By Martine G. Brousse
"The Medical Bill Whisperer... and insurance stuff too"
Patient Advocate, Certified Mediator
June 5, 2023
There is much confusion in the healthcare system between terms which essentially mean the same: "Authorizations", "approvals" and "Referrals".
Let's investigate further.
1. What they all mean
All mean that your insurance has agreed in advance to cover the cost of a treatment, surgery, specialist visit, Rx, inpatient stay or any service ordered by your physician.
Under certain States' laws, such as CA's AB1324, once such an authorization is given, payment MUST be made by the insurance.
This authorization is your guarantee that the claim will not be rejected, denied, or pended for further review once the claim is filed.
2. How they differ:
The term "authorization" or "approval" is usually used in the context of a PPO plan. The insurance itself reviews the request and authorizes it.
A "pre-authorization" or "pre-approval" mean the OK is given ahead of time. A "retro-authorization" means it is given after the service was rendered.
The term "Referral" is usually used in the context of a HMO plan.The insurance does not issue one, the PCP (Primary Care Physician) does. The PCP is the Dr who is assigned to you specifically, who belongs to a medical group and who manages your overall care.
Any request for services that the PCP cannot render must be approved by her/him in order to ensure a payment.
3. The process:
The process is initiated by the ordering physician, who contacts the Utilization Management Dept at your insurance, and files a request indicating what is being prescribed, and why. Medical records are submitted to justify the request.
Once the reviewer at the UM Dept - usually a RN or a Medical Director - confirms the medical necessity, your policy benefits and other criteria, a letter of approval is issued. It indicates details of its validity: length of time or a one-time procedure, what service, where...
While In Network (contracted) providers have the responsibility of obtaining an authorization or referral on their (and your) own behalf, many Out Of Network (non-contracted) ones do not. In such cases, you may have to do so yourself.
"In-for'Out" authorization: this is a request for the insurance to consider covering the cost of certain Out of Network services at the higher In Network rate. I see those a lot with ABA therapy (for autism) or Specialists for rare diseases. A patient may request such an exception to their policy, provided there is medical justification. This would include (but not be limited to): the regular Dr recommended this specialist, no one in the insurance network can treat the patient, the patient has special needs which demand out-of-the-ordinary care, emergency conditions, etc.
"Continuation of Care": Most policies have a provision for patients whose treating physician cancels their contract with the insurance. While you will be encouraged to move your care to a new In Network provider, it may not be possible or safe. In such cases you can request a "Continuation of Care" exception. This approval/authorization which would force the insurance to continue paying higher In Network rate for the remainder of your chemo regimen or mental health treatment. Evidence of the necessity to continue treatment and lack of safety or opportunity to transfer care must be shown.
"Off-Label use": This is the hardest one to obtain. Why? Because insurance companies do not cover, and are not require to cover, the cost of Rx, treatments or surgical interventions which are not FDA approved. "Off label" means that the FDA has no (yet) ruled it safe and effective. If you have been prescribed such a thing, I would recommend to ask the office to file this request for a special authorization, as they would have the experience and documentation to best present the case. However, many offices will not do so, leaving the burden to their patients. In this case, I can only recommend you turn to a advocate with such expertise to help win your insurance's approval.
While many if not most procedures, outpatient stays, office visits, test and treatments do not require an authorization, it is always best to confirm with the office that either one has already been obtained, or that it is being requested.
You may want to contact your insurance as well to confirm. Some insurance companies post those approvals in your online portal.
As for emergency situations, you would not need a special authorization or referral to get to an ER. However, once you are deemed "stable", you may want to contact your insurance to let them know that you were in the ER or even admitted. Although the burden of getting an authorization may not be on you, it could result in denials or reduced payments down the line. Especially if the facility is not part of your insurance network and may not feel the need to obtain the OK to further treat you.
When in doubt, patient advocates specializing in the billing side of things can help guide or advise you on the best course of action to protect your rights and minimize your eventual financial liability.
Martine Brousse, the "medical bill whisperer" is a Patient Advocate and Certified Mediator located in CA and the founder of AdvimedPro, which she started after 20 years as a billing manager for physicians.
@ Martine G. Brousse 2023
@ the medical bill whisperer 2023