Probably one of the trickiest parts of any physician practice administratively is understanding and effectively navigating insurance prior authorization requirements. There are many rules and regulations a provider must follow based on payer guidelines.
Authorization guidelines are among some of the most murky and confusing guidelines of them all. After 20 years of experience and many mistakes along the way I have outlined key elements of the referral, predetermination, authorization and precertification process.
What is an insurance referral and why is it needed?
An insurance referral is an approval from the primary care physician (PCP) for the patient to be seen by a specialist. The insurance referral must be initiated by a PCP with a reason for the visit, as well as their best guess as to how many appointments will be required to treat a condition. This can always be updated later at the request of the specialist. Requesting multiple visits from the insurance company at the initiation of the insurance referral saves time administratively for both the PCP and the specialist. Some insurance companies require an active referral on file when a patient comes in for a surgical procedure or testing. If the appropriate number of visits were not requested or if they all have been exhausted and a patient has a procedure or test, this could result in the specialist losing reimbursement in the absence of the referral. This loss could be as minimal as a removal of a lesion or as costly as a heart transplant, depending on the patient’s condition.
Predetermiations: Why and when?
A predetermation is a formal review of a patient’s requested medical care compared to their insurances’ medical and reimbursement polices. The provider’s office will submit all patient clinical information to support the need for the procedure intended to take place and request for the insurance company to review the patient’s conditions against policy requirements. Predeterminations are not always required by the insurance company, yet they are often times recommended. More often than not, provider offices have patients who would like to have their elective procedures done as soon as possible, this does not always work when a procedure requires a predetermination. Most insurance companies put a turnaround time on these extensive reviews at 30 to 45 days, sometimes upwards to 60 days. It is important to educate providers as well as their patients on the importance of waiting for these medical reviews to come back approved for coverage. Proceeding with the procedure without an approval based off of policy, even with an authorization, could result in no coverage under the insurance plan and leave the patient with a substantial bill for non-covered services.
Is it an authorization or a precertification?
Per Healthcare.gov, a decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost. This concept is not the easiest to understand. It would make sense that a notification and “approval” from an insurance company would then mean services will be paid. This is not the case and is precisely where the predetermination of benefits come into play, in addition to understanding reimbursement policies set up by payers themselves.
Out-of-network insurance referrals, authorizations and special payment arrangements
Sometimes patients are referred to our providers and we are not contacted with their insurance plan. In most cases these scenarios happen due to continuity of care or a provider with the required skill set is not contracted with the insurance plan a patient may have. When receiving a referral from a PCP to your office, for a patent with an out-of-network plan, support staff should first contact the insurance plan to determine if the patient has a lesser level of benefits when seeing a non-contracted provider. It should always be communicated to the patient if your provider is not in network and make them aware it could result in them having a higher out-of-pocket expense. For plans that do not offer out-of-network benefits the first step would be for provider support staff to contact the insurance and ask for an out-of-network referral. Once the referral is approved the support staff would then need to contact the insurance to negotiate a special payment agreement (SPA). Most times when a payer offers an out of network referral the special will only be reimbursed at Medicaid rates. Requesting and obtaining an SPA will allow for your provider to be reimbursed at a higher rate for services rendered.
Payers that do not require precertification and what this means for providers.
Some payers do not require a precertification however; will require the provider’s office to be informed of their guidelines and coverage criteria. An example of this is our Local Medicare Contractor, WPSGHA’s, Cosmetic and Reconstructive Surgery Policy L34698. This policy outlines specific criteria a patient will need to meet in order to have what is deemed a medially necessary breast reduction procedure. All guidelines have to be reviewed prior to the procedure taking place and will be the responsibility of the provider’s office to have this documentation in the patient’s medical records when requested. This leaves the decision to proceed in the providers hands and makes it necessary for provider’s offices to have staff educated and well rounded in policy determinations. If the provider proceeds with the procedure and a patient does not meet all criteria listed in the policy the procedure will not be reimbursed upon post procedure documentation review. It is extremely important for the provider’s support staff to continue to educate faculty on insurance requirements and patient coverage criteria for these types of procedures. Any miss could result in a devastating financial burden on the patient as well as the provider.
Understanding each of these processes and how to determine what is required by the insurance is key to avoiding lost revenue and negatively impacting patients financially. Having knowledgeable support staff in the area of preservice is crucial to any organization. The return on investment in insurance reimbursement and patient experience alone is worth the cost of having this expertise at your institution.
Authorization guidelines are among some of the most murky and confusing guidelines of them all. After 20 years of experience and many mistakes along the way I have outlined key elements of the referral, predetermination, authorization and precertification process.
What is an insurance referral and why is it needed?
An insurance referral is an approval from the primary care physician (PCP) for the patient to be seen by a specialist. The insurance referral must be initiated by a PCP with a reason for the visit, as well as their best guess as to how many appointments will be required to treat a condition. This can always be updated later at the request of the specialist. Requesting multiple visits from the insurance company at the initiation of the insurance referral saves time administratively for both the PCP and the specialist. Some insurance companies require an active referral on file when a patient comes in for a surgical procedure or testing. If the appropriate number of visits were not requested or if they all have been exhausted and a patient has a procedure or test, this could result in the specialist losing reimbursement in the absence of the referral. This loss could be as minimal as a removal of a lesion or as costly as a heart transplant, depending on the patient’s condition.
Predetermiations: Why and when?
A predetermation is a formal review of a patient’s requested medical care compared to their insurances’ medical and reimbursement polices. The provider’s office will submit all patient clinical information to support the need for the procedure intended to take place and request for the insurance company to review the patient’s conditions against policy requirements. Predeterminations are not always required by the insurance company, yet they are often times recommended. More often than not, provider offices have patients who would like to have their elective procedures done as soon as possible, this does not always work when a procedure requires a predetermination. Most insurance companies put a turnaround time on these extensive reviews at 30 to 45 days, sometimes upwards to 60 days. It is important to educate providers as well as their patients on the importance of waiting for these medical reviews to come back approved for coverage. Proceeding with the procedure without an approval based off of policy, even with an authorization, could result in no coverage under the insurance plan and leave the patient with a substantial bill for non-covered services.
Is it an authorization or a precertification?
Per Healthcare.gov, a decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost. This concept is not the easiest to understand. It would make sense that a notification and “approval” from an insurance company would then mean services will be paid. This is not the case and is precisely where the predetermination of benefits come into play, in addition to understanding reimbursement policies set up by payers themselves.
Out-of-network insurance referrals, authorizations and special payment arrangements
Sometimes patients are referred to our providers and we are not contacted with their insurance plan. In most cases these scenarios happen due to continuity of care or a provider with the required skill set is not contracted with the insurance plan a patient may have. When receiving a referral from a PCP to your office, for a patent with an out-of-network plan, support staff should first contact the insurance plan to determine if the patient has a lesser level of benefits when seeing a non-contracted provider. It should always be communicated to the patient if your provider is not in network and make them aware it could result in them having a higher out-of-pocket expense. For plans that do not offer out-of-network benefits the first step would be for provider support staff to contact the insurance and ask for an out-of-network referral. Once the referral is approved the support staff would then need to contact the insurance to negotiate a special payment agreement (SPA). Most times when a payer offers an out of network referral the special will only be reimbursed at Medicaid rates. Requesting and obtaining an SPA will allow for your provider to be reimbursed at a higher rate for services rendered.
Payers that do not require precertification and what this means for providers.
Some payers do not require a precertification however; will require the provider’s office to be informed of their guidelines and coverage criteria. An example of this is our Local Medicare Contractor, WPSGHA’s, Cosmetic and Reconstructive Surgery Policy L34698. This policy outlines specific criteria a patient will need to meet in order to have what is deemed a medially necessary breast reduction procedure. All guidelines have to be reviewed prior to the procedure taking place and will be the responsibility of the provider’s office to have this documentation in the patient’s medical records when requested. This leaves the decision to proceed in the providers hands and makes it necessary for provider’s offices to have staff educated and well rounded in policy determinations. If the provider proceeds with the procedure and a patient does not meet all criteria listed in the policy the procedure will not be reimbursed upon post procedure documentation review. It is extremely important for the provider’s support staff to continue to educate faculty on insurance requirements and patient coverage criteria for these types of procedures. Any miss could result in a devastating financial burden on the patient as well as the provider.
Understanding each of these processes and how to determine what is required by the insurance is key to avoiding lost revenue and negatively impacting patients financially. Having knowledgeable support staff in the area of preservice is crucial to any organization. The return on investment in insurance reimbursement and patient experience alone is worth the cost of having this expertise at your institution.
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