Understanding Prior Authorizations
Insurance prior authorization (often referred to as a "prior auth" or "pre-authorization") is a process in which a healthcare provider must obtain approval from a patient’s health insurance company before certain medical services or medical equipment and supplies are provided. This approval is required to ensure that the service or product is covered under the patient's insurance plan, and to determine that the service is medically necessary.
From a process perspective, Insurance companies require the healthcare provider to submit documentation proving medical necessity before the product is provided to the patient. The insurance company then reviews the documentation and authorizes (or not) the product. Not all medical services or products require prior authorization. It's typically required for specific products or services based on Payer guidelines.
In NikoHealth, authorization management is all about making sure the right prior authorizations are in place—and correctly recorded—so that Invoices don’t get held up or denied. Below, we've included recommendations for managing prior authorizations in NikoHealth, including best practices for configuring Payer Rules, entering and maintaining authorizations, and managing holds and expirations in your day-to-day workflows.
Configure rules so your team doesn't have to think
If a Payer requires an authorization, indicate this in NikoHealth so your billers don’t have to remember.
BEST PRACTICES
Use Payer Rules
For any Payer/Plan where an auth is usually required for a HCPCS or product, build a Payer Rule (Management → Billing Setup → Payers → Rules → Authorizations)
Start with top-volume codes (K0001, E1390, hospital beds, vents, etc.) and expand.
Scope rules at the right level
If requirements differ by Plan, configure at the Plan level, not just Payer.
Avoid over-broad rules like “all codes”; they create a ton of avoidable holds.
Mirror Payer logic as simply as possible
Use HCPCS or Product mappings that match how your billing team thinks.
If Payer Rules are wildly complex, encode only the 80/20 that protects you from the most common denials; leave true one-offs as manual checks.
Enter clean authorization records on the Patient
One good authorization record beats three half-baked ones.
BEST PRACTICES
Always capture the core attributes
Payer/plan (matching the Insurance tab)
HCPCS or Product (avoid “generic” if Payer is code-specific)
From / To dates (no open-ended unless Payer truly allows)
Units authorized (especially for recurring supplies/rentals)
Auth number (or “Pending” + Payer reference if you don’t have the final yet)
Use “Pending” intentionally
Leave the From date blank while you’re waiting for approval.
Once approved, update From/To + final auth number— don’t create a new duplicate auth if you can help it.
Avoid conflicting auths
For the same payer + HCPCS + overlapping dates, try to keep one active record representing the current approval.
If a new auth replaces an old one, either:
Adjust dates so they don’t overlap, or
End-date the old one when the new one starts.
Make holds helpful, not chaotic
When invoices hit “Authorization Required,” it should be expected and actionable.
BEST PRACTICES
Treat holds as a safety net, not normal workflow
If everything is landing on auth holds, your rules are too broad or you’re not entering auths early enough.
Use sample accounts to tune rules until holds only appear when genuinely missing/expired.
Use “Update Invoices on Hold for Authorization Required”
When you add a new auth for a Patient that covers past dates, check this option so NikoHealth auto-clears existing holds that match.
Train billers: “When you resolve an auth issue, do it from the Insurance → Authorizations tab and check the update box” instead of editing invoices one by one.
Decide on auto-apply vs manual
Default (auto-apply) is better for most orgs: reduces missed auth numbers on claims.
Turn on “Don’t automatically apply…” only for special payers where staff must pick a specific auth manually (e.g., complex case-by-case approvals).
Get ahead of expirations (especially for Rentals)
Ensure no rental gets billed under an expired authorization.
BEST PRACTICES
Use Billing → Authorizations as your re-auth work queue
Standard filter: next 30 days for expiration.
Many orgs set an SOP like:
“Re-auth team works everything expiring in 15–45 days; <15 days is considered urgent.”
Align rental cycles with auth periods
When possible, match auth From/To to expected Rental periods (e.g., 3 months at a time).
For long-term Rentals, make sure new auths are entered before the previous one expires to avoid mid-rental holds.
Have clear ownership
Decide who owns re-auth: intake, scheduling, or a dedicated auth team.
Make that team live in Billing → Authorizations + any external payer portals daily.
Standardize Intake & Order-entry behavior
Reduce surprises downstream by checking authorizations early.
BEST PRACTICES
Intake always asks: “Is auth required?”
Use eligibility responses + Payer Rules + payer portal to answer this.
If required, create the auth from the Patient as soon as the order is accepted (even as pending).
Don’t delay entering the authorization in NikoHealth
As soon as the request is submitted to the Payer, create a pending authorization record with best-known info.
When the approval comes in, update existing record instead of creating a new one from scratch.
Train CSRs on what happens if they skip authorization
Show them how Invoices will land in “Authorization Required” holds and delay cash.
Give them a simple checklist:
Coverage verified
Authorization requested/approved
NikoHealth authorization record created
Reporting, QA, and cleanup patterns
Catch gaps before they become denials.
BEST PRACTICES
Use auth-related reports on a cadence
One view for:
Auths expiring soon
Pending auths older than X days (Payers sitting on requests)
Invoices on “Authorization Required” hold grouped by payer/HCPCS
Do periodic audits
Pick a Payer + a common HCPCS and check:
Did all claims have an auth number?
Did dates/units match the approval?
If you find repeat issues, adjust Payer Rules or training
Keep Payer Rule changes documented
Any time you change rules for a big Payer, log:
What changed, why, and as of what date.
Helps explain behavior differences between historical and new Invoices.
Learn More
By effectively managing prior authorizations within NikoHealth, you can streamline the process, reduce administrative burden, and improve patient care by ensuring that products and services are pre-approved in a timely manner. Be sure to familiarize yourself with NikoHealth’s specific features for managing prior auths, and use its automation tools to save time and avoid errors. Check out the articles below: