Prior Authorization Requirement—Why To Beware

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If you have a managed care health insurance plan like a PPO, an HMO, or an EPO, you may be required to get prior authorization before you get certain kinds of health care services or fill certain prescriptions.  If you don’t follow your health plan’s prior authorization requirement, your health plan can refuse to pay even if the health care service you got was medically necessary. But, even if you follow all of the rules, you might still have to pay for services you thought your health plan had agreed to pay for.

Here’s what you need to beware of when you’re dealing with a prior authorization requirement.

Prior Authorization Doesn’t Mean Your Health Plan Will Actually Pay the Bill

Most prior authorizations come with a clause that goes something like, “Prior authorization is not a guarantee of payment. Payment may be affected by the health plan member’s benefit eligibility, coverage, medical necessity, and provider choice.”

The whole point of a prior authorization requirement is to make sure that the health plan only pays for expensive health care services and drugs that are:

  • Truly medically necessary.
  • The best or most cost-effective treatment option available.
  • Provided to health plan members whose health insurance policy provides coverage for that service or drug.
  • Provided to current health plan members.
  • In the case of HMOs and EPOs, given by in-network providers.

By inserting this clause into the authorization, your health plan is giving itself an escape.

It won’t have to pay if it later turns out that your expensive test or treatment wasn’t actually medically necessary. It won’t have to pay if the pre-authorized in-network provider you chose canceled his or her contract with your health plan, becoming an out-of-network provider on the day you actually got the service.

Why do health plans insert this clause? It’s to protect against things like:

  • A member canceling his health plan membership but still demanding the health plan pay for a pre-authorized service that was rendered after his health insurance coverage ended.
  • Paying for out-of-network care if the health plan requires care to be provided only in-network.
  • Making medical necessity determinations based on clinical information that later turns out to be inaccurate or misleading.

What does inaccurate or misleading clinical information mean? Here’s a scenario. Your doctor’s office secretary knows that knee MRIs are usually pre-authorized for people on crutches and wearing knee immobilizer braces. The physician hasn’t entered his physical exam findings into the medical record yet, so she can’t tell the clinical reviewer at your health plan exactly what your doctor found when he examined you. She thinks you were on crutches when she checked you in, so she tells the reviewer at the health plan that you’re on crutches wearing a knee immobilizer, even though she’s not sure.

The knee MRI is pre-authorized based on that clinical information. If your health plan later finds out you weren’t actually on crutches or wearing the knee immobilizer, it can refuse to pay for the MRI because the clinical information it based that authorization on was inaccurate.

The People Making Decisions About Your Care May Not Be Who You Think

Who has the power to decide what your health plan will and won’t pay for? After all, your doctor feels you need this test, procedure, treatment, or drug. Who is it that has the power to override his or her decision without even seeing you?

The prior authorization process works differently in each health plan, but some approaches are common. In many systems, the first person to review a prior authorization request isn’t even a person; it’s a computer using an algorithm.  The computer compares the ICD-9 or ICD-10 code that represents your diagnosis with the CPT code that represents the test or treatment you’re requesting prior authorization for. If that algorithm allows, the prior authorization may be issued by the computer. If the algorithm doesn’t allow pre-authorization, the computer system places your prior authorization request into a queue for a human reviewer to look at.

Prior authorization requests usually get less scrutiny if they’re approved than if they’re denied. Before a request is denied, it may go through several layers of clinical scrutiny by increasingly qualified health care personnel. However, it may only take a single reviewer to approve a prior authorization request.

Who are the human reviewers that evaluate your request? It depends on the type of service you’re requesting prior authorization for. Reviewers for prescription drug authorizations may be different than reviewers for mental health services requests or reviewers for imaging requests like MRI or CT scans.

A common method of evaluating prior authorization requests for expensive imaging studies goes like this:

  1. A computer analyzes the data submitted with your prior authorization request. If it cannot approve the request…
  2. A technician reviews the request for errors like a mistake in entering your demographic information or incorrect ICD-9 or CPT codes. If he or she still can’t approve the request…
  3. A specially trained nurse evaluates your request using protocols. He or she may reach out to your physician’s office for additional clinical information. If he or she can’t approve the request…
  4. A physician reviews your request. He or she may approve the request or may request a telephone conference with your physician to discuss the request. If the physician can’t approve your request or can't reach your physician, it will be denied.

There are lots of ways this process can go wrong and result in your prior authorization request getting denied even though you really need the drug or service you’re requesting. Learn more about this in “How Silly Mix-Ups Cause a Health Insurance Claim Denial" and "How To Get a Prior Authorization Request Approved."

Your Health Insurance Company May Not Be as Involved as It Appears

If you now have an image of your health insurance company employing rows and rows of office workers in cubicles looking at prior authorization requests, you may be mistaken. In many cases, your health insurance company doesn’t have anything to do with approving or denying your prior authorization request. It contracts this job out to multiple different medical management companies.

Your health plan may contract prior authorization requests for prescription drugs to a pharmacy benefits manager. It may contract prior authorization requests for imaging studies to a radiological benefits manager. Mental or behavioral health requests may go to a behavioral health benefits manager. These medical management companies provide services to several different health insurance companies, not only to yours.

If you’re trying to provide information to get a prior authorization request approved and you’re speaking with your health plan, you may be speaking to the wrong person. You need to be speaking the reviewer at the medical management company. Likewise, if you’re trying to negotiate with your health plan to cover something that isn’t usually a covered benefit and you’re speaking with the medical management company’s reviewer, you’re barking up the wrong tree.

Prior Authorization Is a Hassle for Your Doctor’s Office

Although the point of prior authorization requirements is to save your health insurance company money, it may accomplish this at the expense of your physician’s office. Prior authorization requests can take significant time and energy for your physician’s office personnel to deal with; your physician isn’t paid for that time.

The clerical staff of a physician’s office may spend 20 minutes on a prior authorization request only to then require that the office nurse speak with the reviewer for another five to ten minutes. If the request still isn’t authorized, the physician may have to speak directly with a physician reviewer. When all is said and done, it may have taken 30-45 minutes of office personnel’s time to get your pre-authorization. Multiply this by several patients per day, and you’ll begin to understand the administrative burden prior authorization requests place on a physician’s practice.

In fact, if a particular health plan gains a reputation for being difficult to deal with when it comes to prior authorization requests, over time, physicians may migrate out of that health plan’s provider network. The increased hassle factor involved with getting that health plan members’ care pre-approved isn’t worth the reimbursement the physician gets for the care.

Likewise, if your health plan has a reputation for difficult prior authorization approvals, your physician may choose a test or treatment that doesn’t require prior authorization over one that does. In this case, you could be getting a test or treatment that wouldn’t normally be your doctor’s first choice for you, but your doctor is “making do” to avoid the hassle of getting prior authorization.

Just Because It’s Not Pre-Authorized Doesn’t Mean You Can’t Have It

If you’re having trouble getting prior authorization for something, you can still have the test, service, or drug. However, you may have to pay for it yourself. There are some tricks to make this bitter pill easier to swallow.

Waiting for prior authorization of a prescription drug or an expensive specialty drug can delay the start of your treatment. Consider asking your pharmacy if it can fill just a fraction of the prescription for you so you can begin your treatment without delay. For example, your physician may have written the prescription for a 90-day supply of the drug. Ask your pharmacy if it will dispense enough pills for just four or 5 days.

You’ll have to pay for that four or five days out-of-pocket, and your health plan probably won’t reimburse you later, but you’ll be able to start your treatment right away rather than waiting several days for the prior authorization request to come through. Once the prior authorization is approved, you can fill the rest of the prescription.

One caveat, check with your doctor or pharmacist before doing this. If the drug is one that can be dangerous to stop abruptly, you’ll be in trouble if you’ve already started the drug and then learn that your prior authorization request has been denied. You may not be able to afford to pay out of pocket for more pills, yet it could be dangerous to stop your medication suddenly when you’ve run out of your four or five day supply.

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