceed.

Beyond this high-level step, the prior authorization process involves several important realities:

• Coverage for medical services and procedures varies widely among payers.
• Documentation requirements are payer-defined and often differ significantly from one insurer to another.
• Requests may be submitted via telephone, fax, email, or electronic data interchange (EDI).
• Initial response times commonly range from five to ten business days.
• Payers respond with an approval, denial, or a request for additional supporting information.

These complexities directly impact both provider reimbursement and patient access to care. Laboratory testing requirements vary not only by payer but also by specific plans and state regulations. As a result, prior authorization frequently creates laboratory revenue cycle management (lab RCM) bottlenecks and contributes to delayed cash flow and increased denials.

Discover More: LigoLab Offers Labs Automated and Real-Time LIS Software Solutions for Prior Authorization Requirements

Improving Prior Authorization Workflow Efficiency

So how can laboratories reduce these bottlenecks and regain control of the lab RCM process?

The answer lies in decreasing labor intensity, reducing preparatory steps, and implementing a structured, end-to-end laboratory workflow management approach for prior authorization.

An effective clinical lab workflow should include:

• Clearly defined front-end and back-end process ownership
• The ability to identify operational gaps and improvement opportunities
• Compartmentalized tracking of prior authorization, denials, and related claim transactions
• Standardized task workflows for repeatable billing and RCM activities

This level of process discipline enables consistent productivity measurement and creates the foundation for scalable laboratory operations and sustainable lab RCM performance.

How Integrated Medical LIS and Lab RCM Tools Remove Bottlenecks

Modern laboratory billing solutions embedded within an integrated laboratory information system (LIS) and lab RCM platform can eliminate many of the inefficiencies that hinder prior authorization workflows.

Configurable laboratory billing features, such as those available within the lab revenue cycle management module of LigoLab’s all-in-one medical LIS and lab RCM Informatics Platform, help providers automate and streamline prior authorization processes.

Specifically, RCM tools such as specialized workflow queues, a configurable rule engine, advanced reporting and analytics modules, and account-based transaction tracking work together to standardize workflows and ensure consistent execution across all payer requirements.

By embedding these capabilities directly into the lab information system, labs can dramatically reduce administrative burden, improve authorization turnaround times, and remove RCM cycle bottlenecks, while positioning their operations for long-term growth and financial stability.

Get Insight: The LigoLab Difference - Demonstrating the Power of Lab RCM Automation in the Clinical Laboratory

Specialized Lab Billing Workflow Queues

Efficiency Opportunity:

• With mounting concerns regarding the administrative burdens, costs, and inefficiencies associated with prior authorization, the healthcare industry has begun exploring new lab billing approaches to reduce these burdens.
• Professional healthcare entities like the American Medical Association (AMA) promote an automated prior authorization laboratory billing process utilizing standard electronic transactions to increase uniformity across health plans and streamline workflows.
• Initiatives involving electronic prior authorization systems, standardized protocols, and improved communication between all involved entities are a few more ways to mitigate the inefficiency.

Operational Impact:

• Configurable lab billing workflow queues, such as the ones available in the LigoLab platform, enable laboratories to streamline aspects of their workflows effortlessly.
• Moreover, these workflow queues can be combined with the platform’s innovative rule engine to automate certain workflow aspects.
• The queues are designed for data organization and validation while focusing on preventing claims from being overlooked, creating the opportunity to redirect resources toward more complex lab RCM processes.

LigoLab’s Rule Engine

Efficiency Opportunity:

• In 2021, Medicare Advantage insurers overturned more than 80 percent of their initial prior authorization denials after they were reconsidered with the necessary documentation.
• Date and time-stamped prior authorization packages, along with a formalized follow-up process, combined with “tickler” (reminder) files, ensure that submission follow-through isn’t neglected. 
• For the 2021 plan year, 114 contracts failed to pass the data validation process, including all contracts for Anthem Blue Cross Blue Shield plans.

Get Insight: Over 35 Million Prior Authorization Requests Were Submitted to Medicare Advantage Plans in 2021

Operational Impact:

• The rule engine allows users to configure operational settings corresponding to a lab billing workflow task, data-entity-driven reminders (“ticklers”/”tags”), and data validation without relying on manual intervention.
• Additionally, conditions can be added to the preconfigured rule based on lab billing workflow triggers, causing a data cascade depending on the configuration options.
• The combination of these conditions will reduce the instances of prior authorization denials resulting from inaccurate and missing data related to the payer documentation requirements.

LigoLab’s Reporting Module

Efficiency Opportunity:

• In Experian Health’s State of Claims 2022 survey, 62 percent of healthcare executives said they lack sufficient data and analytics to identify issues as lab billing claims are submitted.
• Furthermore, the same survey reported that failure to verify provider eligibility and code inaccuracies are two of the top three reasons for denials.

Operational Impact:

LigoLab’s robust reporting module retrieves real-time claim-related and analytics data:

• Configurable data-entity filters isolate virtually any type of data that has been a part of processing a laboratory billing transaction.
• Implementing the combination of the rule engine and reporting module within lab billing workflows can help reduce the multi-million dollars in revenue losses reported by 35 percent of hospitals and health systems during the 2022 fiscal year.

Account-Based Transactions

Efficiency Opportunity:

• Payers tend to make changes to prior authorization requirements within the same fiscal year, causing delays and sometimes resulting in rejections (here’s an example of notification and requirements from a payer).
• Changes to requirements can vary and, in certain cases, can be significant, so having a central outline of all the relevant data along with any data modifications made to a claim can be the difference between potential rejections and efficient processing.

Operational Impact:

Account-based transactions link all claim-related data and transactions within a single account, represented via data rows:

• User-friendly and intuitive navigation creates open yet secure access to all claim data within a single user interface, thus significantly improving laboratory workflow management efficiency.
• Retrieval of relevant data needed in terms of fulfilling payer documentation requirements for either appeal or prior authorization packages becomes a standardized laboratory billing process.
• Overall, the importance of transparency, accuracy, and secure access to claim-related data contributes to a decrease in prior authorization denials, resulting in an increased cash flow.

The Future of Laboratory Revenue Cycle Management

Healthcare is a service consistently in demand, yet it can be unpredictable, with the COVID-19 pandemic serving as recent evidence. Therefore, seizing opportunities that proactively improve laboratory workflow management efficiency should be at the top of any laboratory executive’s checklist. 

More specifically, incorporating advanced laboratory billing solutions such as the one offered by LigoLab can serve as a stabilizing factor directly impacting a laboratory’s fiscal health and growth potential. 

Although prior authorization can significantly hamper lab workflow inefficiency, it is far from the only factor plaguing laboratory operations in today’s industry landscape. 

Utilizing the modern lab RCM features available within LigoLab’s “single source of truth” informatics platform puts laboratories firmly in the driver's seat to streamline, standardize, and track lab workflow processes, such as prior authorization. 

Finally, the RCM cycle tips mentioned in this article can help clinical laboratories and pathology practices navigate longer business cycles, around the increasingly stringent payer requirements, and toward sustained long-term growth.

Discover More: Maximizing Your Lab’s Profitability - The Case for In-House Lab Billing

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