The relationship between insurance companies, medical providers, and patients can be complicated. Even if you have health insurance, getting specialized treatment is not always as simple as being prescribed a procedure or filling a prescription; prior authorization from the insurer may be required for payment, but this is not required for the service itself. In that case, the medical provider theoretically obtains approval from your health insurance company before prescribing a certain medication or performing a procedure.
To help you better understand prior authorization, this article examines how prior authorization works, common health scenarios that require it, and how to request authorization.
How Does Prior Authorization Work?
Prior authorization is when your insurance company, not your doctor or healthcare provider, approves payment for medical service or prescription. Also referred to as pre-approval, pre-authorization, precertification, predetermination, or PA, prior authorization is part of securing care for patients.
Insurers may require or request prior authorization for several reasons. First and foremost, prior authorization helps insurance companies control healthcare costs. It helps insurers determine whether they can cover certain medications, medical services, or medical equipment.
Insurance companies want to ensure that any care you need is medically necessary, recommended for your situation, and makes financial sense. Prior authorization can also prevent service duplication and ensure that any ongoing service is actually helping you.
Policyholders need to know about prior authorization requirements, as care delays can often occur and even result in adverse events for the patient. In a 2021 survey, 24% of physicians surveyed reported that delays from prior authorization led to a patient’s hospitalization.
Another reason policyholders need to know about medical authorization is how it interacts with coverage. When you get prior authorization, your insurance company agrees to cover all or a part of a medical treatment or a prescription. If the company denies prior authorization, you may have out-of-pocket costs for the service you need.
How Pre-Authorization Works in Medical Emergencies
If you have a medical emergency, prior authorization is not usually needed. A medical emergency occurs when an illness or injury poses an immediate threat to an individual’s life or long-term health and requires immediate care or medication.
While prior authorization is not required in most medical emergencies, coverage for any emergency medical costs is still subject to the terms of your health insurance plan. In some instances, insurance companies may enact the prior authorization process after you receive care of the patient has stabilized.
Common Health Services That Require Pre-Authorization
Pre-authorization applies to various types of services. Knowing how pre-authorization works for each can help you minimize delays in medical treatment.
Each insurance carrier determines which procedures require pre-authorization. Generally, the more expensive and complex a treatment or medication is, the more likely prior authorization is required. For example, invasive procedures typically require prior authorization. Other procedures requiring pre-authorization are diagnostic imaging (PET scans, MRIs, CTs, etc.), inpatient procedures, and home healthcare, such as skilled nursing visits.
Thoroughly review your health insurance documents or call your health insurance company to learn which procedures require prior authorization.
While your doctor may prescribe you a medication, your insurance may still require prior authorization. Your doctor will contact your insurance company to find out if you need prior authorization for a prescription. Your doctor must then complete and submit a formal authorization request. If your doctor has not done so, the pharmacy will inform you that you need prior authorization when you try to pick up or fill your prescription.
Depending on your healthcare plan, several categories of prescription medications usually require prior authorization. These include medications that are often abused, unsafe when combined with other medications, used for cosmetic reasons, or have lower-cost alternatives.
In general, if your healthcare provider is in network with your plan, they will start the prior authorization process. When you seek out care that is out of network, you’re typically responsible for obtaining prior authorization. To do so, you must call your insurance carrier and ask how the process works.
If your insurance company denies your prior authorization request, the care or medication may not be covered, and you may have to pay out of pocket. Fully review your health insurance plan’s policies to understand which treatments, medications, and supplies require prior authorization.
How to Get Prior Authorization for Your Procedure
To minimize care delays, patients and doctors must follow procedures for obtaining prior authorization. In the previously mentioned survey, 93% of the American physicians surveyed reported care delays associated with prior authorization. As a result of these delays, 34% of physicians reported that prior authorization led to a severe adverse event for a patient they were caring for.
To get prior authorization, follow the pre-authorization procedure laid out by your insurance carrier.
Prior Authorization Requirements
Authorization requirements can vary depending on your health plan. In general, prior authorizations require that the service or prescription is a medical necessity and optimal solution for your situation. Ensure all your information is correct on all health insurance paperwork and card. Your health provider will submit your information in an authorization request.
Insurance companies typically require the following information for an authorization request:
- Demographic information (your name, birthdate, insurance ID number)
- Provider information (tax ID number, National Provider Identifier number, phone number, etc.)
- Physician’s name
- Requested service, procedure, medication, or durable medical equipment
- The location where service will occur (address, contact information, tax number, and National Provider Identifier number)
- Length of stay (for inpatient requests)
In some cases, your insurer may require a letter of medical necessity. In this document, your doctor explains the rationale for treatment with a summary of your diagnosis and patient history. Although your doctor is the one to fill out and submit an authorization request, be sure to complete any authorization forms they provide for you. Any incorrect or missing information may result in a prior authorization denial.
What to Do If Authorization Is Denied
If your insurance company denies your prior authorization request, you have several options. One option is that you can submit an appeal to your insurance. Get input from your healthcare provider to build an appeal that is more likely to succeed. Any medical documentation or notes can help prove that your prescription or treatment is medically necessary.
If submitting an appeal doesn’t work, your physician may order an alternate prescription, procedure, or test. For example, suppose a prior authorization is denied for a prescription. In that case, your physician can try filling a 90-day supply (which is cheaper than a 30-day supply) or getting a higher-dose prescription that you cut in half to save on cost.
You can resubmit Previously denied prior authorization requests, which may be authorized. The timing of submittal can also affect authorization forms. If your condition worsens or your current treatment remains ineffective, your insurance may be more likely to approve the prior authorization request.
Sometimes, your insurer may deny prior authorization due to inaccurate or missing information. You can then submit a new prior authorization form with corrected information.