What is Prior Authorization for Health Insurance and When is it Required?
Prior authorization is the process of getting approval from your health insurance company before receiving certain medications, tests, or procedures. This extra step helps insurers control costs but can also cause delays for patients. Learning what triggers prior authorization and how to navigate requirements can smooth the process.
What is Prior Authorization?
Prior authorization (sometimes called pre-certification or pre-approval) is permission from an insurer to move forward with a prescribed treatment or service. It involves providing clinical information like diagnosis, past treatments tried, and medical necessity to allow the insurance company to verify coverage eligibility before costs are incurred.
Prior authorization may be required for:
- Brand name prescription drugs
- High-cost medications and treatments
- Inpatient hospital stays
- Outpatient surgeries and procedures
- Durable medical equipment purchases
- Home healthcare services
- Imaging tests like MRI and CT scans
- Genetic testing
The insurer reviews the reason for the care and determines if it meets established clinical guidelines to qualify for coverage under the plan. You will also need to consider getting prior authorization before obtaining the services of a telehealth service. By selecting a reputed telemedicine service such as Holts Healthcare, you can get a clear understanding of it.
Why Prior Authorization is Required
Insurance companies require prior authorization to control spending and ensure services fit the parameters of the health plan. It prevents providers from ordering tests, drugs, or procedures that may be considered unnecessary or experimental. This helps limit costs for premium payers.
Prior authorization also guides patients toward more cost-effective options when available, like using generic drugs or outpatient facilities when feasible. For very expensive services, it ensures clinical appropriateness and that no better alternatives exist.
Drawbacks of Prior Authorization Requirements
While prior auth aims to contain costs and improve care quality, it can cause delays and disruptions for patients:
- Postpones needed treatment until approval is obtained
- Causes stress managing paperwork and phone calls
- Forces providers to justify medical necessity
- Potential denial results in appeals process
- Raises administrative burden for medical offices
Streamlining requirements helps minimize delays so patient care isn’t compromised.
Prior Authorization for Prescriptions
Many health plans require prior authorization for certain brand name or very expensive medications before the insurer will cover them. Doctors must provide documentation showing:
- Diagnosis and history
- Less costly drugs tried previously without success
- Rationale why this specific medication is medically necessary
- Appropriate dosage and duration needed
Plans aim to guide prescribers toward generics and lower-tier options when applicable to contain premium and out-of-pocket costs.
Prior Authorization for Medical Services
Insurers often mandate prior authorization for surgeries, specialty care referrals, testing, and other services based on criteria like:
- Cost - Authorizing high-expense procedures like organ transplants or genetic tests.
- Medical necessity - Verifying outpatient surgery couldn’t be done in a doctor’s office.
- Appropriateness - Confirming no equivalent procedure or test delivers the needed results.
- Clinical guidelines - Ensuring services meet established appropriateness standards.
- Facility type - Directing patients to outpatient centers instead of hospitals when feasible.
Learning when your health plan requires prior auth helps avoid surprise claim denials. Staying in touch with your providers during the process can smooth approval.
While burdensome at times, prior authorization aims to optimize insurance coverage based on clinical evidence and cost considerations. Familiarizing yourself with your plan’s policies makes navigating requirements easier. Ask your insurer how you can facilitate necessary prior authorizations to minimize disruption, delays, and denials.