What is prior authorization?
Your health insurance plan may require approval for certain
medical services or treatments before the services or treatments
are rendered. This is called prior authorization. Insurance companies
use prior authorization as a way to ensure that the prescribed
treatment is medically necessary. In other words, the insurance
company does not want to pay for a medical procedure that is not
really needed. Through prior authorization, your insurance company
can learn more about your health condition and why the treatment
is needed before they decide whether to cover or pay for it. The
decision to cover a treatment is based on information that your
doctor or nurse gives them. The only way to know if your insurance
company requires prior authorization for a particular treatment
is to call and ask.
Prior authorization requirement will vary from plan to plan.
Each insurance company has a unique prior authorization process.
Real Life-
"My insurance authorized pulmonary endarterectomy surgery
for $75,000. After going through the preliminary tests, it
was determined that I wasn't a candidate for the surgery.
The tests amounted to $13,000. My insurance wasn't paying
the hospital, so the hospital notified me. Fortunately I had
a copy of every authorization for every test and procedure.
I worked for weeks with the hospital billing department and
with my insurance, and ultimately they had to pay what they
had authorized. The point is, be persistent, and make the
insurance company honor their authorization letters." |
For some programs, your doctor may have to call or send a special
letter called a "Statement of Medical
Necessity" or "Letter of Medical Necessity." This guide provides
a Sample Physician's Statement of Medical Necessity letter in
the Appendix B. It is often helpful to include a letter of medical
necessity from your physician indicating why a particular treatment
has been prescribed for you when seeing prior authorization. When
calling to inquire about prior authorization, be sure to ask the
following questions:
- Does my plan require prior authorization for coverage
of this particular service or product? (For example,
does my plan require prior authorization for an infusion pump?
Do I have to get prior approval for my Tracleer prescription?)
- How do I get something prior authorized? What is the process?
Who must make the prior authorization request? (physician?
patient? nurse?)
- What is the address or fax number to send the request
to (or phone number to call)?
- What documentation should be included? (What paperwork
or proof do they need?)
- How long will it take for a decision to be made?
(If they say they are "not sure," then ask "How long does
it usually take?")
- If prior authorization is given, how long is it approved
for or when will the approval time "expire?"
- How will I find out if it has been approved or not?
Who usually submits the claim?
For medical procedures or services, claim submission is typically
the responsibility of the medical provider. Your medical provider
will need to fill out the appropriate claim form with patient
demographic information, insurance information, descriptions of
services and associated billing codes that describe the procedure
or service as required by the insurance company, provider information
and dates of service.
For prescription drugs, your pharmacy or specialty pharmacy
provider will typically submit a claim to your insurance company.
Your insurance company may require an NDC number on claims submitted
for prescription drugs. NDC stands for National
Drug Code and is a national classification system used to
identify drugs. Claims submitted for prescription medications
provided in outpatient pharmacies usually require a drug's specific
NDC number and the name of the drug. Your pharmacist can provide
you with the NDC number that you should include on the claim form
if you are required to submit the claim form.
Will I ever be required to submit a claim?
If your plan requires that you pay for medical services up front
and submit a claim for reimbursement, you should contact your
insurance company to obtain information on how to file the claim
correctly or to request the proper claim form. If filing a claim
for a medical procedure/service or prescription drugs, many health
plans require that you complete a claim form.
Follow these steps when submitting a claim:
- Determine the type of claim form your insurance plan requires.
If necessary, contact your insurance company's member services
department for guidance.
- Obtain the correct claim form from the customer service department
of your insurance company or your employer.
- Follow the instructions on the claim form. Be sure to include:
- Patient's full name, address and phone number
- Patient's Social Security number
- Patient's date of birth and gender
- Policy and group number
- Policy holder's name, if different from patient
- Policy holder's relationship to patient
- Attach a copy of any requested supporting information to
the claim form.
- Check the claim form for completeness and accuracy.
- Be sure to sign the claim form.
- Make a copy of the claim form and all attachments (i.e.,
receipts, medical records, etc.) for your records.
- Mail the claim form and all attachments to the claims department
of your insurance company.
Your claim can take four to six weeks to process. If payment
has not been received within six weeks of submission, you should
call your insurance company to check on the status of your claim.
The customer service department is the best place to start. Before
you call, be sure to have the following information:
- Date of service
- Type of service received or name of the drug for which the
claim was submitted
- Name of provider that performed the service or dispensed
the medication
- Total charge submitted for reimbursement
- Policy number (found on your insurance card)
- Name of insured
- Insured's date of birth
This resource was developed in 2004. Some of the content may be out of date or no longer relevant. PHA is working to update and re-organize this guide. We apologize for any inconvenience.
